Kansas Family Medical Assistance
Manual (KFMAM)
Eligibility Policy - 4/18/2024
0700008000: Incorrect Coverage - Prevention of incorrect benefits is the responsibility of every staff member, contracted staff member, and client. Incorrect coverage includes both understated and overstated eligibility.
08100 Understated Eligibility -
8110 Understated Eligibility - Understated eligibility occurs when the client does not receive the level or extent of coverage they were entitled to receive. Eligibility staff shall document how the understated eligibility was determined and the reason correction was required. All understated eligibility must be promptly resolved.
8111 Situations Requiring Correction of Understated Eligibility - Understatement of eligibility shall be corrected promptly using the program policies in effect for the month(s) in which the error occurred.
The following are situations in which a correction of understated eligibility is required.
8111.01 - The understated eligibility was the result of agency error;
8111.02 - The agency failed to give the household sufficient time to verify information that resulted in the understated eligibility;
8111.03 - The agency failed to take timely action on reported changes that resulted in the understated eligibility;
8111.04 - There is a fair hearing decision in favor of the household;
8111.05 - Case correction is ordered as a result of a class action lawsuit or other legal proceeding.
8111.06 - A recipient may also be entitled to correction of understated eligibility where a change has been reported and verified timely but the future month has already been authorized due to system cutoff date.
8112 Timely Billing - There may be instances where the medical provider is outside of the timely billing time frame to receive payment for services and the client has already privately paid the bill. The provider may be unwilling to reimburse the client since they will not be able to receive payment from the state. In those instances, the client shall be reimbursed by the state for the verified amounts paid to the provider, up to the allowed rate for the service. There is no other provision for correcting the understated eligibility.
8113 Situations Not Requiring Correction of Understated Eligibility - Even though a technical understatement of eligibility may have occurred, an eligibility correction is not required in the following situations:
8113.01 - The household failed to report a change which would have resulted in an increase in coverage had the change been timely reported.
8113.02 - The household failed to timely provide information necessary to make a change.
8210 Time Frame - Once it has been determined that an understated eligibility has occurred, the amount of the underpayment, if any, shall be calculated and the case corrected as soon as possible but no later than 20 calendar days after the worker identifies that a correction is necessary.
8211 Erroneous Denial - When the individual has no coverage due to an erroneous denial, an understatement of eligibility has occurred. For example, the application was incorrectly denied for failure to provide information when the information had been timely received. The first month, or date for date-specific programs (CHIP), that the individual would otherwise be eligible shall be the first month coverage was not received as a result of the erroneous denial.
8212 Erroneous Termination - The month the discontinuance initially occurred shall be the first month coverage was not received as a result of the erroneous discontinuance.
08300 Overstated Eligibility and Claims -
8300 Compromising Claims - The amount of the claim determined by the agency may be reduced in accordance with a court order. The amount determined to be uncollectable shall be the compromised amount of the claim. The original amount of the claim minus the compromised amount shall be the amount then subject to collection.
8311 Types of Claims - There are three types of claims. The type of claim will determine action to be taken in recovery efforts.
8312 Agency Error - Instances of agency error which may result in a claim include, but are not limited to, the following:
8312.01 - Prompt action was not taken on a change reported by the household;
8312.02 - Household income was incorrectly computed;
8312.03 - Coverage continued after the review period expired without benefit of a required redetermination of eligibility; or
8312.04 - Policy was misapplied.
8313 Client Error - Instances of client error which may result in a claim include, but are not limited to, the following:
8313.01 - Non-willful withholding of information from a one-time failure on the part of a client to report a change timely (see 7100), which affects eligibility when:
(1) - The worker has reason to believe that the client did not understand his responsibility; and
(2) - There was no oral or written misstatement by the client, or
8313.02 - Willful withholding of information such as:
(1) - Misstatement (oral or written) made by the client in response to oral or written questions from the agency;
(2) - Failure by the client to report a change timely (see 7100), which affects eligibility;
(3) - Failure by the client to report the receipt of a medical coverage payment which he/she knows, or should know, is incorrect;
8314 Fraud Error - A fraudulent error occurs when the client intentionally:
(1) Makes false or misleading statement, misrepresentation, concealment, or withholding of facts for the purpose of improperly establishing or maintaining eligibility; or
(2) Misuses medical benefits, including selling, sharing or trading the medical I.D. number for money or other remuneration, signing for services that were not provided to the recipient, or other misuse as determined by the agency.
