CMS Urged to Strengthen Oversight of Medicare and Medicaid

To conserve funds and strengthen oversight of Medicare and Medicaid, the Government Accountability Office (GAO) has reiterated several of its past recommendations related to the management of Medicare and the need for additional oversight of Medicaid in its most recent report. In this report, the GAO noted that CMS has heeded its advice and implemented some of its recommendations, which have led to program improvements that, “while not always quantifiable, have nonetheless enhanced the efficiency of agency operations.”  However, several open recommendations exist that “could yield billions of dollars in savings” and the GAO urged CMS to take action to advance CMS’ performance and accountability in what GAO considers high risk programs.

First, CMS needs to require contractors to automate prepayment controls to identify potentially improper claims for medical equipment and supplies. Although CMS initially agreed with GAO’s recommendation, this strategy has not yet been implemented. CMS has, however, added other prepayment controls to flag claims for services that were unlikely to be provided in the normal course of medical care. GAO believes that by implementing its recommendation and adding additional prepayment controls, CMS could enhance identification of improper claims before they are paid, which would reduce reliance on the typical “pay and chase” strategies.

GAO reports have identified fraudulent and abusive practices prevalent among many home health agencies. Current regulations must be expanded to revoke billing privileges for home health agencies with improper billing practices. Often, home health agencies are overstating the severity of a beneficiary’s condition, which has contributed to higher Medicare home health spending and utilization. CMS has indicated that it is exploring its authority to expand the types of practices that are grounds for revocation of billing rights.

CMS must also “designate responsible personnel with authority to evaluate and promptly address vulnerabilities identified to reduce improper payments” according to the GAO report and its recent testimony before the Senate. The GAO reiterated its prior recommendations and noted that CMS could do more to strengthen provider enrollment screening to avoid enrolling those intent on committing fraud, improve pre- and postpayment claims review to identify and respond to patterns of suspicious billing activity more effectively, and identify and address vulnerabilities to reduce the ease with which fraudulent entities can obtain improper payments.

One area where spending seems to have dramatically increased is diagnostic imaging services. GAO has noted that payment safeguards must be enhanced for physicians who use advanced imaging services, suggesting that CMS examine “the feasibility of adding front-end approaches, such as prior authorization, to improve payment safeguard mechanisms.” Although CMS has not implemented this suggestion, it is involved in a demonstration project to assess the appropriateness of physicians’ use of advanced diagnostic imaging services furnished to Medicare beneficiaries.

Earlier this year, GAO released a report recommending that Medicare coverage should be aligned with clinical recommendations, taking cost-effectiveness into consideration. GAO found that Medicare beneficiaries’ use of preventive services do not always align with the U.S. Preventive Services Task Force’s recommendations. GAO found that several opportunities exist to improve the appropriate use of preventive services through means such as revising coverage and cost-sharing policies and educating beneficiaries and physicians. In some cases, beneficiaries are required to pay for recommended health screenings such as osteoporosis and prostate checks. Perhaps if services such as these were fully covered, they would be utilized more and promote a healthier Medicare population. Along the same lines, GAO suggested that Congress consider requiring beneficiaries to share the cost of services if they receive services the Preventive Services Task Force recommends against.

Payments to Medicare Advantage plans should better reflect the health status of beneficiaries, and differences should be adjusted between Medicare Advantage (MA) plans and traditional Medicare providers in reporting beneficiary diagnoses, according to the GAO. Earlier this year, the GAO reported that in doing so, CMS could achieve “billions of dollars” in additional savings. According to the GAO, CMS is not doing enough to improve the accuracy of the adjustment made for differences in coding practices between MA plans and traditional fee for service, and that CMS needs to use more current data, allowing for all relevant differences in beneficiary characteristics between the two beneficiary populations.

GAO has also noted that CMS could achieve billions of dollars in savings by canceling the MA Quality Bonus Payment Demonstration which would save an estimated $8 billion over the next 10 years. Instead, it recommends that the Secretary of HHS allow the MA quality bonus payment system established by PPACA to take effect. HHS did not concur with GAO’s recommendation, however, stating that it believed the demonstration supports a strategy to improve the delivery of health care services, patient health outcomes, and population health.

Further oversight of the Medicaid program is a must. GAO believes that transparency requirements should be adopted by CMS, along with a strategy to ensure that supplemental payments to providers have been reviewed. GAO noted that its work has found that while a variety of federal legislative and CMS actions have helped curb inappropriate financing arrangements, gaps in oversight still remain. GAO also indicated that the approval process for demonstrations must include a review by CMS to ensure they are budget neutral.

Another area that HHS needs to improve is with CMS’ rate-setting methodologies. As previously reported by the GAO, CMS has not ensured that all states are complying with federal Medicaid requirements that managed care rates be developed in accordance with actuarial principles, appropriate for the population and services, and certified by actuaries. In the past, GAO has found several gaps in CMS oversight. It recommended that CMS develop a mechanism to track state compliance with Medicaid managed care actuarial soundness requirements, clarifying guidance on rate-setting reviews, and making use of information on data quality in overseeing states and rate setting. CMS agreed, and indicated that they were reviewing and updating the agency’s guidance and exploring the incorporation of information about data quality into its review and approval of Medicaid managed care rates.