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

The objective of this review was to determine if capitation payments to HealthAmerica Pennsylvania, Inc. (HealthAmerica), contract number H3959, were appropriate for beneficiaries reported as institutionalized for the audit period.  We determined that HealthAmerica received Medicare overpayments totaling $26,000 for 15 beneficiaries incorrectly classified as institutionalized during the audit period.  Some of the overpayments occurred because of the lack of oversight of internal control procedures.  Other overpayments occurred due to the lack of procedures requiring managed care organizations to determine if the beneficiary resided in a certified distinct part of the institution.  We recommended that HealthAmerica refund the overpayments, ensure adherence to policies and procedures for verifying institutional care, and develop more effective internal control procedures.