Health Law Daily Managed care payment risks need closer oversight
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Monday, July 30, 2018

Managed care payment risks need closer oversight

By Dietrich Knauth

CMS needs better oversight for its Medicaid managed care spending, and it could address the problem by speeding up its guidance on managed care program integrity and by working more collaboratively in auditing managed care costs. According to a new Government Accountability Office (GAO) report, CMS’ oversight of managed care is as robust as its controls for fee for service (FFS) reimbursement (GAO Report, GAO-18-528, July 26, 2018).

Managed care program integrity. The federal government spent $171 billion on Medicaid managed care services in 2017, almost half of the total federal Medicaid expenditures for that year. However, according to the GAO, CMS' oversight of managed care lags behind the controls in place for Medicaid fee-for-service delivery, where the state pays providers directly, rather than paying managed care organizations (MCOs) to coordinate and provide care. CMS has taken some steps to improve program integrity in managed care, including strengthening regulations, developing guidance for states on provider enrollment in Medicaid managed care, and beginning to include managed care in the monitoring and auditing process, but the effectiveness of its oversight has been hampered by delays and limited implementation.

Six risk types. GAO identified six types of risks for managed care payments: (1) incorrect MCO FFS payments to providers; (2) inaccurate state capitation rates; (3) improper state capitation payments; (4) state payments to noncompliant MCOs; (5) incorrect MCO capitation payments; and (6) duplicate state payments. The highest-risk areas are incorrect FFS payments from MCOs, where the MCO paid providers for improper claims, and inaccuracies in a state's capitation payment, which is a fixed periodic payment per beneficiary enrolled in an MCO. Incorrect MCO FFS payments may include billing for services that were not provided, were not medically necessary, or were provided by people who were not enrolled as Medicaid providers, according to the report. Inaccurate state capitation rates may arise when there is insufficient verification to capitation adjustments, when encounter data accuracy is in question, and when MCOs fail to report overpayments from the state.

Oversight challenges. Stakeholders interviewed by GAO cited several challenges to improving oversight for managed care programs, including appropriate allocation of resources, quality of the data and technology, and adequacy of state policies and practices. For example, while states' Medicaid applications have grown dramatically in recent years, resources to determine eligibility have not always kept pace, and states often have difficulty getting accurate and complete encounter data from MCOs without contract provisions ensuring access to data. States can address some of the known challenges by improving data quality, encouraging collaboration among state agencies and MCOs, imposing sanctions on noncompliant MCOs, enhancing contract requirements, and conducting regular monitoring, according to the report.

Recommendations and response. The GAO recommended that CMS expedite issuing planned guidance on Medicaid managed care program integrity, address impediments to managed care audits, and ensure that states account for overpayments in setting future MCO payment rates. CMS issued a Final rule on Medicaid managed care in May 2016, aiming to enhance program integrity and reduce payment risks, but it has delayed its planned publication of guidance related to the managed care rule’s program integrity regulations. CMS told the GAO in September 2017 that it had a draft of the compendium, but had no timeline for issuing it, because the managed care rule is under review. Without that guidance, stakeholders’ ability to effectively address challenges to payment risks in Medicaid managed care will continue to be hindered, the GAO found, urging CMS to expedite its publication. HHS concurred with GAO's recommendations, and said that it would work to communicate its planned guidance to stakeholders.

MainStory: TopStory CMSNews FraudNews ManagedCareNews MedicaidNews ProgramIntegrityNews

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