22-01 Version of 22.2 Overpayments

22.2.1 Overpayments Introduction

An overpayment occurs when:

Medicaid benefits are incorrectly paid for a person who was not eligible for them,
A MAPPMedicaid Purchase Plan member should have paid a higher premium, or
A long-term care member did not pay as much as they should have for their nursing home patient liability or waiver cost share

The dollar amount of an overpayment may not exceed the amount of the Medicaid benefits incorrectly provided, the amount of underpaid premiums, or the patient liability or cost share, whichever is less.

Overpayments can only be recovered if the member received a benefit they weren't entitled to receive, more benefits than they were entitled to receive, or a lower premium, patient liability, or cost share than they should have been charged because the member did one or more of the following:

Provided incorrect or incomplete information at application
Provided incorrect or incomplete information at renewal
Failed to report a change they were required to report

Overpayments not caused by the member, which includes overpayments caused by the agency, system issues, or timely notice requirements, may not be recovered, although they may be subject to estate recovery (see Section 22.1 Estate Recovery).

Use the best available information to determine whether an overpayment exists in situations where verification has been requested but has not been provided (see Section 20.1.4 General Rules for more information on best available information).

22.2.1.1 Recoverable Overpayments

22.2.1.1.1 Date of Discovery and Look back Period

The date of discovery of the overpayment is the date the worker creates the overpayment claim in the system and an overpayment notice is triggered to be sent to the member.

Most recoverable health care overpayments will have a look back period of 12 months prior to the date of discovery. The look back period for health care overpayments based on fraud convictions, a signed Intentional Health Care Program Violation Acknowledgement form, or a member receiving duplicate benefits is limited to six years prior to the date of discovery.

Duplicate benefits are defined as situations in which a member moved out of state, enrolled in another state’s Medicaid program, and received services under BadgerCare Plus or Wisconsin Medicaid more than two months after the move occurred.

Example 1:

Max applied for MAPP and was determined eligible starting April 1, 2022. In October 2022, Max started a new job but did not report this to his IM agency. Max did not complete his renewal, so his MAPP ended on March 31, 2023. In August 2024, the IM agency discovered his job that was not reported and that his income was over the income limit for MAPP. However, the IM agency found that Max misunderstood the change reporting requirements and there was no intention to commit fraud. There is no fraud conviction, and Max did not sign the Intentional Health Care Program Violation Acknowledgement form. The 12-month look back period applies in this situation. Since the overpayment period is more than 12 months prior to the date of discovery, the overpayment is not recoverable.

22.2.1.1.2 Overpayment Claims Minimum Threshold

The minimum threshold for each claim is $500 for recoverable health care overpayments. If the overpaid amount is less than $500, no claim will be established unless it meets one of the following criteria:

Health care overpayments based on fraud convictions or a signed Intentional Health Care Program Violation Acknowledgement form
Overpayments related to a member receiving duplicate benefits

Example 2:

John was determined eligible for SSI-Related Medicaid starting January 1. John moved to South Carolina on July 20. Since John was no longer a Wisconsin resident, he was no longer eligible for Medicaid. John enrolled in Medicaid in South Carolina starting August 1. John did not report his move to South Carolina to his IM agency in Wisconsin, so capitation payments continued to be made for John. John did not complete a Medicaid renewal, so Medicaid closed December 31. His case would have closed August 31 if he had reported the move timely. Two years later, the IM agency discovered that John had duplicate benefits in Wisconsin and South Carolina for more than two months after the move. Since this is a duplicate benefits situation, the look back period is six years, and the minimum threshold does not apply. Fee-for-service claims and any HMO capitation payments for September, October, November, and December are recoverable.

22.2.1.1.3 Recoverable Overpayment Types

Medicaid overpayments resulting from any of these reasons are subject to recovery:

Applicant or member error
Applicant or member error occurs when an applicant, member, or any other person responsible for giving information on the applicant's or member’s behalf unintentionally misstates or omits facts at application or renewal, and this results in the member receiving a benefit that they are not entitled to or more benefits than they are entitled to. This can include having lower premiums, patient liability, or cost share amounts than the member should have had.

Applicant or member error also occurs when the member, or any person responsible for giving information on the member’s behalf, fails to report changes in financial or nonfinancial information (see Section 12.1 Change Reporting Introduction) that would have adversely affected eligibility, the benefit plan, or premium, patient liability, or cost share amounts.

