Duplicate Medicare Payments to Cost-Based Health Maintenance Plan Scott & White Health Plan for the Fiscal Years 2002, Through 2004

EXECUTIVE SUMMARY:

Our objective was to determine whether medical services provided for the Scott and White Health Plan's (SWHP) enrollees by the Clinic and its contracted providers were reimbursed under SWHP's Medicare cost report and also through the Medicare fee-for-service payment system. SWHP's capitated provider filed Medicare claims, for which they were paid on a fee-for-service basis, while under a capitation arrangement with SWHP. The capitation arrangement, which provides for a per-member, per-month payment to SWHP's capitated provider, covered allowable service performed by the provider to SWHP's enrollees. Medicare reimbursed SWHP for the capitation payments made to the provider via the Medicare cost reports; therefore, the fee-for-service claims paid directly to the provider by Medicare are considered overpayments since Medicare has, in effect, paid twice for the same service. During our audit period, inappropriate Medicare fee-for-service billings by SWHP's capitated provider amounted to $122,130.

We recommended that SWHP recover the $122,130 in duplicate Medicare fee-for-service claims made to the capitated provider and its subcontracted providers and that SWHP develop an efficient and effective billing process system to preclude and detect duplicate payments. SWHP agreed with our findings and will adjust their next cost report to correct the overpayments. SWHP does not believe that their internal control system failed in detecting the duplicate payments. They believe that they are unable to detect some duplicate payments because the Carrier is not sending explanation of Medicare benefits for all the services that were paid for on a fee-for-service basis.