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The Texas Health and Human Services Commission paid managed-care organizations $5,521,704 in Medicaid capitation payments after beneficiaries died, according to an audit from the Department of Health and Human Services Office of Inspector General.

According to the report, a capitation payment is one that the state makes to a contractor for each beneficiary’s medical services enrolled under the state plan. This payment is made regardless of whether or not the beneficiary receives services in that period.

“The State agency performs monthly reviews of capitation payments and beneficiary eligibility to identify and recover unallowable payments made after a beneficiary’s death,” the report explains. “We compared the dates of death noted in the Texas Medicaid eligibility system or the State Bureau of Vital Statistics records to [Social Security Administration]’s dates of death to confirm whether SSA’s dates of death were correct.”

While auditors found that the Texas Health and Human Services Commission made efforts to identify and recover unallowable payments, they still made roughly $5.5 million capitation payments after beneficiaries had died. The state was able to recover about $3.75 million of those payments, but roughly $1.77 million in payments had not been identified or recovered.

“We determined that 107 of the 174 deceased beneficiaries, or 61 percent, had payments made over one year after their dates of death,” auditors said.

The report said the Texas Commission did not have safeguards in place to make sure that unallowable payments were not made. For example, 116 of 174 deceased beneficiaries, or 66 percent, did not have a date of death recorded in the system.

Auditors recommended that the state agency try to recover the $1.77 million in unallowable payments, strengthen its safeguards for identifying beneficiaries who have died, and end their eligibility so future payments won’t be made. The state agency agreed with the recommendations and said it would ensure capitation payments were stopped. It would also conduct a thorough review of recording death information.