Program Integrity in Medicare and Medicaid; Finding the Balance Between State and Federal Efforts

Over the last several years, Congress has passed legislation designed to help address Medicare and Medicaid program integrity issues, yet they are still vulnerable to fraud, waste, and abuse. Although the program integrity challenges for Medicaid and Medicare are different the GAO has noted in its recent report that there are many things that can be done to help address both problems, because in all cases, federal and state must work together. With 51 distinct state-based programs, Medicaid has complex challenges for finding the appropriate balance between state and federal efforts. Medicare uses contractors to help administer the program and CMS must oversee their efforts. GAO feels that these problems would be greatly improved by focusing on these four strategies: (1) strengthening provider enrollment standards and procedures to ensure that only legitimate providers participate in the program; (2) improving prepayment controls; (3) improving postpayment claims review and recovery of improper payments; and (4) developing a robust process for addressing identified vulnerabilities.

 The most frequently cited area of concern addressed by CMS’ comprehensive state program integrity reviews identified provider enrollment as a key issue, but CMS has noted a positive trend in states’awareness of regulatory requirements for the Medicaid program. Several new or improved enrollment safeguards, including screening enrollment applications for categories of Medicare providers by risk level have been authorized by Congress. A final rule was released to implement this and other changes. CMS has not, however, completed other final rules and additional actions that could further strengthen enrollment procedures, such as rules to implement new surety bond provisions and provider and supplier disclosures.

CMS noted vulnerabilities in the prepayment reviews of claims in five states and effective practices in seven others. In anticipation of new analytic tools to predict vulnerabilities before claims are paid, the agency has initiated discussions with and provided guidance to states. GAO’s prior work found certain gaps in Medicare’s prepayment edits based on coverage and payment policies and made recommendations for improvement, such as adding edits to identify abnormally rapid increases in medical equipment billing. GAO is currently evaluating new CMS efforts in this area.

Much duplication of work exists between the federal and state audit efforts. GAO noted that CMS has begun collaborating with states to identify targets for federal postpayment audits, which should help to avoid future duplication of the work.

GAO has also identified the prescription drug program as one in need of auditing and oversight. CMS has begun using recovery auditing in its prescription drug program but not for its Medicare managed care plans.

Although the states’ new recovery audit contractors were brought in to identify improper payments and recoup overpayments, CMS has not established guidelines for what GAO considers useful tools for states to evaluate and address vulnerabilities. GAO recommended that CMS establish such a process to ensure prompt resolution of identified vulnerabilities in Medicare and is currently evaluating steps that CMS has taken recently. GAO noted that lessons learned from each program can be applied to the other, which is critical to all issues, from reducing improper payments to ensuring that federal funds are used efficiently and for their intended purpose.

 This report represents just one of many by the GAO and OIG released in the past several weeks indicating that more program oversight is needed.