CMS Needs to Do More to Fight Medicaid Fraud and Overpayments

Published: August 23, 2018

CMSHealth IT

GAO contends that CMS has made progress in strengthening Medicaid program integrity, but further action is needed to address risk areas.

Medicaid provides health care to nearly 75 million Americans at the cost of over $600 billion per year. In 2017, estimated Medicaid improper payments totaled approximately $37 billion and 26% of all federal improper payments. Because Medicaid is a joint federal-state health care program overseen by CMS and significant flexibility is given to states to implement the program, the diversity and complexity of the program is challenging to oversee at the federal level. Due to the program’s high level of improper payments and its size and complexity, the Medicaid program has been on GAO’s High Risk List since 2003.

Tuesday, the Senate Committee on Homeland Security and Government Affairs held a hearing on CMS efforts to fight Medicaid fraud and overpayments. Committee members heard testimony from GAO’s Eugene L. Dodaro, US Comptroller General, and Seema Verma, CMS Administrator.

According to Dodaro, improper payments, supplemental payments and demonstrations represent the three broad areas of program integrity risk identified by GAO during its studies of Medicaid oversight. GAO supports the CMS plan to resume audits of beneficiary eligibility determinations in order to reduce improper payments, however it recommends that CMS implement processes to ensure that managed care payments are appropriate.

In the area of supplemental payments, which are made to providers for specific services in addition to regular, claims-based payments, GAO recommends that CMS’ new planned reporting requirements “clearly establish approval criteria and review processes to ensure these payments are economical and efficient.”

Dodaro acknowledged CMS efforts and realized savings in the area of demonstrations, which allow states and CMS to test new coverage and service delivery approaches.  $63 billion in savings were amassed from FY 2016 to FY 2018 due to a CMS policy change that no longer allows states to accrue unspent demonstration funds. GAO further recommends CMS ensure that demonstration projects do not increase federal costs and that state evaluations of demonstration projects are conducted properly.

Dodaro offered the following GAO recommendations to further strengthen Medicaid oversight:

  • Improve data - More needs to be done to collect complete and comparable data from all states to feed CMS’s Transformed Medicaid Statistical Information System (T-MSIS) initiative.  But the initiative has the potential to improve program oversight.
  • Implement a fraud-risk strategy - CMS still needs to conduct a fraud risk assessment and implement a risk-based antifraud strategy for Medicaid, even though CMS’ Center for Program Integrity required antifraud training for stakeholders.
  • Collaborate – CMS should enlist state auditors by giving them a substantial, ongoing role in auditing state Medicaid programs. Increased collaboration between the federal government and the states can help reduce improper payments and improve program integrity.

Verma testified that since her appointment she has made partnering with GAO and the HHS OIG a priority in order to improve program integrity and deliver better outcomes for patients. For example, CMS is using GAO’s 2015 Fraud Risk Assessment Framework for guidance on how to instill fraud risk assessment principles throughout the agency.

Verma and her team at CMS are attempting to transform the Medicaid program through greater flexibility, stronger accountability, and enhanced program integrity. In June, they announced a new Medicaid program integrity strategy with the intent of enhancing accountability for managing federal taxpayer dollars together with the states.

Specific enhanced Medicaid program integrity initiatives include:

  • New Audits of State Beneficiary Eligibility Determinations
  • Targeted Audits of State Managed Care Claims for Federal Match Funds and Rate Setting
  • Addressing the Inherited Backlog of Disallowances
  • Designated State Health Programs (DSHP) Funding Phase-Out
  • Intergovernmental Transfers
  • Budget Neutrality Policies for Medicaid Demonstration Projects

Another key component of CMS’ Medicaid program integrity plans involves optimizing data. Medicaid and CHIP data and systems are a high priority for CMS. CMS has been working with the states to implement a Transformed Medicaid Statistical Information System (T-MSIS) to replace MSIS. The new system changes the way in which data on health services is collected. As of June, all 50 States, along with D.C. and Puerto Rico, were submitting data on their programs using the new system. CMS will be validating the quality and completeness of the data over the coming months. CMS’s ongoing goal is to use advanced analytics and other innovative solutions to improve T-MSIS data and to maximize program integrity.

Dodaro told the committee that GAO will continue to monitor CMS’ efforts to improve oversight and integrity of the Medicaid program, suggesting that it would be appropriate for the committee to ask CMS for regular reports on their progress, as well as GAO’s evaluation of their progress.