Medicare Improperly Paid $34 Million in Benefits to Incarcerated Individuals

Agency paid out 63,949 claims to 11,786 incarcerated individuals

prison doctor
A doctor waits to be let into the main building of the California Medical Facility in Vacaville, Calif. / AP

The Centers for Medicare and Medicaid Services paid $34.6 million in benefits to incarcerated individuals in 2013 and 2014, according to an audit from the agency’s inspector general.

"Medicare generally does not pay for services rendered to incarcerated beneficiaries," the audit states. These include individuals who are "under arrest, incarcerated, imprisoned, escaped from confinement, under supervised release, on medical furlough, required to reside in mental health facilities, required to reside in halfway houses, or required to live under home detention, or confined completely or partially in any way under a penal statute or rule."

Laws governing the agency require it to ensure that payments for Medicare services are not made to incarcerated beneficiaries. The agency is required to take steps to prevent improper payments from occurring and recoup improper payments if they are made.

"Both [Centers for Medicare and Medicaid Services] policies and procedures to ensure that payments are not made for Medicare services rendered to incarcerated beneficiaries and its planned revisions to those policies and procedures, did not comply with Medicare requirements," the audit said.

The agency uses data from the Social Security Administration to determine whether beneficiaries are incarcerated and the period of time for which Medicare will not pay health services for them.

"CMS’s policies and procedures did not allow CMS to detect and recoup improper payments on a post payment basis when CMS’s data systems did not identify a beneficiary as incarcerated at the time that a claim was processed," the audit states.

The audit found that in 2013 and 2014, the agency paid out 63,949 claims totaling $34,588,984 in Medicare payments for 11,786 incarcerated individuals.

"CMS has not taken steps to determine whether any of the $34,588,984 in potentially improper payments made in calendar years 2013 and 2014 should have been denied," the audit said.

Andy Slavitt, acting administrator at the Centers for Medicare and Medicaid Services, said that the agency will attempt to recoup the payments.

"CMS has worked with SSA to identify data that will better allow CMS to comply with its statutory requirements," Slavitt said. "This data will allow CMS to more accurately adjudicate claims for payment."

"While CMS works to obtain this new data from SSA, CMS will reinstate the previously existing post-payment edit to identify and recoup overpayments for services ostensibly provided to beneficiaries when CMS receives SSA data after a claim was processed indicating the beneficiaries were incarcerated during the date of service."