An individual shall be considered to have committed fraud when the individual has been legally determined to have committed fraud through a court of appropriate jurisdiction. There is no other method of establishing a fraud claim.
A finding of fraud under these provisions may result in criminal penalty, including fines and imprisonment, but may only result in a period of ineligibility if so ordered by the court. Fraud error status is not established if the court’s resolution to the willful client error is to place the individual on diversion.
8321 Claim Not Required - Even though a technical overstatement of eligibility may have occurred, a claim shall not be established in the following instances.
8321.01 - The agency failed to ensure the application used to approve eligibility was signed.
8321.02 - Coverage granted in accordance with the treatment of income policies or the inability of the agency to act on available information due solely to system cutoff dates. Assistance provided under these circumstances does not constitute incorrect coverage.
8321.03 - Overstatement of eligibility that occurred as the result of the household failing to report a change in circumstances they were not required to report.
8321.04 - The overstated eligibility was the result of agency error and the recipient did not receive any medical services within the month, even if capitation payments have been made on their benefit.
8321.05 - An eligibility error related to citizenship or alien status is not considered overstated eligibility when:
a. Eligibility was based on verification of satisfactory immigration status by the Immigration and Naturalization Service (INS).
b. Eligibility was approved to meet timely processing guidelines, but no INS response to a request for verification of immigration status has been received.
c. Eligibility was approved to meet timely processing guidelines, but the reasonable opportunity period for alien applicants to provide documentation of their alien status had not expired.
8321.06 - A previously met spenddown is increased within the base period due to a change in income and the new spenddown amount is not met.
08330 Overstated Eligibility and Claims - Overstated eligibility occurs when an individual receives more coverage than they are entitled to receive. Eligibility staff shall document how the overstated eligibility was determined and the reason case correction was required. All overstated eligibility must be promptly resolved.
8330 Time Frames - The date of discovery for purposes of tracking timely claims shall be the date the case is first identified as potentially having overstated eligibility by the worker, quality assurance, or by other means.
Failure to establish a claim within the time frames identified below does not negate the responsibility of the agency to establish or collect on the claim, or of the client to repay any valid overstated eligibility.
8331 - For agency and client errors, the agency is required to prepare the claim and initiate recovery or attempt to initiate recovery or attempt to initiate recovery by the end of the calendar quarter in which the overstated eligibility is first identified.
8332 - For fraud errors, the agency is required to prepare the claim and initiate a referral to the Office of the Medicaid Inspector General for prosecution by the end of the calendar quarter following the calendar quarter in which the overstated eligibility is first identified.
08340 Computing the Claim - In calculating the amount of the claim, the agency shall determine the point at which the correct information should have been reported and acted upon timely allowing for timely notice as appropriate. From that point, the correct coverage shall then be compared against the actual coverage received to determine the difference. The difference in the coverage received versus the coverage entitled to receive is the amount of the claim. The actual amount of the claim shall be:
8341 No Eligibility - For instances where there was no eligibility, the claim is calculated based on whether or not the coverage was provided as managed care or fee for service.
a. Managed Care – The amount of the capitated payment made each month,
b. Fee for Service – The amount of the paid claims.
8342 CHIP Premiums - For instances related to CHIP premiums, the claim is the amount of the understated premium.
8343 Spenddowns - For Spenddown, the claim is the difference between the capitated payment for an unmet spenddown versus a met spenddown.
08350 Establishing Claims and Repayment Agreements -
8351 Establishing Claims and Repayment Agreements - Once the amount of the overstated eligibility has been determined, a claim in that amount shall be established. The type of the claim (Agency Error, Client Error, or Fraud Error) shall determine which action to take next.
1. Agency Error or Client Error – For purposes of establishing a claim, there is no difference between an Agency Error and a Client Error. Even though the root cause of the error differs, the collection action is the same.
2. Fraud Error – A fraud error can only be established through a finding by a court of appropriate jurisdiction. Therefore, additional steps are required before collection action may commence.
A suspected fraud error shall be referred to the Office of the Medicaid Inspector General. The Office of the Medicaid Inspector General will make a determination as to whether or not to pursue the case in court. If a decision is made not to pursue, the claim will be labeled as Client Error and processed as such. If the claim is accepted by the Office of the Medicaid Inspector General for prosecution, no further action shall be taken until a decision by the court has been rendered.
