United States Senate Committee on Finance, Subcommittee on Health Care 
 
 
 
 
 
 
Medicaid: Compliance with Eligibility Requirements 
   
Testimony of: 
 
Brian P. Ritchie 
Assistant Inspector General for Audit Services 
Office of Inspector General 
U.S. Department of Health and Human Services  
 
 
 
 
 
 
 
 
October 30, 2019 
2:00 p.m. 
215 Dirksen Senate Office Building 
 
 
   
Testimony of: Brian P. Ritchie 
Assistant Inspector General for Audit Services 
U.S. Department of Health and Human Services, Office of Inspector General 
 
Good morning, Chairman Toomey, Ranking Member Stabenow, and distinguished Members of 
the committee.  I am Brian P. Ritchie, Assistant Inspector General for Audit Services, U.S. 
Department of Health and Human Services.  Thank you for your longstanding commitment to 
ensuring that the Medicaid programs 67 million beneficiaries are well served and the 
taxpayers approximately $600 billion investment is well spent.  I appreciate the opportunity to 
discuss the Office of Inspector Generals (OIGs) work on Medicaid beneficiary eligibility 
determinations and what more can be done to secure the future of this important program.    
 
Introduction 
 
Medicaid spending represents onesixth of the national healthcare economy, and Medicaid 
serves more people, including some of the Nations most vulnerable individuals, than any other 
Federal healthcare program.  In 2010, Congress enacted the Patient Protection and Affordable 
Care Act (P.L. No 111-148) and the Health Care and Education Reconciliation Act (P.L. No. 111-
152), collectively known as the Affordable Care Act (ACA).  The ACA mandated changes to 
Medicaid eligibility rules, such as calculating income based on modified adjusted gross income, 
a measure of income that is based on Internal Revenue Service rules.  The ACA also provided 
States with the option to expand Medicaid coverage to low-income adults without dependent 
children and established a higher Federal reimbursement rate for services provided to these 
newly eligible beneficiaries.   
 
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Senate Committee on Finance, Subcommittee on Health Care 
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Historically, only certain groups of individuals who had incomes and assets below certain 
thresholds were eligible for Medicaid.  These traditional coverage groups include low-income 
parents and other caretaker relatives with dependent children, pregnant women, people with 
disabilities, children, and the elderly.  Although many newly eligible beneficiaries applied for 
Medicaid coverage for the first time after the passage of the ACA, many people who applied for 
coverage qualified for these traditional coverage groups.  We refer to these individuals as non-
newly eligible beneficiaries.  
 
OIG shares the Committees commitment to protecting Medicaid from fraud, waste, and abuse 
and has an extensive body of oversight work in this area.  A strong program integrity strategy 
starts with prevention.  Correctly determining beneficiary eligibility prevents Medicaid from 
making improper payments for people who are not eligible for the program. 
 
For the past several years, OIG has conducted several audits of States Medicaid eligibility 
determinations under the Medicaid eligibility rules changed by the ACA.  To date, OIG has 
issued seven audit reports of four States: four on newly eligible beneficiaries and three on non-
newly eligible beneficiaries.   
 
We found that these States made payments on behalf of beneficiaries who were not eligible, or 
who may not have been eligible, for Medicaid.  We also identified instances where States 
received higher Federal reimbursement rates than appropriate on behalf of beneficiaries who 
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were eligible for a traditional eligibility group; but were incorrectly enrolled as newly eligible.  
These four States did not comply with requirements to verify applicants income, citizenship, 
identity, and other eligibility criteria.  We estimated that almost $6.3 billion in Federal 
payments were associated with these incorrect, or potentially incorrect, eligibility 
determinations.    
 
My testimony today details this work, which was done in California, Colorado, Kentucky, and 
New York.  I will discuss the types of errors, the estimated number of beneficiaries affected, 
and the associated amount of dollars impacted for both newly eligible and non-newly eligible 
groups; as well as how both human and system errors contributed to these payments.  Our 
audit period for California, Kentucky, and New York was October 1, 2014, to March 31, 2015; 
and our audit period for Colorado was January 1, 2014, to September 30, 2015.  We have 
additional ongoing audits in Louisiana and Ohio assessing Medicaid eligibility determinations for 
newly eligible beneficiaries, as well as an audit in Colorado for non-newly eligible beneficiaries.  
These reports will be issued as they are completed. 
 
