Kusserow on Compliance: GAO calls for strengthening oversight of Managed Care organizations

Medicaid is a major commitment of federal and state budgets, with total estimated expenditures of $596 billion in fiscal year 2017—expenditures that rival the budget of the Department of Defense. States are permitted wide latitude in the design and implementation of their program. The resulting diversity of the program and its size make the program particularly challenging to oversee at the federal level. The Government Accountability Office (GAO), in testimony before Congress, reported last year that they estimated about $37 billion in improper payments that accounted for about 26 percent of government-wide improper payments. The GAO testimony called for increased oversight of Medicaid providers and managed-care plans, and was critical of the Obama administration’s lax auditing of Medicaid insurers as millions joined the rolls through expansion. During the same hearing, the CMS Administrator responded by reporting the structure of expansion with the 90 percent match and an open-ended entitlement is an incentive for the states to spend more and more.

 

Highlights of GAO recommendations to CMS

  1. Add to clearly establish approval criteria and review processes to ensure supplemental payments of around $50 billion a year are identified and accounted for by states when setting future payment rates.
  2. Ensure demonstrations do not increase federal costs and properly conduct evaluations to increase significant savings and better informed policy decisions.
  3. Improve the Transformed Medicaid Statistical Information System to improve program oversight and collect complete and comparable data from all states.
  4. Conduct a fraud risk assessment and implement a risk-based antifraud strategy for Medicaid.
  5. Increased collaboration with the states is needed to help reduce improper payments.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: CMS increases audits to address Medicaid fraud and abuse

In efforts to prevent Medicaid fraud and reduce improper payments, CMS is in the process of implementing eight “new or enhanced” program integrity initiatives and strategies to address reported billions in improper Medicaid payments. These initiatives include target auditing of selected state programs and known vulnerabilities. The stated aim is to promote transparency and accountability. The CMS announcement noted that Medicaid spending has risen more than 26 percent in the three years leading up to 2017, from $456 to $576 billion. A significant part of the increase was as result of states expanding their Medicaid programs under the Patient Protection and Affordable Care Act (ACA). Most of this increase was covered by the federal government, with its share rising 38 percent, from $263 billion to $363 billion, over the same three-year period. CMS efforts include evaluating the impact of this expansion on program integrity. The announced new initiatives followed a Senate hearing that lambasted CMS, reporting that Medicaid pays out $37 billion a year of improper payments, an increase of 157 percent since 2013.  The new initiatives will be designed to address previously identified activities that harmed Medicaid’s program integrity, and address problems identified by the GAO and OIG and include:

  1. Targeted audits of certain state MCOs. CMS will review financial reports from MCOs in targeted states to ensure they match actual claims experience.
  2. New audits of beneficiary eligibility. States that had OIG reviews of Medicaid beneficiary eligibility will have follow-up determinations reviewed by CMS.
  3. Claims and provider data optimization. CMS will validate the quality and completeness of state-provided data in the Transformed Medicaid Statistical Information System (TMSIS) using data analytics and other techniques to improve data quality and to flag potential problems that require further investigation.
  4. Data analytics pilots. CMS will use analytics and other IT tools on state-provided data to optimize state data to identify areas that need additional investigation.
  5. Provider screening on an opt-in basis. CMS will pilot a plan to screen Medicaid providers on behalf of states, in the belief that centralizing this process will improve efficiency and coordination across Medicare and Medicaid. This, in turn, should reduce state and provider burden, and address one of the biggest sources of error as measured by the Payment Error Rate Measurement (PERM) program.
  6. State-federal data sharing and collaboration. CMS is giving states access to the SSA’s master file of death records to help with managing provider enrollment.
  7. Publicly report state performance. The Medicaid scorecard will indicate how well states perform on certain measures pertaining to their Medicaid programs. This scorecard will include the state’s “integrity performance measures,” such as PERM.
  8. Provider education to reduce improper payments. CMS will bolster education efforts for Medicaid providers to reduce billing errors, including targeting comparative billing reports and provider-facing tools currently in development.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: GAO calls for CMS to mitigate program risks in managed care

·       Medicaid enrollment in managed care rose in three years from 35 to 55 million beneficiaries

·       $170 billion Medicaid managed care is half of total federal Medicaid expenditures

·       CMS is not doing enough to ensure accuracy in payments

 

Congress called for the Government Accountability Office (GAO) to conduct a study of the Payment Error Rate Measurement (PERM), which  measures the accuracy of capitated payments for managed care, including CMS’s and states’ oversight. Driving this inquiry was the rapid growth of Medicaid managed care enrollment, which increased by 56 percent in three years, jumping from covering 35 million beneficiaries to 54.6 million beneficiaries. Federal Medicaid managed care expenditures last year were $171 billion, almost half of the total for Medicaid. The GAO focused on weaknesses in oversight, given the recent rapid growth. The GAO reviewed program integrity risks reported in 27 federal and state audits and investigations over a five year period; federal regulations and guidance on the PERM; and the CMS’s Focused Program Integrity Reviews. The GAO also contacted program integrity officials in the 16 states with a majority of 2016 Medicaid spending for managed care. The GAO found:

