Audit of Medicare Payments to PacifiCare of California for Beneficiaries Classified as Institutionalized

Office of Inspector Seneral DEPARTMENT OF HEALTH & HUMAN SERVICES Memorandum Deputy Inspector General for Audit Services Subject Audit of Medicare Payments to PacifiCare of California for Beneficiaries Classified as Institutionalized in January 1998 (A-09-01 -00056) To Neil Donovan, Director Audit Liaison Staff Centers for Medicare and Medicaid Services This memorandum is to alert you of the issuance on Septeniber 2 1 , 2 0 0 1 , of our final report titled, “Audit of Medicare Payments to PacifiCare of California for Beneficiaries Classified as Institutionalized in January 1998” (A-09-01 -00056). A copy of the report is attached. We suggest that you share this report with the Centers for Medicare and Medicaid Services (CMS)’ components involved in the Medicare managed care organization (MCO) operations, particularly the Center for Health Plans and Policy. Our objective was to determine if enhanced Medicare payments made to PacifiCare of California (PacifiCare) were appropriate for beneficiaries classified as institutionalized in January 1998. We estimate that PacifiCare was overpaid at least $2 million for beneficiaries incorrectly classified. During a previous audit entitled, “Audit of Medicare Payments to Pacificare of California for Beneficiaries Classified as Institutionalized During the Period October 1, 1996 through December 3 1, 1999” (A-09-00-001 04), we determined that PacifiCare had not implemented Operational Policy ...