New Mexico Did Not Always Appropriately Refund the Federal Share of Recoveries from Managed Care Organizations

Of the $374 million in managed care organization (MCO) recoveries, New Mexico appropriately refunded the Federal share for $359 million. However, New Mexico underreported the Federal share for the remaining $15 million by $4.4 million because (1) it incorrectly calculated the Federal share of recoveries related to Affordable Care Act (ACA) expansion population payments, which the Federal Government originally matched at 100 percent using the regular Federal medical assistance percentage (FMAP), and (2) it did not consider higher FMAPs, such as for Family Planning and Breast and Cervical Cancer, in its Federal share calculations for MCO recoveries of other beneficiary populations' payments.

Additionally, New Mexico did not perform reconciliations of capitation payments for community-based long-term care services as required under its contracts with MCOs. As a result, New Mexico had not made any MCO recoveries related to those long-term care services.

We recommended that New Mexico refund to the Federal Government the additional $4.4 million Federal share related to ACA expansion MCO recoveries and MCO recoveries originally claimed at higher FMAPs, such as those for Family Planning and Breast and Cervical Cancer. We also recommended that New Mexico establish policies and procedures to identify MCO recoveries that were originally claimed at higher FMAPs, perform reconciliations in accordance with its contracts with MCOs, and consider conducting its reconciliations in a more timely manner.

In written comments on our draft report, New Mexico partially concurred with our recommendations. Regarding our first and third recommendations, New Mexico agreed to work with CMS to refund the additional $4.4 million to the Federal Government and to develop an appropriate allocation methodology for MCO recovery reporting. As for our second recommendation, New Mexico stated that it is already following a timeline established under the MCO contracts.

New Mexico disagreed with our final recommendation and responded that it had conducted an analysis of long-term services and supports capitation payments that met the requirements of the reconciliation. New Mexico provided information about the results of that analysis.

After reviewing New Mexico's comments, we maintain that our findings and recommendations are valid.