States do not always correctly determine Medicaid eligibility for both newly eligible and non-
newly eligible beneficiaries 
 
Correctly determining beneficiary eligibility is vital to the accuracy of Medicaid payments.  To 
ensure that Medicaid makes payments on behalf of the right beneficiary, it is critical to 
determine whether the beneficiary receiving services is actually eligible for Medicaid, as well as 
for the specific eligibility category the beneficiary has been placed in.  The seven recent OIG 
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audits of four States estimated that almost $6.3 billion in Federal Medicaid payments has been 
made on behalf of beneficiaries who are ineligible or who may have been ineligible for 
Medicaid or their assigned eligibility category.  Beneficiaries that States determined to be newly 
eligible accounted for almost $1.3 billion of these payments, and the remaining $5 billion was 
for beneficiaries that States determined to meet one of the non-newly eligible Medicaid 
categories. 
 
Methodology 
 
For each of our seven audits, we reviewed the Medicaid eligibility determinations made by the 
State Medicaid agency for a random sample of beneficiaries, classified as newly eligible or non-
newly eligible depending on the audit, to determine whether the State agency made payments 
on behalf of beneficiaries who did not meet Federal and State eligibility requirements. 
  
For each sampled beneficiary, we obtained, where possible, application data and 
documentation used to support the State agencys eligibility determination.  Reviewing that 
data and documentation, we determined whether the State agency followed Federal and State 
requirements and its own procedures to verify eligibility information when making the eligibility 
determinations. In instances where the eligibility documentation, data, or the States 
determination was unclear, we followed-up with State agency officials.   
 
If we were able to determine that a beneficiary was not eligible for Medicaid based on the 
application data and documentation, we refer to the beneficiary as ineligible.  As an example, a 
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sampled beneficiary attested to having income, supported by documentation, which was above 
the Medicaid income limit.  In this example, the State agency incorrectly determined the 
beneficiary to be eligible and incorrectly claimed Federal reimbursement for payments made on 
behalf the ineligible beneficiary.  We also refer to a beneficiary as ineligible if the beneficiary 
was eligible for a traditional coverage group but the State incorrectly determined that the 
beneficiary was newly eligible.  As an example, a sampled beneficiary attested to having income 
that was below 100 percent of the Federal poverty level.  The beneficiary qualified for Medicaid 
under a traditional coverage group but was not newly eligible.  As result, the State agency 
incorrectly received a higher Federal reimbursement rate for this beneficiary.  In this type of 
case, we used the difference between the higher Federal reimbursement rate for the newly 
eligible population and the lesser reimbursement rate for the traditional population when 
determining the amount of Federal reimbursement that was incorrectly claimed.   
 
If we were unable to conclusively determine eligibility because the State agency did not have 
sufficient supporting documentation or did not verify eligibility in accordance with Federal and 
State requirements, we refer to the beneficiary as potentially ineligible.  As an example, a 
sampled beneficiary had not had a Medicaid eligibility redetermination since 2011.  There were 
no case notes or other documentation between November 2011 and April 2017, and the State 
agency could not explain why no annual redetermination had been performed, as required, 
since 2011.  For this type of situation, the State agency may have claimed Federal 
reimbursement for an ineligible beneficiary.   
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Senate Committee on Finance, Subcommittee on Health Care 
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Based on our sample results in each audit, we estimated the total number of ineligible 
beneficiaries and beneficiaries who were potentially ineligible during our audit period; we also 
estimated the total amount of Federal Medicaid reimbursement made on behalf of ineligible 
beneficiaries and potentially ineligible beneficiaries during our audit period.   
 
