Medicaid Improper Payment Rate Continues to Grow

22 Jun Medicaid Improper Payment Rate Continues to Grow

Last month Congress held a hearing concerning the escalating number of improper payments in Medicare and Medicaid. The House oversight panel reviewed concerns regarding escalating improper payment rates discovered by federal oversight groups which include the Government Accountability Office (GAO) and the Health and Human Services Office of the Inspector General (HHS-OIG).

Testimony on Medicaid Improper Payment Rate

The key testimony came from Dr. Shantung Agrawal, CMS’s Director of the Center for Program Integrity. Dr. Agrawal discussed how CMS and the states were employing guidance from the GAO and HHS-OIG to lessen improper payments. He additionally discussed challenges with carrying out program integrity initiatives, particularly in the state Medicaid programs.

In 2005, CMS implemented the Medicare Recovery Audit Program, resulting in billions of dollars recovered for the Medicare Trust Fund. The agency has also implemented several other programs to identify and recover improper payments, including the Medicaid Integrity Program, Zone Program Integrity Contracts and a host of others. These programs are large and complex efforts, and although they have had some success, the improper payment rate for Medicare and Medicaid continues to grow.

It’s time that we stop frittering away tax dollars because of inefficiency and poor technology. CMS and state Medicaid agencies should focus their efforts on proactively avoiding improper payments, not on detecting liable primary insurers after the improper payment is made and trying to recoup the wasted dollars after the fact (A systemic process known universally as “Pay & Chase”). The way to achieve this is by implementing prospective cost avoidance at the time claims arrive to the Medicaid plan, before any remittance is made. Technologies are actually now available that can stop making payments on claims that are the liability of third party commercial payers, which account for 57% of Medicaid’s improper payments. Prospectively identifying if a Medicaid beneficiary has primary coverage will essentially eliminate the need for post-payment recovery.

PERM Provisions Get tighter

To this end, the program that gauges Medicaid improper payments and eligibility might be getting tougher in the future under a new rule proposed by CMS last Monday.

The measure would implement stipulations of the Affordable Care Act in the Payment Error Rate Measurement program, which generates improper payment rates according to assessments of the fee-for-service, managed care and eligibility aspects of Medicaid. A key provision is that the task of performing PERM eligibility reviews would move to a state-supported federal contractor, rather than the current provision requiring states to administer their own eligibility assessments and report results to CMS.

States whose improper payment rates exceed 3% could face stricter Corrective Action Plans and potential payment reductions or disallowances under the proposed regulation. Monday’s proposal additionally would change the Medicaid Eligibility Quality Control program, a separate eligibility review program that requires states to disclose the ratio of their improper payments for medical services compared with their total expenses for medical services.

The aim is to “restructure” the program so it can help states lower their eligibility improper payment rates, and more effectively complement PERM.

CMS is accepting comments on the proposed rule through August 22. Click here to read the full proposal in the Federal Register.