Example 3:

Ed applied for EBDElderly, Blind, or Disabled Medicaid and was found eligible effective November 1, 2020. Ed originally reported $1,800 of nonexempt assets (checking and savings accounts), which were subsequently verified. At the time of his application, Ed failed to disclose ownership of several nonexempt vehicles with an equity value of $1,000. The agency discovers Ed’s ownership of these vehicles on February 10, 2021. On February 20, 2021, the agency receives verification that the equity value of Ed’s nonexempt vehicles and other nonexempt assets has continuously exceeded the $2,000 Medicaid asset limit since the Medicaid application date. The agency sends Ed a Notice of Decision on February 22, 2021, advising him that his eligibility is being discontinued effective March 31, 2021. The overpayment amount that is subject to recovery is the total of all Medicaid benefits that were received by Ed from November 1, 2020, through March 31, 2021, as long as they exceed the minimum threshold of $500.

Example 4:

Sally was determined eligible for a HCBWHome and Community-Based Waiver in January with a cost share. She experienced a reduction in her health insurance expense as of July 1 but did not report that to her worker until her November review. The worker made the changes in CARES and increased her cost share for December.

Had Sally reported timely, her cost share would have increased beginning in August. The overpayment is the difference between the new cost share and the old cost share for August, September, October, and November.

Example 5:

Shana was determined eligible for WWWMAWisconsin Well Woman Medicaid in February. She had private insurance that covered treatment of breast or cervical cancer, but due to a waiting period for preexisting conditions, her treatments were not covered. The waiting period ended July 31, and the private insurance began to cover Shana’s treatment effective August 1. Shana did not report this to her worker, so Medicaid continued to pay some service costs for Shana until the worker closed the case effective November 30.

Since her case would have closed August 31 if she had reported the change timely, Shana has an overpayment for September through November. The fee-for-serviceA method of payment for health services. The medical provider bills the Medicaid fiscal agent rather than an HMO for specific individual services. claims paid for September, October, and November are recoverable.

Example 6:

Joe has been a Medicaid member since January 1, 2021. During a December 2022 eligibility review, the agency discovered that Joe won a $10,000 lottery that was paid to him on June 12, 2021. Joe never reported the receipt of these lottery winnings and still has about $8,000 from the lottery proceeds. The agency verified that Joe’s nonexempt assets have been in excess of the $2,000 Medicaid asset limit since June 12, 2021, and sent him a Notice of Decision, advising him that his Medicaid eligibility is ending effective January 31, 2023. The overpayment amount that is subject to recovery is the total of all Medicaid benefits that were received by Joe from August 1, 2021, through January 31, 2023. June and July of 2021 are not included in the overpayment period because Joe had 10 days to report the change that he had won a lottery. If Joe had reported this change timely (no later than June 22, 2021), the earliest that the agency could have terminated Joe’s eligibility with proper notice would have been July 31, 2021.

Fraud
Fraud exists when an applicant, member, or any other person responsible for giving information on the member's behalf does any of the following:
- Intentionally makes or causes to be made a false statement or representation of fact in an application for a benefit or payment.
- Intentionally makes or causes to be made a false statement or representation of a fact for use in determining rights to benefits or payments.
- Having knowledge of an event affecting initial or continued right to a benefit or payment and intentionally failing to disclose such event.
- Having made application to receive a benefit or payment and intentionally uses any or all of the benefit or payment for something other than the intended use and benefit of such persons listed on the application.
If there is suspicion that fraud has occurred, the case may need to be referred to the District Attorney (DA) (see SECTION 22.2.4 REFER TO DISTRICT ATTORNEY).
Overpayments based on fraud convictions or a signed Intentional Health Care Program Violation Acknowledgement form have a look back period of six years preceding the date of discovery, and the minimum threshold does not apply.
Member loss of an appeal
Benefits a member receives as a result of a fair hearing request order can be recovered if the member loses the appeal.

A member may choose to continue to receive benefits pending an appeal decision. If the appeal decision is that the member was ineligible, the benefits received while awaiting the decision can be recovered. If an appeal results in an increased patient liability, cost share, or premium, recover the difference between the initial amount and the new amount of the amount of claims and any HMO capitation payments the state paid for each month, whichever is less.

22.2.1.2 Unrecoverable Overpayments

22.2.1.2.1 Date of Discovery and look back Period

Overpayments for periods prior to the look back period are not recoverable (see Section 22.2.1.1.1 DATE OF DISCOVERY AND look back PERIOD).

22.2.1.2.2 Overpayment Claims Minimum Threshold

Claims under $500 can only be recovered if the claim meets one of the following criteria:

Health care overpayments based on fraud convictions or a signed Intentional Health Care Program Violation Acknowledgement form
Overpayments related to a member receiving duplicate benefits

Duplicate benefits are defined as situations in which a member moved out of state, enrolled in another state's Medicaid program, and received services under BadgerCare Plus or Wisconsin Medicaid more than two months after the move occurred.