Results from four audits on Medicaid eligibility for newly eligible beneficiaries 
 
OIG reviewed whether certain States correctly determined eligibility, following changes made 
by the ACA to Medicaid eligibility rules.   
 
OIG reviews of Medicaid eligibility determinations by California, New York, Colorado, and 
Kentucky revealed that these States did not always comply with Federal and State requirements 
to verify applicants income, citizenship, identity, and other eligibility criteria.  Generally, errors 
associated with newly eligible beneficiary determinations were due to the State agencies not 
properly verifying income or citizenship requirements; or the beneficiary being eligible under a 
different Medicaid eligibility group.  In total, across these four States, OIG estimated that more 
than $721 million in Federal Medicaid payments were made on behalf of 498,434 ineligible 
beneficiaries. More than $534 million in Federal Medicaid payments were made on behalf of 
127,020 beneficiaries who may have been ineligible.  In total, that is almost $1.3 billion in 
Federal Medicaid payments made for more than 625,000 beneficiaries that were ineligible or 
potentially ineligible.   
 
 
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Senate Committee on Finance, Subcommittee on Health Care 
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Both human and system errors contributed to these payments.  As an example, human error 
occurs when State agency officials making eligibility determinations do not correctly act on 
known information.  We identified instances where State agency officials incorrectly 
determined beneficiaries to be newly eligible even though the beneficiaries application data or 
supporting documentation clearly demonstrated that their household income amounts were 
above the allowed maximum threshold of 138 percent of the Federal poverty level.   
 
We found that some enrollment data systems were lacking the ability to (1) deny or terminate 
ineligible beneficiaries; (2) properly redetermine eligibility when a beneficiary aged out of an 
eligibility group; (3) maintain records, in accordance with Federal requirements, relating to 
eligibility determinations and verifications; and (4) retrieve and use information from other 
Government databases, such as those managed by the Social Security Administration and 
Department of Homeland Security.   For example, we identified instances where a State agency 
electronically verified that a change in beneficiary income was above the allowable threshold 
but the system continued to make payments on behalf of the beneficiary.  This occurred 
because the State systems did not have the functionality to discontinue Medicaid for a 
beneficiary who became ineligible due to a change in income after a previous determination 
had already been made. 
 
Results from three audits on Medicaid eligibility for non-newly eligible beneficiaries 
 
OIG also reviewed whether certain States were correctly determining eligibility for non-newly 
eligible beneficiaries in accordance with Federal and State requirements.  Errors associated with 
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non-newly eligible beneficiaries were generally due to beneficiaries not meeting income 
requirements (including not submitting required tax information forms) or specific coverage 
group requirements.  Additionally, there were a few errors due to beneficiaries not meeting 
citizenship and residency requirements.  As a result of States incorrectly determining 
beneficiaries eligibility, payments were made on behalf of those beneficiaries that were 
ineligible or potentially ineligible, resulting in improper and potentially improper costs to the 
Federal Government.   
 
OIG reviews of Medicaid eligibility determinations by California, New York, and Kentucky 
revealed that these States did not always comply with Federal and State requirements to verify 
applicants eligibility.  In total, across these three States, OIG estimated that more than 
$1.05 billion in Federal Medicaid payments were made on behalf of 1,186,635 ineligible 
beneficiaries. More than $3.98 billion in Federal Medicaid payments were made on behalf of 
3,788,248 beneficiaries who may have been ineligible.  In total, more than $5 billion in Federal 
Medicaid payments were made for more than 4.9 million beneficiaries who were ineligible or 
potentially ineligible.   
 
As with OIGs newly eligible audits, the non-newly eligible audits showed that both human and 
system errors contributed to these payments; specifically, (1) State agency staff did not 
consider all relevant information when making determinations, (2) caseworkers made errors, 
(3) system delays occurred during a system conversion, and (4) State agencies did not always 
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maintain documentation to support their eligibility determinations. 
 
