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New Initiatives to Curb Medicaid Fraud and Abuse

Medicaid spending is on the rise and various government agencies are looking to cut down on improper payments. The U.S. Government Accountability Office (GAO) and the Centers for Medicare & Medicaid Services (CMS) have recently proposed some recommendations and a plan to strengthen Medicaid program integrity.

GAO Report on Medicaid Fraud

The GAO released a new report on Medicaid Fraud on June 26, 2018, entitled Medicaid: Actions Needed to Mitigate Billions in Improper Payments and Program Integrity RisksMedicaid funding is a huge taxpayer commitment that expended $596 billion in fiscal year 2017, with an estimated $36.7 billion in improper payments. These payments accounted for approximately 26 percent of government-wide improper payments for the year. The GAO evaluation involved looking at improper payments, supplemental payments, and demonstrations. It offered 83 recommendations focused on data improvement, better targeting of fraud, and the need for a more collaborative approach to fraud mitigation. The Department of Health and Human Services (HHS) and CMS have agreed with many of the recommendations and have already implemented 23 of them. As the GAO pledged to continue monitoring the progress on its remaining recommendations, the report focused on major risks to Medicaid program integrity and further action to be taken to manage those risks.

CMS Plan for New or Enhanced Medicaid
Program Integrity Initiatives

On June 26, 2018, CMS announced new initiatives designed to improve Medicaid program integrity through greater transparency and accountability, strengthened data, and innovative and robust analytic tools. CMS reported a rapid increase in Medicaid spending driven by several factors, including Medicaid expansion, from $456 billion in 2013 to an estimated $576 billion in 2016. Much of that growth came from the program’s federal share that grew from $263 billion to an estimated $363 billion during that period. CMS announced eight “new or enhanced” initiatives that include stronger audit functions, enhanced oversight of state contracts with private insurance companies, increased beneficiary eligibility oversight, and stricter enforcement of state compliance with federal rules. Those initiatives include:

  1. Emphasizing program integrity in audits of state claims for federal matching funds and medical loss ratios (MLRs). CMS will begin auditing some states based on the amount spent on clinical services and quality improvement versus administration and profit. The MLR audits will include reviewing states’ rate setting. The audits will address issues identified by the HHS Office of Inspector General (OIG) and the GAO, and other behavior that has been found to harm the Medicaid program.
  2. Conducting new audits of state beneficiary eligibility determinations. CMS will audit states that the OIG has previously found to be high risk to examine how they determine which groups are eligible for Medicaid benefits. The audits will include assessing the effect of Medicaid expansion and its enhanced federal match rate on state eligibility policy. Current regulations will allow CMS to begin issuing potential disallowances to states based on Payment Error Rate Measurement (PERM) program findings in 2022. The PERM program measures improper payments in the Medicaid program and the Children’s Health Insurance Program and determines national and state-specific improper payment rates.
  3. Optimizing state-provided claims and provider data: CMS will utilize advanced analytics and other innovative solutions to both improve Medicaid eligibility and payment data and maximize the potential for program integrity purposes. The agency will work with states to ensure that the agency and oversight bodies have access to complete and accurate Medicaid data. All states, the District of Columbia, and Puerto Rico are now submitting enhanced data to CMS that will be validated for quality and completeness.

CMS is pledging to work with states to ensure that Medicaid provides high-quality care for beneficiaries and to learn about noteworthy efforts in place to protect Medicaid’s integrity—including provider screening and education, streamlined access to data, and an enhanced Medicaid Scorecard. CMS’s plan also expands on existing initiatives such as managed care rate reviews, financial oversight, ensuring states comply with the Medicaid Managed Care Final Rule, and more.

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