22.2.1.2.3 Non-Member Errors

Overpayments resulting from a non-member error are not recoverable, including the following situations:

The member reported the change timely, but the case could not be closed or the benefit reduced due to the 10-day notice requirement
Agency error (keying error, math error, failure to act on a reported change, etc.)
Normal prospective budgeting projections based on best available information

Example 1:

Susan is open for HCBW. Susan reported a change in income on April 1. The worker didn’t process the change until April 28, so it wasn’t effective until June 1. There is no overpayment for May since the change was reported timely but not acted on by the worker until after adverse action.

Overpayments for any months when rules preventing health care terminations during the COVID-19 public health emergency were in effect are not recoverable. This means benefits issued March 2020 and any months after March 2020 for which continuous coverage due to the COVID-19 public health emergency is in effect for that member. This includes individuals whose health care was granted, extended, or both due to agency or state error.

22.2.2 Overpayment Calculation

22.2.2.1 Overpayment Period

Misstatement or Omission of Fact

If the overpayment is a result of a misstatement or omission of fact during an initial Medicaid application or renewal, the period for which the benefits were determined incorrectly and the appropriate overpayment amount must be determined (see Section 22.2.2.2 Overpayment Amount) within the applicable look back period (see Section 22.2.1.2.1 Date of Discovery and look back period).

Failure to Report

For ineligible cases, if the overpayment is a result of failure to report a required change, the date the change should have been reported and the month the case would have closed or been adversely affected if the change had been reported timely must be calculated.

Fraud

For ineligible cases, if the overpayment was the result of fraud, the date the fraudulent act occurred must be determined. The period of ineligibility should begin the date the case would have closed or been adversely affected allowing for proper notice, within the applicable look back period (see Section 22.2.1.2.1 Date of Discovery and look back period).

22.2.2.2 Overpayment Amount

The actual income that was reported or required to be reported is used in determining if an overpayment has occurred. If the information needed to determine if an overpayment exists is incomplete, the best available information is used to determine the overpayment. The amount of recovery may not exceed the amount of the Medicaid benefits incorrectly provided.

If a case was ineligible due to excess income, the overpayment amount is the lesser of the following:

Fee-for service claims and any HMO capitation payments Medicaid paid. Any contributions made by the member (such as premiums) for each month in which an overpayment occurred are deducted from the overpayment amount.
The amount the member would have paid toward a deductible (if eligible for a deductible)

If a case or person was ineligible for reasons other than excess income or wasn’t eligible for a deductible, the overpayment amount is the amount of fee-for-service claims paid by the state and any HMO and MCO capitation rates the state paid. Any contributions made by the member (for example, premiums or cost share) for each month in which an overpayment occurred are deducted from the overpayment amount.

For the overpayment amounts for long-term care (Section 22.2.2.2.1 Long Term Care Overpayments), MAPP (Section 22.2.2.2.4 Overpayments for Qualified Medicare Beneficiary Cases), and deductible (Section 22.2.2.2.2 Deductible-Related Overpayments) cases, see the appropriate sections.

22.2.2.2.1 Long Term Care Overpayments

If a member is still eligible for long-term care benefits but a misstatement or omission of fact resulted in a patient liability or waiver cost share that is lower than it should be, the overpayment amount is the difference between the correct patient liability or cost share amount and the one the member originally paid. See Process Help, Section 31.3.6.1 for instructions on how to complete the forms reporting the overpayment amount.

Note:

Patient liability should not be subtracted from the claims paid by Medicaid when determining the overpayment amount. Nursing Home bills paid by Medicaid are already reduced by the patient liability amount.

If a member failed to report a divestment that would have resulted in a penalty period and the member is still otherwise eligible for long-term care, any benefits Medicaid paid during the time in which the penalty period would have been served are not recovered. Instead, a penalty period is imposed for ongoing eligibility as outlined in SECTION 17.3.4 PENALTY PERIOD BEGIN DATE FOR MEMBERS.

22.2.2.2.2 Deductible-Related Overpayments

If a member error increases the deductible before the deductible is met, there is no overpayment.

If the member met the incorrect deductible and Medicaid paid for services after the deductible had been met, there is an overpayment. Recover the lesser of:

The difference between the correct deductible amount and the previous deductible amount
The difference between the correct deductible amount and any fee-for-service claims and HMO capitation payments Medicaid paid over the six-month period

If the member prepaid the deductible but was actually ineligible for the deductible, the amount prepaid toward the deductible is deducted from the overpayment amount.

Example 6:

Sean had a deductible of $2,000 for a six-month period. He met the deductible by paying $1,000 and sending in verification of $1,000 in outstanding medical bills. An IM worker discovers an undisclosed bank account that puts Sean over the asset limit for the program. After determining his overpayment amount, the IM worker must decrease the amount overpaid by the $1,000 that Sean prepaid toward his deductible. The IM worker will not decrease the overpayment amount by any of the medical bills that helped Sean meet his deductible.

