Audit: State Medicaid program lost out on $27M from estates

JEFFERSON CITY, Mo. -- Missouri's Medicaid program could have recovered as much as $27 million from more than 30,000 estates of deceased patients but did not file claims in time, according to a statewide audit of federal programs released Tuesday.

Federal and Missouri laws allow the state to recover Medicaid funds spent on a participant as a state debt, but a claim against the person's estate must be filed in probate court within a year of his or her death. Of 9,321 cases closed in fiscal year 2014 by the MO HealthNet Division, an average of $15,000 was recovered from 6 percent of those, according to the audit.

The $27 million estimate is based on a similar estimated recovery rate for the 30,000 cases that were past the deadline to file.

"Without timely action on probate estate cases of deceased participants," the audit states, the program "is not in compliance with cost recovery requirements and loses the opportunity to recover state and federal funds."

The Department of Social Services division responsible for filing claims told the auditor's office it does not have sufficient staff to review all cases of deceased patients. The audit says there's no system to prioritize potential cases.

The department's response acknowledges a backlog resulted in forfeited potential recoveries but challenges the $27 million estimate, pointing out some of the cases may be duplicates, incorrect, exempt from collection or received more than a year after the participant died. Its response also says the attorney general's office is responsible for litigating the cases and does not proceed unless a participant has $20,000 in assets.

"By definition, the vast majority of (MO HealthNet Division) participants are low income and thus, have few to no collectible assets," the department response stated.

A 1993 federal law requires states to collect long-term care costs from the estates of Medicaid recipients 55 and older and allows Missouri the option of recovering other expenses, as the state plan directs. Assets cannot be recovered during the lifetime of a surviving spouse or from a child under age 21 or who is permanently disabled. Homes are protected if a sibling or former caregiver lives there for a certain period of time.

The audit also found continued eligibility verification problems in the child-care subsidy and temporary cash assistance programs overseen by the department, which have been the focus of previous audits.

The department is moving toward using a new electronic system for eligibility verification and has created a review team to monitor child-care providers who receive payments for children of low-income parents while they are working, according to the department's response.