Kansas Department of Health & Environment

Kansas Family Medical Assistance

Manual (KFMAM)

Eligibility Policy - 5/16/2022

08000 >>> 08300

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08300 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.

8310 Types of Claims -

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 - Nonwillful 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.

8320 Claim Not Required -

8321 Claim Not Required - Even though a technical overstatement of eligibility may have occurred, a claim shall not be established in the following instances.

8321.02 - 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.

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 KDHE-DHCF Legal Division for prosecution by the end of the calendar quarter following the calendar quarter in which the overstated eligibility is first identified.

8340 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.

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 KDHE-DHCF Legal Division. The Legal Division 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 Legal Division 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.

8360 Collecting the Claim -

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).

8380 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.

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