Review of Medicare Payments for Beneficiaries With Institutional Status at Coventry Healthcare of Kansas, Inc. for the Period January 1, 2000 Through May 31, 2002

The objective of this review was to determine if capitalization payments to Coventry were appropriate for beneficiaries reported as institutionalized during the audit period.  Medicare generally pays a higher monthly capitation rate for enrolled beneficiaries who are residents of a Medicare or Medicaid certified institution (or the distinct part of the institution).  We determined that Coventry received Medicare overpayments totaling $132,000 for 61 beneficiaries incorrectly classified as institutionalized during the audit period.  Of these, a total of 37 beneficiaries were incorrectly classified because they were residing in assisted living facilities (19); or were residing in non-approved facilities (7); or had not met the 30 consecutive day minimum time requirement to qualify as institutionalized (11).  In addition, Coventry incorrectly classified 24 beneficiaries as institutional who were residing in the non-certified portion of the institution.  We recommend that Coventry refund overpayments of approximately $132,000, ensure adherence to policies and procedures for verifying institutional care, and develop more effective internal control procedures for verification of each beneficiary's institutional status.