11000 Incorrect Coverage

11000 Incorrect Coverage

Prevention of incorrect benefits is the responsibility of every staff member and client.  Incorrect coverage includes both understated and overstated eligibility.

11110 Understated Eligibility

Understated eligibility occurs when the client does not receive the level or extent of coverage they were entitled to receive. Eligibility staff shall document how the understated eligibility was determined and the reason correction was required. All understated eligibility must be promptly resolved.

11111 Situations Requiring Correction of Understated Eligibility

Understatement of eligibility shall be corrected promptly using the program policies in effect for the month(s) in which the error occurred.

The following are situations in which a correction of understated eligibility is required.

1. The understated eligibility was the result of agency error.  See 11121.1.
2. The agency failed to give the household sufficient time to verify a medical expense that resulted in the understated eligibility.
3. The agency failed to take timely action on reported changes that resulted in the understated eligibility.
4. There is a fair hearing decision in favor of the household.
5. Reserved
6. Case correction is ordered as a result of a class action lawsuit or other legal proceeding.

A recipient may also be entitled to correction of understated eligibility where a change has been reported and verified timely, but the future month has already been authorized due to system cutoff date.

11111.1 Timely Billing

There may be instances where the medical provider is outside of the timely billing time frame to receive payment for services and the client has already privately paid the bill.  The provider may be unwilling to reimburse the client since they will not be able to receive payment from the state.  In those instances, the client shall be reimbursed by the state for the verified amounts paid to the provider, up to the allowed rate for the service.  There is no other provision for correcting the understated eligibility.

11112 Situations Not Requiring Correction of Understated Eligibility

Even though a technical understatement of eligibility may have occurred, an eligibility correction is not required in the following situations:

1. The household failed to report a change which would have resulted in an increase in benefits had the change been timely reported.
2. The household failed to timely provide necessary information. See 9121.1.

11113 Time Frame

Once it has been determined that an understated eligibility has occurred, the amount of the underpayment, if any, shall be calculated and the case corrected as soon as possible but no later than 20 calendar days after the worker identifies that a correction is necessary.

11114 Erroneous Termination

The month the discontinuance initially occurred shall be the first month coverage was not received as a result of the erroneous discontinuance.

11120 Overstated Eligibility and Claims

Overstated eligibility occurs when an individual receives more coverage than they are entitled to receive. Eligibility staff shall document how the overstated eligibility was determined and the reason case correction was required. All overstated eligibility must be promptly resolved.

11121 Types of Claims

There are three types of claims. The type of claim will determine action to be taken in recovery efforts.

11121.1 Agency Error

Instances of agency error which may result in a claim include, but are not limited to, the following:

1. Prompt action was not taken on a change reported by the household.
2. Household income or allowable deductions were incorrectly computed.
3. Coverage continued after the review period expired without benefit of a required redetermination of eligibility.
4. Policy was misapplied.
5. The loss of SSI recipient status for an SI medical assistance recipient was not timely processed, including failure to timely request or process a new application or information.

11121.2 Client Error

Instances of client error which may result in a claim include, but are not limited to, the following:

1. Non-willful withholding of information from a one-time failure on the part of a client to report a change timely (see 9121), which affects eligibility when:
   1. The worker has reason to believe that the client did not understand his/her responsibility; and
   2. There was no oral or written misstatement by the client, or
2. Willful withholding of information such as:
   1. Misstatement (oral or written) made by the client in response to oral or written question from the agency;
   2. Failure by the client to report a change timely (see 9121), which affects eligibility;
   3. Failure by the client to report the receipt of a medical coverage payment which he/she knows, or should know, is incorrect.

11121.3 Fraud Error

A fraudulent error occurs when the client intentionally:

1. Makes false or misleading statement, misrepresentation, concealment, or withholding of facts for the purpose of improperly establishing or maintaining eligibility; or
2. Misuses medical benefits, including selling, sharing, or trading the medical I.D. number for money or other renumeration, signing for services that were not provided to the recipient, or other misuse as determined by the agency.

