Medicaid Expenditures Now Exceed Department Of Defense Budget

GAO actuaries estimated Medicaid expenditures at $529 billion

The Government Accountability Office (GAO) reported to Congress that its actuaries estimated Medicaid expenditures of $529 billion in Fiscal Year (FY) 2015. To put the government’s commitment to assisting the infirm and disadvantaged in context, $529 billion is larger than the Department of Defense’s entire base budget, which totaled $496 billion in FY 2015. As Medicaid rapidly grows and migrates from a traditional fee-for-service operation to managed care, Congress requested that the GAO review the screening of managed care providers to prevent fraudulent applicants or health care providers. In response, the GAO examined the experience of states and plans using federal databases to screen providers, as well as how states and plans share data about ineligible providers. The GAO further reviewed Medicaid program websites and plan contracts, as well as relevant federal laws, regulations, and guidance. It also interviewed officials from 10 states, representatives from 16 plans in these states, and officials from CMS and HHS-OIG.

Improper Medicaid payments have doubled since 2013

The GAO found that both CMS and state Medicaid officials failed to properly coordinate and streamline the databases that are essential in ferreting out improper payments and fraud. The GAO found that Medicaid made $29.12 billion in improper payments in FY 2015. Compared to GAO’s findings in FY 2013, the FY 2015 improper payments more than doubled the $14.4 billion estimates for FY 2013. The GAO concluded that Medicaid managers failed to curtail improper payments and fraud, citing fragmentation of the screening system that determines the eligibility of applicants for health care coverage. Screening providers is important to help prevent improper payments, but the GAO reported that “CMS might not have identified all reliable sources of information about ineligible providers that could help states and plans achieve program objectives.” As a result, states and Medicaid managed care plans face significant challenges in screening providers for eligibility to participate in the Medicaid program. These deficiencies contribute to Medicaid’s status as a high-risk program.

The GAO supported its findings with evidence that states and plans used information fragmented across 22 databases managed by 15 different federal agencies to screen providers. State officials and plan representatives reported that accessing and using fragmented information from multiple and disparate federal databases challenged their screening efforts. Officials and representatives reported difficulties with (1) accessing certain databases, such as the Social Security Administration’s Death Master File, and (2) conducting and confirming identified provider matches across databases, particularly those not based on a unique national provider identifier. Inability to access and use databases resulted in enrolling ineligible providers who had been excluded from participating in federal health care programs, resulting in a higher rate of improper payments to Medicaid providers.

Federal internal control standards state that agencies should use quality data that is complete, current, accurate, and accessible. However, the GAO stated that CMS has failed to coordinate properly with other agencies to address these challenges. Although CMS has issued guidance encouraging states to share data on ineligible providers through its Medicaid provider termination notification system, the guidance remains optional. Not all states use the list, and it is not available to Medicaid managed care plans. Moreover, CMS has not provided states with guidance on other ways to share their data on ineligible providers or how to access data on ineligible providers from other states.