Audit of North Carolina's Buy-In of Medicare Part B Premiums for Medicaid Beneficiaries From April 2004 Through March 2007

For the quarters ended June 2004 through March 2007, the North Carolina Department of Health and Human Services, Division of Medical Assistance, did not claim Federal share for Medicare Part B premiums that it paid on behalf of some Medicaid beneficiaries (buy-in) in accordance with Federal requirements. The Social Security Act allows States to use Medicaid funds to pay Medicare Part B premiums on behalf of certain persons eligible for both Medicare and Medicaid. Of the $722 million that the State claimed, $698 million was eligible for Federal share, and approximately $24 million (approximately $16 million Federal share) was for beneficiaries in buy-in eligibility categories that were ineligible for Federal share.

We recommended that the State (1) refund to the Federal Government the $16 million incorrectly claimed for Federal share for Part B premiums, (2) perform a review of claims after the end of our audit period and refund any unallowable Federal share, and (3) develop adequate internal controls to ensure that Part B premiums claimed for Federal share are only for beneficiaries in eligible categories. The State concurred with our finding and recommendations