Individuals should not receive notice that the case is under investigation for fraud. Client inquiries concerning the possible fraud investigation should be responded with a statement that the case is “under administrative review.” No additional information should be provided.
Collection action for an Agency Error or Client Error claim shall be initiated by sending the household a repayment agreement. No action shall be taken on a Fraud Error claim until the court has rendered a decision.
The repayment agreement shall include the amount of the claim and the reason the overstated eligibility has occurred. The household is given 10 days to respond to the repayment agreement.
8361 Collecting Claims - Once the household has been notified of the overstatement of eligibility and repayment requested, collection action shall be initiated. Recovery may only be initiated if there are countable resources that are currently available. This includes any resources counted toward the allowable resource limit outlined in 5130.
8362 Methods of Collection - Agency Error and Client Error claims shall be collected in one of the following ways:
8362.01 - If the household responds with a payment on the claim, the payment shall be accepted according to established procedures. If the claim is paid in full, no further collection action is required. If the claim is only partially paid, further action is necessary to collect the remaining amount of the claim.
8362.02 - If the household responds with a promise to make payments, the payments shall be accepted according to established procedures. If the payments continue or the claim is paid in full, no further collection action is required. If the household fails to begin making payments or to continue making payments, further action is necessary to collect the remaining amount of the claim.
8362.03 - If the household is unable or unwilling to make a voluntary, a special spenddown shall be imposed. The special spenddown shall be created in an amount equal to the amount to be recovered and shall be considered in the current eligibility base period.
Medical expenses may be allowed against the special spenddown requirements if the expense is verified, medically necessary, and reported to the agency on at least a 6-month basis. Medical expenses shall be counted against the regular spenddown (if any) and then the special spenddown.
A special spenddown may be used for both automatic and determined eligibles. There is no requirement that the client have a regular spenddown. However, a special spenddown shall not be used in the Medicaid poverty level or CHIP programs.
If a special spenddown is imposed on a regular spenddown, the amount of both spenddowns must be met before the overstated eligibility claim is considered satisfied. If unmet, the special spenddown may extend over more than one base period.
8363 Fraud Claims - A claim that has been determined to be fraudulent through a court of appropriate jurisdiction shall be collected in the same manner as other types of claims. A repayment agreement shall be sent to the household as indicated in 8350.
1. Method of Collection – If the court has not imposed the method of collection, the provisions of 8350 apply. If the court has established how the claim is to be repaid, the agency shall follow that collection method.
2. Disqualification Penalty – An individual who has been convicted of medical assistance fraud under 42 U.S.C. Sec. 1320a-7b shall be ineligible for medical assistance for one year from the date of conviction. Convictions under state law do not carry a disqualification period.
8364 Claims Discharged through Bankruptcy - If the agency becomes aware of any bankruptcy proceedings concerning a household with an uncollected medical assistance claim, KDHE-DHCF Legal Division shall be notified immediately. Legal Division will provide notification when the bankruptcy action is complete. Collection action should then be initiated, resumed, or terminated in accordance with the outcome of the final bankruptcy action.
8370 Terminating Claims - An uncollected claim shall be terminated when either of the following occur:
1. The only remaining household member responsible for the claim is deceased; or
2. The claim has been discharged through a bankruptcy proceeding (see 8364).
08400 Determination of Fraud - A fraud error can only be established through a finding by a court of appropriate jurisdiction. Therefore, additional steps are required before collection action may commence.
A suspected fraud error shall be referred to the Office of the Medicaid Inspector General. The Office of the Medicaid Inspector General will make a determination as to whether or not to pursue the case in court. If a decision is made not to pursue, the claim will be labeled as Client Error and processed as such. If the claim is accepted by the Office of the Medicaid Inspector General for prosecution, no further action shall be taken until a decision by the court has been rendered.
Individuals should not receive notice that the case is under investigation for fraud. Client inquiries concerning possible fraud investigation should be responded with a statement that the case is “under administrative review”. No additional information should be provided.
8410 Definition of Fraud - A fraudulent error occurs when the client intentionally:
1. Makes false or misleading statement, misrepresentation, concealment, or withholding of facts for the purpose of improperly establishing or maintaining eligibility; or
2. Misuses medical benefits, including selling, sharing, or trading the medical I.D. number for money or other renumeration, signing for services that were not provided to the recipient, or other misuse as determined by the agency.
