Medicaid’s Wasteful Spending – The Numbers

27 Jul Medicaid’s Wasteful Spending – The Numbers

The CMS has witnessed a dramatic surge in improper Medicaid payments and says the Affordable Care Act could be the cause. The Medicaid improper payment rate has jumped from 5.8% or $14.4 billion in fiscal 2013 to 9.78% or $29.12 billion in fiscal 2015, according to an HHS fiscal audit.

An improper payment might occur when funds go to the wrong beneficiary, the Medicaid enrollee has other primary insurance coverage, information is not accessible to support a remittance or the beneficiary uses funds in an improper way. The count includes fraudulent claims but is by no means a measure of fraud.

Medicaid Improper Payment Rate

In a post on the CMS blog, chief medical officer Dr. Patrick Conway notes, “When we talk about improper payments, it’s important to remember what they are and why they happen. To be clear, improper payments are not typically fraudulent payments.”

Dr. Conway goes on to explaining the upsurge, attributing the rise to difficulties that state organizations are having with new provider enrollment and screening guidelines under the Affordable Care Act. Without these new requirements, the Medicaid improper payment rate might have decreased to 5.1%, Conway said.

” We often see such increases when new requirements take effect, as states and providers often need time to modify their operations in order to comply with the updated standards,” Conway said. “We believe, however, that these requirements will ultimately strengthen the Medicaid and CHIP programs, and that the improper payment rates will again decrease with state and provider experience.”

Thus far, Medicaid Recovery Audit Contractors (RACs) are actually providing little assistance to states in recovering improper payments. States were obligated to employ Medicaid RAC programs by Jan. 1, 2012, under the Affordable Care Act. Recoveries totaled $57.71 million in fiscal 2015, up a little from $55.1 million in fiscal 2014, according to the audit. The review does not explain why the RAC recoupment is so low, however, it does bring up questions as to why the emphasis remains on post-payment recovery versus the implementation of technology to avoid paying claims in error.