An individual shall be considered to have committed fraud when the individual has been legally determined to have committed fraud through a court of appropriate jurisdiction. There is no other method of establishing a fraud claim.

A finding of fraud under these provisions may result in criminal penalty, including fines and imprisonment, but may only result in a period of ineligibility if so, ordered by the court. Fraud error status is not established if the court’s resolution to the willful client error is to place the individual on diversion. 

11122 Claim Not Required

Even though a technical overstatement of eligibility may have occurred, a claim shall not be established in the following instances.

1. The agency failed to ensure the application used to approve eligibility was signed.
2. Coverage granted in accordance with the treatment of income policies or the inability of the agency to act on available information due solely to system cutoff dates. Assistance provided under these circumstances does not constitute incorrect coverage.
3. Overstatement of eligibility that occurred as the result of the household failing to report a change in circumstances they were not required to report. See 9121.
4. The overstated eligibility was the result of agency error and the recipient did not receive any medical services within the month, even if capitation payments have been made on their benefit.
5. An eligibility error related to citizenship or alien status is not considered overstated eligibility when:
   1. Eligibility was based on verification of satisfactory immigration status by the Immigration and Naturalization Service (INS).
   2. Eligibility was approved to meet timely processing guidelines, but no INS response to a request for verification of immigration status has been received.
   3. Eligibility was approved to meet timely processing guidelines, but the reasonable opportunity period for alien applicants to provide documentation of their alien status had not expired.
6. A previously met spenddown is increased within the base period due to a change in income and the new spenddown amount is not met.
7. Continued SI medical coverage pending a determination of eligibility under another medical assistance program due to loss of SSI recipient status. See 2636. However, if the transition is not timely processed, overstated eligibility may have occurred.  See 11121.1(5).

11123 Time Frames

The date of discovery for purposes of tracking timely claims shall be the date the case is first identified as potentially having overstated eligibility by the worker, quality assurance, or by other means.

1. For agency and client errors (see 11121.1 and 11121.2), the agency is required to prepare the claim and initiate recovery or attempt to initiate recovery by the end of the calendar quarter in which the overstated eligibility is first identified.
2. For fraud errors (see 11121.3), the agency is required to prepare the claim and initiate referral to the Office of the Medicaid Inspector General for prosecution by the end of the calendar quarter following the calendar in which the overstated eligibility is first identified.

NOTE: Failure to establish a claim within the time frames identified above does not negate the responsibility of the agency to establish or collect on the claim, or of the client to repay any valid overstated eligibility.

11124 Computing the Claim

In calculating the amount of the claim, the agency shall determine the point at which the correct information should have been reported and acted upon timely allowing for timely notice as appropriate. From that point, the correct coverage (if any) shall be determined.  The corrected coverage shall then be compared against the actual coverage received to determine the difference. The difference in the coverage received versus the coverage entitled to receive is the amount of the claim. 

The actual amount of the claim shall be:

1. For instances where there was no eligibility:
   1. Managed Care - The amount of the capitated payment made each month, 
   2. Fee for Service - the amount of paid claims. 

      NOTE: For ineligibility due to excess resources, the amount of the claim cannot exceed the amount by which countable resources exceeded the allowable resource limit. If the value of the resources varies during the months of ineligibility, the highest value obtained shall be used.

2. For Nursing Home, HCBS and PACE, the amount of the understated share of cost.
3. For Working Healthy and CHIP, the amount of the understated premium.
4. For Spenddown, the difference between the capitated payment for an unmet spenddown versus a met spenddown.

11125 Establishing Claims and Repayment Agreements

Once the amount of the overstated eligibility has been determined, a claim in that amount shall be established.  The type of the claim - Agency Error, Client Error, or Fraud Error, shall determine which action to take next.

1. Agency Error or Client Error – For purposes of establishing a claim, there is no difference between an Agency Error and a Client Error.  Even though the root cause of the error differs, the collection action is the same.  
2. Fraud Error – A fraud error can only be established through a finding by a court of appropriate jurisdiction.  Therefore, additional steps are required before collection action may commence.  

