Health Reform WK-EDGE $36 billion in improper payments each year
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Friday, February 10, 2017

$36 billion in improper payments each year

By Robert B. Barnett Jr., J.D.

In testimony before a House subcommittee, the Government Accountability Office (GAO) identified four vulnerabilities in Medicaid that contribute to an estimated $36 billion in improper payments being made each year: (1) gaps in efforts to ensure that only eligible individuals are enrolled, (2) lax oversight of Medicaid managed care, (3) lax oversight of healthcare provider eligibility, and (4) poor coordination between Medicaid and Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) exchanges, resulting in duplicate coverage. GAO had previously provided multiple recommendations to CMS to reduce the waste, most of which have been embraced and are being implemented, but much work remains to be done to plug the leaks (GAO Report, GAO-17-386T, January 31, 2017).

The new GAO Report highlights the testimony of Carolyn L. Yocom, Director of the GAO’s Health Care Team, who was asked by the House Subcommittee on Oversight and Investigations to testify on program integrity issues in Medicaid. She identified the four areas of concern, as well as efforts to address those concerns.

Gaps in eligibility determinations. Gaps remain in efforts to ensure that those who receive Medicaid funds are actually eligible to receive those funds. The ACA expanded Medicaid eligibility but it also established more rigorous eligibility verification procedures. One GAO report, however, found that both the federal and state ACA exchanges were doing a poor job of following those new guidelines, leading to ineligible individuals obtaining ACA benefits. Another report found that CMS was excluding from review of eligibility determinations any state that had delegated authority for such determinations to a federally facilitated exchange, which resulted in virtually no oversight of eligibility determination in those states. The GAO has recommended a systematic review of all federal eligibility determinations, which has not occurred because CMS lacks a mechanism to conduct such a review. Thus, CMS continues to rely on operational controls within the exchanges.

Lax managed care oversight. Lax oversight of Medicaid managed care has led to improper payments being made to healthcare providers. With more than half of all Medicaid beneficiaries now in managed care, managed care is responsible for almost 40 percent of all Medicaid expenditures. Although the GAO has calculated that the improper payment rate is less than one percent, it believes that the actual number is higher. Given the large amount of annual payments to managed care providers, however, even a small percentage of improper payments constitute a large amount of waste. The GAO has recommended that CMS require the states to audit managed care organizations and that CMS provide more guidance to the states on how to maintain program integrity.

Lax provider eligibility oversight. The ACA strengthened the screening process for determining whether a provider is eligible to participate in Medicaid. If these additional mechanisms are enforced, the problem should be greatly reduced. The gap in the system, however, continues to be poor communication and coordination between the states. If one state terminates a provider from its program, the termination decision is not shared with other states. As a result, a provider kicked out of one state is free to pursue opportunities in other states. One GAO report identified hundreds of providers who were improperly receiving Medicaid payments, including those with suspended or revoked licenses. A second problem is a lack of database uniformity and consistency in how eligibility is tracked. A GAO study found after examining two states and 16 health plans that those entities were using information across 22 databases managed by 15 different federal agencies. As a result, the GAO has recommended that CMS identify the database or databases best suited for eligibility determinations and that it seek to impose those requirements system-wide.

Poor coordination. Poor coordination between Medicaid and the exchanges has resulted in individuals with duplicate coverage. CMS has begun making more vigorous checks for duplication, but problems remain. CMS, for example, lacks any mechanism for determining whether its checks are sufficient to root out duplication, even as it continues to explore ways to reduce duplication.

ReportsLetters: GAOReports AgencyNews MedicaidNews NewsFeed

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