The Centers for Medicare and Medicaid Services made $2.4 million in Medicare Parts A and B payments after beneficiaries died, according to an audit from the Department of Health and Human Services Office of Inspector General.

The agency is required to implement policies to prevent beneficiary payments from being made to deceased individuals and should ensure that improper payments are recouped if they are made.

"Our objective was to determine whether CMS's policies and procedures ensured that capitation payments were not made to MA [Medicare Advantage] organizations for Medicare Parts A and B services on behalf of deceased beneficiaries after the individuals' dates of death," the auditors said.

While auditors found that the agency generally had procedures in place to ensure payments were not made to dead people, they found that the agency did not recoup all of the improper payments. Auditors found that as of March 2017 the agency did not recoup $2,420,761 made to 978 dead beneficiaries.

The agency makes monthly capitation payments to MA organizations, which use the payments to cover Medicare Parts A and B services beneficiaries would normally need.

"At the beginning of each month, CMS makes a capitation payment to each MA organization to cover any medical services provided to each beneficiary in that month," auditors explain. "If CMS receives changes to beneficiary information that would alter previous monthly payments, it adjusts the applicable capitation payment."

"Such adjustments are processed retroactively to the effective date of the change and reported to the MA organizations on monthly payment reports," the auditors said.

The report found that the agency's data systems were generally effective in signaling when a beneficiary had died so that improper payments were not made.

"When CMS receives information about a beneficiary's death, CMS enters the date of death into its data systems and disenrolls the beneficiary," said Seema Verma, administrator of the Centers for Medicare and Medicaid Services. "As OIG states in its report, CMS has extensive policies and procedures in place to ensure that capitation payments are not made to Medicare Advantage organizations after a beneficiary's date of death."

"CMS should implement system enhancements to identify, adjust, and recoup improper capitation payments in the future," Verma said, echoing the recommendations of the auditors.