GAO Criticizes Medi-Cal’s Outdated Reporting Model And Improved Medicaid Oversight

19 Sep GAO Criticizes Medi-Cal’s Outdated Reporting Model And Improved Medicaid Oversight

In August, the GAO submitted a report to Congress that focused on what CMS would need in order to better target risks and improve Medicaid oversight. The review determined that one of the critical problems the agency is facing is the failure to implement new reporting technology. At the moment, California’s Medicaid program is still using paper files to report expenditures and that translates into thousands of documents.

Carolyn Yocom is the Health Care Director at the GAO that focuses on Medicaid. She stated, “For this type of reporting on expenditures, California really should be able to provide that electronically.”

Medi-Cal serves 1 in 3 Californians with a combined federal and state budget of $104 billion annually. Currently, the state utilizes 92 separate computer systems to operate the program. However, according to DHCS, “Given system limitations and the magnitude of the supporting documentation, providing it electronically is currently not feasible.”

Throughout the program’s lifetime, Medi-Cal has been unsuccessful in implementing new technology. For example, in 2010 Xerox secured a contract worth $1.7 billion to develop a new system for the program. However, the deal was terminated after six years of delay and according to the state, Xerox paid more than $123 million as a settlement. Conduent was then spun off into a separate company from Xerox to continue running the system and process claims.

The issue is even more problematic when you consider that California’s outdated paper system is not only a problem within the state but its also entrenched throughout the country’s health care system.

States are required to submit Medicaid data to the federal government on a quarterly basis. This data includes expenditures and supporting documentation such as invoices, cost reports, and eligibility records. While California provides its spending reports electronically, its supporting documentation is not.

Recently, California has made some efforts to update its systems that would lead to improved Medicaid oversight. DXC Technology was awarded a contract in August to take over some of the operations of Conduent. In addition, program officials are also planning for a new system that would cost an estimated $500 million. If approved, the federal government would be responsible for 90% of the design and implementation costs and the state would cover $50 million out of pocket.

As the state begins modernizing its operations, a remedy to the program’s reporting issues remains a focus among government officials. According to Elaine Howle, a state auditor, Medicaid’s information technologies system, “needs to be replaced, because it is more than 40 years old, its operations are inefficient, maintaining the system is difficult and there is a high risk of system failure.”

Howle wrote a letter to Governor Brown and other officials in June. She stated that California is paying approximately $30 million a year to maintain the 40-year old system.

The GAO also criticized CMS  for its lack of Medicaid oversight. The report took issue with the fact that the agency assigns nearly the same amount of staff to review case files regardless of the size of a state’s program. As an example, under the ACA, California had ten times the amount of new enrollees as Arkansas. Therefore, California is at higher risk of enrollment errors and improper payments due to its program’s size. Despite the substantial difference in enrollment figures, both states were assigned 30 staff members to review claims. In addition, the authors of the report pointed out that California represents 15% of federal Medicaid spending, while Arkansas only represents 1%.

Carolyn Yocom commented that CMS “needs to step back and assess where are the biggest threats and vulnerabilities.” She also stated, “If you aren’t looking, you don’t know what you aren’t catching.”

According to the GAO, from FY2014 to FY2018 federal Medicaid spending rose to around 31% and at the same time, CMS financial oversight dropped by about 19%.

In a July letter to the GAO, DHHS agreed with the report’s Medicaid oversight recommendations and wrote that it “will complete a comprehensive national review to assess the risk of Medicaid expenditures reported by states and allocate resources based on risk.”