  1. Ten of 27 federal and state audits and investigations identified about $68 million in overpayments and unallowable MCO costs, not accounted for by PERM estimates.
  2. Another investigation resulted in a $137.5 million settlement.
  3. CMS does not have a process to track managed care overpayments and cannot determine whether states considered those overpayments when they set capitation rates.
  4. CMS is not doing enough to ensure that states are adequately paying managed Medicaid companies and that the plans are making correct payments to providers.
  5. The managed care component of the PERM neither includes a medical review of services delivered to enrollees, nor reviews of MCO records or data.
  6. CMS and states have updated regulations, focused reviews, and used federal program integrity contractors’ audits of managed care services, however, some of this is only recent, and it may not fully address risks across all states.
  7. CMS does not ensure identification and reporting of overpayments to providers and unallowable costs by MCOs.

The GAO called for CMS to consider and take steps to mitigate the program risks that are not measured in the PERM, such as overpayments and unallowable costs. Such an effort could include actions such as revising the PERM methodology or focusing additional audit resources on managed care. The GAO also recommended CMS expedite the release of planned guidance and requirements for states to report to the CMS overpayments made between managed-care providers and plans.

 

 

 

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2017 Strategic Management Services, LLC. Published with permission.

Healthcare.gov enrollment declines; plan affordability a factor

The Government Accountability Office (GAO) found that in 2018, 5 percent fewer people enrolled in healthcare.gov individual market health insurance plans available on the exchanges than in 2017, most attributable to plan affordability. The GAO noted that premiums increased more than expected in 2018, detracting from enrollment. Conversely, larger tax credits helped exchange enrollment. Additionally, the report found that HHS reduced its consumer outreach for the 2018 open enrollment period (GAO Report, GAO 18-565, July 24, 2018).

Background

The exchanges, established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-149) allow consumers to enroll during an annual open enrollment period. HHS, along with other agencies, conduct outreach for the open enrollment period to encourage enrollment. The GAO report examined both outreach and enrollment for the exchanges using healthcare.gov.

According to the report, about 8.7 million consumers enrolled in heathcare.gov plans during the open enrollment period for 2018 coverage, five percent less than the 9.2 million enrolled for 2017 coverage. This decline represents a trend from the 2016 plan year, when 9.6 million consumers enrolled in these plans. Moreover, in 2018, enrollees new to healthcare.gov coverage comprised a smaller proportion of total enrollees in 2018 compared to 2017.

Affordability

Plan affordability likely played a “major role” in 2018 exchange enrollment. For example, in 2018, premiums across all healthcare.gov plans increased by an average of 30 percent. The GAO stated that because of the premium increases, plans were less affordable as compared to 2017 for exchange consumers without advance premium tax credits. Most stakeholders interviewed chalked up lower enrollment to decreased affordability of plans.

Although premium affordability reportedly played a role in enrollment, interviews with shareholders revealed that other factors likely affected 2018 healthcare.gov exchange enrollment. Many reported that there was consumer confusion about the ACA and its status, including the possibility or repeal or replace. As a result, the confusion played a “major role” in detracting from 2018 healthcare.gov enrollment. Other shareholders, however, dismissed this viewpoint, pointing to other factors for the decline.

As for consumer outreach, the report revealed that HHS drastically reduced the amount it spent on paid advertising, a 90 percent reduction, compared with advertising spending for the 2017 open enrollment period. Notwithstanding, HHS declared its advertising campaign in 2018 success. The GAO found that HHS reduced navigator funding by 42 percent for the 2018 open enrollment period compared to 2017. According to HHS, this was the result in a shift in its priorities, specifically HHS using a narrower approach and with “problematic data.” This included some consumer application data HHS acknowledged was unreliable and some “navigator organization-reported goal data that were based on an unclear description of the goal, and which HHS and navigator organizations likely interpreted differently.”

No targets

HHS did not set numeric enrollment targets for open enrollment in 2018, as it had in the past. According to the report, the lack of these numeric targets hampered HHS’ ability to evaluate its performance related to the specific open enrollment period, which in turn made it more difficult for HHS to make informed decisions related to its resources.

The GAO recommended that the HHS ensure that the data it uses to determine navigator organization awards is accurate, and recommended that HHS set numeric enrollment targets. Additionally, the GAO recommended that the HHS assess other aspects of the consumer experience. HHS agreed with all but the recommendation to set numeric enrollment targets