More Oversight Ahead for Medicaid Managed Care

As the Medicaid program is wrapped up in the battle of expansion and work requirements, the Centers for Medicare & Medicaid Services (CMS) is quickly pushing along its efforts to increase oversight of the program as well, and Managed Care Organizations (MCOs) should be prepared.

A new Office of Inspector General (OIG) report found two weaknesses in MCOs’ efforts to identify and address fraud and abuse in Medicaid. (1) some MCOs identified and referred few cases of suspected fraud or abuse, and (2) some MCOs identified and recovered few overpayments, including those associated with fraud or abuse. OIG notes the second issue indicates there is limited MCO and State communication, as MCOs took actions against providers, but did not inform the State about those actions.

A third of the insurers examined reported less than 10 cases each of suspected fraud or abuse to state Medicaid officials in 2015 for further investigation. Two insurers did not identify a single case. OIG found that some insurers failed to recover millions of dollars in overpayments, leading to increased Medicaid rates.

Another previous report found that $37 billion out of $596 billion in payments last year were improper, amounting to 6% of the Medicaid program.

In response to these scathing reports, CMS announced it is unveiling increased and stricter oversight of the program.  “With historic growth in Medicaid comes an urgent federal responsibility to ensure sound fiscal stewardship and oversight of the program,” said CMS Administrator Seema Verma.

The oversight initiatives include stronger audit functions, enhanced oversight of state contracts with private insurance companies, increased beneficiary eligibility oversight, and stricter enforcement of state compliance with federal rules. CMS will begin auditing some states based on the amount spent on clinical services and quality improvement versus administration and profit. The MLR audits will include reviewing states’ rate setting. CMS will also audit states that have been previously found to be high risk by the OIG to examine how they determine which groups are eligible for Medicaid benefits. Finally, CMS will be validating the quality and completeness of state provided claims and provider data, as required by the Medicaid Managed Care rule.




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