An individual shall be considered to have committed fraud when the individual has been legally determined to have committed fraud through a court of appropriate jurisdiction. There is no other method of establishing a fraud claim.
A finding of fraud under these provisions may result in criminal penalty, including fines and imprisonment, but may only result in a period of ineligibility if so ordered by the court (see 8363). Fraud error status is not established if the court’s resolution to the willful client error is to place the individual on diversion.
8420 Medical Assistance Penalties - An individual who has been convicted of medical assistance fraud under 42 U.S.C. Sec. 1320a-7b shall be ineligible for medical assistance for one year from the date of conviction. Convictions under state law do not carry a disqualification period.
Pregnant women who are sanctioned remain eligible for medical coverage when continuous eligibility provisions apply. See 2300.
8430 Fraud Referral - Before a referral to the Office of the Medicaid Inspector General for prosecution of suspected fraud can be made, it is necessary for the agency to first determine the amount (if any) of the alleged fraudulent overstated eligibility by following the procedures outlined in 8340. The same act of alleged fraud repeated over a period of time shall not be separated so that separate penalties can be imposed. If it is decided that a case will not be prosecuted for fraud, then the overpayment shall be handled as a client overpayment as outlined in 8313. The burden of proving fraud is on the agency. All referrals shall be reviewed by the Eligibility Supervisor and Program Integrity Specialist prior to the referral being sent to the Office of the Medicaid Inspector General.
There is no minimum amount of alleged fraudulent overstated eligibility required to initiate a fraud referral.
Claims (individual program or combined) of less than $1001 are to be referred to an Administrative Disqualification Hearing.
Claims (individual program or combined) of $1001 and over are to be referred to the fraud unit who will determine the appropriate course of action.
8480 Imposition of Disqualification Penalties -
8481 Applying the Disqualification Penalty - Once the court has found the individual to be guilty of fraud the disqualification penalty shall be applied as follows:
8481.01 - Individuals found guilty of civil fraud or criminal fraud by a court of appropriate jurisdiction shall be disqualified for a period of one year. If the court fails to impose a disqualification period, a disqualification period shall be imposed in accordance with 8420, unless contrary to the court order. If a disqualification is ordered, but a date for initiating the disqualification period is not specified, the disqualification period for currently eligible individuals shall be initiated within 45 days of the date the disqualification was ordered. The disqualification period is initiated by the sending of the notice. The notice must be sent within 45 days, with the disqualification starting the month following the month in which the notice is sent (or should have been sent in cases where the agency does not act timely to disqualify the individual). For fraudulent individuals not currently eligible, disqualification periods shall be initiated by notifying the household of the fraud and the specific time period established for disqualification. The disqualification period for individuals not currently eligible shall also be established within 45 days of the date the disqualification was ordered, or within 45 days of the date the court found the individual guilty of fraud as described above. The eligibility worker is responsible for notifying the fraudulent individual of the disqualification period and the effect on the remaining household members, if any.
8481.02 - Once a disqualification period has been imposed against the fraudulent individual, the period of disqualification shall be initiated and shall continue uninterrupted until completed regardless of the eligibility of the fraudulent individual's household. The fraudulent individual's household shall continue to be responsible for repayment of the fraudulent overstated eligibility regardless of its eligibility for program benefits.
8481.03 - If the agency fails to act timely to disqualify the fraudulent individual, the individual can only be disqualified to the extent that the disqualification period has not elapsed. An agency error claim SHALL NOT be established for any overstated eligibility resulting from the fraudulent individual participating in the program when he/she should have been disqualified.
8510 Fraud Recovery - The remaining household members, if any, shall begin repayment during the period of disqualification imposed by the court. The repayment agreement shall inform the remaining household members of:
8510.02 - The period of time the overstated eligibility covers;
8510.03 - The repayment methods that are available.
8511 - The household shall have 10 days from the date the notice is mailed to return the completed repayment agreement. If the household fails to return the completed repayment agreement in the time allotted, recovery action shall be imposed in accordance with 8360, if repayment is not otherwise established by a court. In addition, if the household agrees to make repayment but fails to do so, recovery action shall be automatically imposed and adequate notice only is required.
8520 Reversed Disqualifications - In cases where the determination of fraud is reversed by a court of appropriate jurisdiction, the individual shall be reinstated if otherwise eligible. Understated eligibility shall promptly be corrected as a result of the disqualification.