Review of LDH Medicaid Eligibility Processes Finds Areas That Could Be Improved

An evaluation of where the Louisiana Department of Health (LDH) might be able to strengthen its processes for determining the eligibility of Medicaid recipients found two areas of concern: the reasonable compatibility standard and the use of federal income tax data.

Federal law requires states to compare various electronic data sources to income information provided by Medicaid applicants or beneficiaries to judge whether an individual’s self-reported income and the electronic data are reasonably compatible. Each state is allowed to set its own standard for the acceptable level of variance between the numbers.

LDH increased its standard from 10 percent to 25 percent in 2014, which is higher than any other state. However, the Department plans to lower its reasonable compatibility standard to 10 percent after the implementation of its new eligibility and enrollment system has stabilized.

Auditors noted that while 30 other states use federal and/or state income tax data to make Medicaid eligibility determinations, LDH does not use either. Department officials estimated staff would need to spend about 4,500 hours to update the systems necessary to accommodate the federal data, and the Office of Technology Supports would need to spend an additional 1,500 hours to store and secure the data. Using federal income tax data would give LDH a more complete picture of the jobs held and the wages earned by Medicaid applicants and recipients, and give it the ability to look at trends in an individual’s employment.

An analysis done by LDR at the request of the Task Force on Coordination of Medicaid Fraud Detection and Prevention Measures found that 83,850 (25 percent) of the 335,400 adult Medicaid recipients who filed a tax return had income reported to Medicaid that differed by $20,000 from the amount on their state tax return. The $20,000 difference in income amounts could be higher or lower, LDR’s analysis showed. When the analysis results were expanded to those whose tax return did not match within $10,000, 207,948 (62 percent) did not match.

LDR also said multiple individuals had income greater than $100,000 on their tax returns, but the majority of these were lump sum payments that would not affect the eligibility of the Medicaid recipient. However, without access to state income tax data, the auditor’s office cannot verify the accuracy of the information.