February 28, 2014

For the full report see: 

Ongoing Review of MassHealth and Noncustodial Parents' Health Insurance, February 2014  pdf format of Ongoing Review of MassHealth and Noncustodial Parents' Health Insurance
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For the past three years, the Legislature has directed the Office of the Inspector General (“Office”) to study the administration of the Massachusetts Medicaid program (“Medicaid”) by MassHealth, the state entity that runs the program.  This year, pursuant to Section 160 of Chapter 38 of the Acts of 2013, the Office continued its examination of Medicaid and MassHealth’s obligation to ensure that Medicaid is the payer of last resort.

In situations where one parent has custody of a dependent child, the courts will often enter a health insurance order requiring the noncustodial parent to provide health insurance for the child and/or the custodial parent.  Even absent a court order, parents have an obligation to provide health insurance for their children.  Furthermore, under federal regulations, MassHealth has an obligation to identify alternate sources of health insurance for Medicaid recipients, such as a noncustodial parent’s commercial health insurance.

On March 1, 2013, the Office issued its Report Pursuant to Section 182 of Chapter 139 of the Acts of 2012: Assessing MassHealth’s Identification and Recovery of Noncustodial Parents’ Health Insurance.   That report examined two issues important to the financial well being of Medicaid: 

  1. How MassHealth gathers and verifies information from custodial parents regarding the availability of commercial health insurance from noncustodial parents; and
  2. To what extent MassHealth uses that information to obtain commercial health insurance coverage for a Medicaid recipient.

The Office found that MassHealth did not collect enough information about noncustodial parents’ health insurance and did not utilize the information it did collect.

Since last year’s review, MassHealth has made progress in addressing the Office’s concerns.  MassHealth adopted the Office’s recommendations to simplify and add new language to the Medicaid application, and to require custodial parents to answer all of the questions on the Absent Parent/Non-Custodial Parent Form, used to obtain noncustodial parent information.  In addition, MassHealth and the Department of Revenue’s Child Support Enforcement Division (“DOR/CSE”) began a pilot project to determine whether it is cost effective for MassHealth to refer cases to DOR/CSE to determine noncustodial parents’ responsibility to obtain and provide health insurance. 

This year, following up on its 2013 report, the Office reviewed a sample of 500 households for which a custodial parent indicated on the Medicaid application that a court had issued an order requiring a noncustodial parent to provide health insurance for the custodial parent and/or dependent children.  The Office reviewed the available court orders for the sampled households and determined which orders required noncustodial parents to provide Medicaid recipients with health insurance.[1]  The Office also gathered Medicaid payment information for the 500 households from the Office of the State Auditor (“Auditor”),[2] and used the actual payment information to estimate the potential financial impact on the entire Massachusetts Medicaid program.  

The Office also evaluated whether MassHealth could utilize existing resources to identify noncustodial parents who have commercial health insurance that could cover their dependent children and/or the custodial parent.  Finally, the Office reviewed MassHealth’s response to the Office’s 2013 recommendations; this included monitoring MassHealth’s pilot project with DOR/CSE, described above.

The Office found:

  1. MassHealth paid $1.5 million in claims and other health care costs on behalf of the 500 households sampled that a noncustodial parent’s health insurance policy should have covered during hospital fiscal year 2011;[3] 
  2. Extrapolating from those actual claims to all cases in which a recipient reported that a health insurance order exists, MassHealth could potentially be spending as much as $17.5 million annually for health care that a noncustodial parent’s health insurance plan should have covered.  This figure could be even greater if MassHealth pursues health insurance orders for appropriate cases where no order is currently in place; and
  3. MassHealth has access to commercial health insurance information that it could use to identify noncustodial parents who have, or who have access to, employer-sponsored health insurance. 

Based on these findings, the Office makes the following recommendations:

  1. MassHealth should amend its Medicaid application to require identifying information, including Social Security numbers, for custodial and noncustodial parents for all the children included in the application;
  2. MassHealth should use its current data verification and matching processes to independently verify applicants’ answers to questions about noncustodial parents;
  3. MassHealth should use the vendor it currently uses for Medicaid eligibility determinations to identify noncustodial parents with (or with access to) employer-sponsored insurance;
  4. MassHealth and DOR/CSE should formalize the process for MassHealth referrals to DOR/CSE, which can then initiate proceedings against noncustodial parents to obtain health insurance coverage for the dependent child and/or custodial parent;
  5. MassHealth should continue the process of simplifying and clarifying the Medicaid application form; and
  6. The Legislature should consider funding a data-match system that would allow MassHealth and DOR/CSE to easily identify when a court orders a noncustodial parent to provide health insurance to a custodial parent and/or dependent children.

The Office does not suggest that any current recipients are ineligible for Medicaid.  Even when a recipient is added to a noncustodial parent’s health insurance, it is likely that the recipient would maintain Medicaid as a secondary insurance.  The recommendations above, however, could make a positive financial impact on MassHealth and would help ensure that Medicaid is the payor of last resort.

[1] The Office appreciates the assistance of the County Registrars of Probate and their staffs, as well as the staff of the Administrative Office of the Probate and Family Court, in identifying cases and locating court records.
[2] The Office appreciates the Auditor’s assistance in assembling and providing this information, which was essential to the Office’s claims analysis.
[3] Hospital fiscal year 2011 ran from October 1, 2010 to September 30, 2011.