A suspected fraud error shall be referred to the Office of the Medicaid Inspector General (OMIG). The OMIG will decide whether to pursue the case in court.  If a decision is made not to pursue, the claim will be labeled as Client Error and processed as such.  If the claim is accepted by the OMIG for prosecution, no further action shall be taken until a decision by the court has been rendered.   

Individuals should not receive notice that the case is under investigation for fraud.  Client inquiries concerning the possible fraud investigation should be responded with a statement that the case is “under administrative review.” No additional information should be provided.

Collection action for an Agency Error or Client Error claim shall be initiated by sending the household a repayment agreement. No action shall be taken on a Fraud Error claim until the court has rendered a decision.

The repayment agreement shall include the amount of the claim and the reason the overstated eligibility has occurred. The household is given 10-days to respond to the repayment agreement.

11126 Collecting the Claim

Once the household has been notified of the overstatement of eligibility and repayment requested, collection action shall be initiated.  Recovery may only be initiated if there are countable resources that are currently available.  This includes any resources counted toward the allowable resource limit outlined in 5130. 

11126.1 Methods of Collection

Agency Error and Client Error claims shall be collected in one of the following ways:

1. If the household responds with a payment on the claim, the payment shall be accepted according to established procedures.  If the claim is paid in full, no further collection action is required.  If the claim is only partially paid, further action is necessary to collect the remaining amount of the claim.
2. If the household responds with a promise to make payments, the payments shall be accepted according to established procedures.  If the payments continue or the claim is paid in full, no further collection action is required.  If the household fails to begin making payments or to continue making payments, further action is necessary to collect the remaining amount of the claim.
3. If the household is unable or unwilling to make a voluntary repayment to the agency, a special spenddown shall be imposed.  The special spenddown shall be created in an amount equal to the amount to be recovered and shall be considered in the current eligibility base period.   

Medical expenses may be allowed against the special spenddown if the expense is verified, medically necessary and reported to the agency on at least a 6- month basis.  Medical expenses shall be counted against the regular spenddown (if any) and then the special spenddown.

A special spenddown may be used for both automatic and determined eligible.  There is no requirement that the client have a regular spenddown. However, a special spenddown shall not be used in the Medicaid poverty level or CHIP programs.

If a special spenddown is imposed on a regular spenddown, the amount of both spenddowns must be met before the overstated eligibility claim is considered satisfied.  If unmet, the special spenddown may extend over more than one base period.

11126.2 Fraud Claims

A claim that has been determined to be fraudulent through a court of appropriate jurisdiction shall be collected in the same manner as other types of claims.  A repayment agreement shall be sent to the household as indicated in 11125.

1. Method of Collection - If the court has not imposed the method of collection, the provisions of 11125 apply.  If the court has established how the claim is to be repaid, the agency shall follow that collection method.
2. Disqualification Penalty - An individual who has been convicted of medical assistance fraud under 42 U.S.C. Sec. 1320a-7b shall be ineligible for medical assistance for one year from the date of conviction.  Convictions under state law do not carry a disqualification period.  

11126.3 Bankruptcy Discharge

If the agency becomes aware of any bankruptcy proceedings concerning a household with an uncollected medical assistance claim, KDHE-DHCF Legal Division shall be notified immediately. Legal division will provide instruction on how to proceed.  Legal division will provide notification when the bankruptcy action is complete. Collection action should then be initiated, resumed or terminated (see 11127) in accordance with the outcome of the final bankruptcy action.

11127 Terminating Claims

An uncollected claim shall be terminated when either of the following occur:

1. The only remaining household member responsible for the claim is deceased; or
2. The claim has been discharged through a bankruptcy proceeding, see 11126.3.  

11128

Reserved

11129 Compromising Claims

The amount of the claim determined by the agency may be reduced in accordance with a court order. The amount determined to be uncollectable shall be the compromised amount of the claim. The original amount of the claim minus the compromised amount shall be the amount then subject to collection.