If a deductible is prepaid with a check that is returned for insufficient funds, the member’s eligibility is terminated. The overpayment amount is any fee-for-service claims and HMO capitation payments Medicaid paid during the deductible period.

22.2.2.2.3 Medicaid Purchase Plan

If a person was ineligible for MAPP, the overpayment amount is the amount of fee-for-service claims and any HMO capitation payments paid by the state. Deduct any amount the person paid in premiums for each month in which an overpayment occurred from the overpayment amount.

If a MAPP member was still eligible for the time frame in question, but there was an increase in the premium, there is an overpayment. The overpayment amount is the lesser of:

The difference between the premiums paid and the premium amount owed
The difference between the premiums paid and the amount of any fee-for-service claims and HMO capitation payments Medicaid paid for each month in question

Premium adjustments are only made on months where there is an overpayment. If there is a month without an overpayment, then the premium calculation for that month should not be adjusted.

Example 7:

Stephanie was eligible for MAPP with a premium of $50. She forgot to report a part-time job that would have increased her MAPP premium to $75 a month. During the overpaid months, the state paid a monthly capitation rate of $200. For the months during the overpayment time period, the overpayment each month is $150, which is the difference between the $200 monthly capitation payment and the $50 monthly premium payment.

22.2.2.2.4 Overpayments for Qualified Medicare Beneficiary Cases

The overpayment amount for QMBQualified Medicare Beneficiary cases is both the following:

Medicare Part A premium, if paid by the state (Some are free, and others are paid by the state.)
Medicare Part B premium

22.2.2.3 Liable Individual

Collect overpayments from the Medicaid member, even if the member has authorized a representative to complete the application or renewal for him or her. Join liability for married couples is as follows:

Legally married spouses living in the household at the time the overpayment occurred are jointly liable for overpayments.
For cases for which spousal impoverishment rules have been applied, the legally married spouses who signed the application or renewal are jointly liable even though one of the spouses may be institutionalized.

Example 8:

Sofie applied for Medicaid in December and at that time designated her daughter, Lynn, as her authorized representative . Lynn did not report some of her mother’s assets when she applied, which would have resulted in Sofie being ineligible for Medicaid. Sofie was determined to be ineligible for Medicaid from December through March. Benefits that were provided to Sofie from December through March are recovered. Even though Lynn failed to report the information as the authorized representative, Lynn is not liable.

Example 9:

Mary and Herman are married, living together, and eligible for SSI-related Medicaid without a deductible. At their annual renewal, the IM worker discovers an undisclosed pension that would have pushed the couple above the income limit for the program, requiring them to meet a deductible before being eligible. Because they are married and were living in the same household at the time of the overpayment, Mary and Herman will be jointly liable for the entire overpayment that is calculated for the time period in question.

Example 10:

Jill and Samuel are married and living together. Jill is eligible for SSI-related Medicaid. Samuel receives federal and state SSI. At renewal, the IM worker discovers that Jill receives disability income from her former employer. This income was not disclosed at application. Because they are married and were living in the same household at the time of the overpayment, both Jill and Samuel are jointly liable for any overpayment calculated for the benefits incorrectly paid to Jill.

Members under age 18 are not liable for overpayments. Dependent 18-year-olds are not liable for overpayments in cases where their parent or other caretaker relative is the primary person for the case.

If a member age 18 or younger received Medicaid in error, the member’s parent(s) or non-legally responsible relative is liable for the overpayment if the parent or non-legally responsible relative was living with the member at the time of the overpayment.

Other household members who were not enrolled in Medicaid on the same case during the time the overpayment occurred are not jointly liable for overpayments.

22.2.3 Member Notice

The member or the member’s representative must receive a notice of the overpayment that includes the period of ineligibility, the reason for their ineligibility, the amounts incorrectly paid, and information on arranging for repayment within a specified period of time.

22.2.4 Refer to District Attorney

Overpayments involving suspected fraudulent activity by the member may be referred to the Department of Health Services (DHS) Office of the Inspector General (OIG). If the investigation reveals a member may have committed fraud, the case may be referred to the district attorney or corporation counsel for investigation. The district attorney or corporation counsel may prosecute for fraud under civil liability statutes. The agency may seek recovery through an order for restitution by the court of jurisdiction in which the member or former member is being prosecuted for fraud.

22.2.5 Fair Hearing

The IM agency’s decision concerning ineligibility and amounts owed may be appealed through a fair hearing. During the appeal process, the agency may take no further recovery actions pending a decision.

This page last updated in Release Number: 22-01
Release Date: 04/04/2022
Effective Date: 04/04/2022