Comparison of newly eligible and non-newly eligible errors 
 
In the three States where we have completed audits of both newly eligible and non-newly 
eligible beneficiary eligibility determinations, we have found eligibility determination errors in 
both groups.  Kentucky and New York had relatively comparable error rates between both the 
two beneficiary groups, whereas California had a higher error rate for the non-newly eligible 
group.  (See chart below.) 
Medicaid Eligibility Error Rates:
Newly vs. Non-Newly Eligible Populations
60.00% 60.00%
50.00% 50.00%
40.00% 40.00%
30.00% 30.00%
43.84%
4.19%
20.00% 20.00%
11.55%
10.00% 19.40% 2200..7711%% 10.00%
11.35%
7.44% 7.76% 7.17%
0.00% 0.00%
California Kentucky New York
Newly Eligible Population - Potentially Ineligible Non-Newly Eligible Population - Potentially Ineligible
Newly Eligible Population - Ineligible Non-Newly Eligible Population - Ineligible
 
 
Conclusion 
 
Correct determination of beneficiary eligibility is vital to the accuracy of Medicaid payments.  
Seven recent OIG audits of four States estimated that almost $6.3 billion in Federal Medicaid 
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payments has been made on behalf of beneficiaries who were ineligible or who may have been 
ineligible.  These include inaccurate eligibility determinations for both the newly eligible and 
the non-newly eligible beneficiary groups.  (See Attachment A listing information on our seven 
reports.)   
 
To address the concerns that we identified, we recommended that these States ensure that 
enrollment data systems be able to verify eligibility criteria, develop and implement written 
policies and procedures to address vulnerabilities, and undertake redeterminations as 
appropriate.   
 
OIG will continue to prioritize Medicaid oversight to prevent fraud, waste, and abuse and take 
appropriate action when they occur.  We are committed to ensuring that Medicaid pays the 
right amount, to the right provider, for the right service, on behalf of the right beneficiary.   
 
Thank you for your ongoing leadership and for affording me the opportunity to testify on this 
important topic. 
   
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Attachment A 
 
 
   
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Senate Committee on Finance, Subcommittee on Health Care 
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Report  Date  Ineligible  Potentially Ineligible 
Report Title 
Number  Issued  Beneficiaries  Dollars  Beneficiaries  Dollars 
Colorado Did Not 
Correctly Determine 
A-07-16- August 
Medicaid Eligibility for  85,085  $66,525,688  13,372  $26,797,483 
04228 2019 
Some Newly Enrolled   
Beneficiaries  
New York Did Not 
Correctly Determine 
A-02-16-
Medicaid Eligibility for  July 2019  383,893  $520,295,792  618,057  $1,297,308,200 
01005
Some Non-Newly   
Eligible Beneficiaries 
California Made 
Medicaid Payments on 
Behalf of Non-Newly 
A-09-17- December 
Eligible Beneficiaries  802,742  $536,039,109  3,100,260  $2,616,843,793 
02002 2018 
Who Did Not Meet   
Federal and State 
Requirements 
California Made 
Medicaid Payments on 
Behalf of Newly 
A-09-16- February 
Eligible Beneficiaries  366,078  $628,838,417  79,055  $402,358,529 
02023 2018 
Who Did Not Meet   
Federal and State 
Requirements 
New York Did Not 
Correctly Determine 
A-02-15- January 
Medicaid Eligibility for  47,271  $26,221,803  0  - 
01015 2018 
Some Newly Enrolled   
Beneficiaries 
Kentucky Did Not 
Always Perform 
Medicaid Eligibility 
Determinations for 
A-04-16- August 
Non-Newly Eligible  0  -  69,931  $72,800,000 
08047 2017 
Beneficiaries in   
Accordance With 
Federal and State 
Requirements  
Kentucky Did Not 
Correctly Determine 
A-04-15-
Medicaid Eligibility for  May 2017  0  -  34,593  $105,075,377 
08044
Some Newly Enrolled   
Beneficiaries 
Totals        1,685,069  $1,777,920,809  3,915,268  $4,521,183,382 
      Beneficiaries  Dollars     
Grand Totals        5,600,337  $6,299,104,191     
 
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Senate Committee on Finance, Subcommittee on Health Care 
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