GAO CRITICIZES MEDI-CAL'S OUT-OF-DATE REPORTING MODEL AND IMPROVED MEDICAID OVERSIGHT

In August, the GAO issued a report to Congress that focused on what CMS would need in order to better target risks and improve Medicaid oversight. The review discovered that one of the critical problems the agency is facing is the failure to incorporate new reporting technology. Currently, California's Medicaid program is still using paper files to report expenses 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 provides services to 1 in 3 Californians with a combined federal and state budget of $104 billion annually. Presently, the state utilizes 92 separate computer systems to run the program. However, according to DHCS, "Given system limitations and the magnitude of the supporting documentation, providing it electronically is currently not feasible."

Over the course of the program's lifespan, Medi-Cal has been unsuccessful in implementing new technology. For example, in 2010 Xerox acquired a contract worth $1.7 billion to create 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 deal. 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The issue is even more problematic when you take into consideration that California's outdated paper reporting system is not only a problem within the state but its also entrenched across the country's healthcare system.

States are mandated to send Medicaid data to the federal government on a quarterly basis. This data consists of expenses and supporting documentation including invoices, cost reports, and eligibility records. Even though California provides its spending reports electronically, its supporting documentation is not.

Recently, California has made some attempts to upgrade its systems that would result in improved Medicaid oversight. DXC Technology was granted a contract in August to take over some of the functions 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 accountable for 90% of the design and implementation costs and the state would cover $50 million out of pocket.

As the state begins updating 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 roughly $30 million a year to maintain the 40-year old system.

The GAO also criticized CMS for its lack of Medicaid oversight. The report disagreed with the fact that the agency appoints 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. For that reason, California is at higher risk of enrollment errors and improper payments due to its program's size. Regardless of the substantial difference in enrollment figures, both states were assigned 30 staff members to review claims. In addition, the authors of the report specified 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 decreased 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."

Click here to read more. 

GOVERNMENT OFFICIALS AND AGENCIES LOOK INTO MEDICAID'S INTEGRITY

In 2017, improper payments within the Medicaid program reached a total of $37 billion according to CMS. That amounts to 10 percent of the federal dollars spent on the program. Furthermore, 99.2 percent of the payments made are overpayments.To make matters worse, under the current legislation, national health spending is predicted to reach $5.7 trillion by 2026. When considering the rising costs of healthcare and the programs growth from expansion under the Affordable Care Act, government officials are concerned over the programs sustainability.

In an effort to address Medicaid fraud and overpayments, the Senate Homeland Security and Governmental Affairs Committee held a hearing in June. Those present to investigate the problems and solutions were Chairman Senator Ron Johnson (R) WI, Senator Clair McCaskill (D) MO, Comptroller General of the United States Government Accountability Office, Eugene L. Dodaro, and the U.S. Department of Health and Human Services Assistant Inspector General for Audit Services, Brian P. Ritchie. Over the course of the hearing, the ranking members and witnesses discussed the rising costs associated with the Medicaid program and what efforts should be made so that federal funds are spent efficiently and effectively.

GAO Recommendations

Comptroller General Dodaro represented the GAO at the hearing and suggested actions to mitigate improper payments and program integrity risks. He indicated that Medicaid's unique state-by-state structures combined with the size of the program are two elements that make overseeing the program difficult.

The GAO identified improper payments, supplemental payments, and demonstrations as three areas of risk within Medicaid that are estimated to exceed $900 billion by 2025. In order to strengthen oversight and address risk, the GAO recommended the following:

Improve Data
"The Centers for Medicare & Medicaid Services (CMS), which oversees Medicaid, needs to make sustained efforts to ensure Medicaid data are timely, complete, and comparable from all states, and useful for program oversight. Data are also needed for oversight of supplemental payments and ensuring that demonstrations are meeting their stated goals."

Target Fraud
"CMS needs to conduct a fraud risk assessment for Medicaid, and design and implement a risk-based antifraud strategy for the program."

Collaborate
"There is a need for a collaborative approach to Medicaid oversight. State auditors have conducted evaluations that identified significant improper payments and outlined deficiencies in Medicaid processes that require resolution."

Click here to see the GAO's full report.

DHHS Recommendations

Inspector General for Audit Services, Brian P. Ritchie represented DHHS and also weighed-in on the obstacles facing Medicaid. The Inspector General identified high improper payments rates, inadequate program integrity safeguards, and beneficiary health and safety concerns as risks that jeopardize the integrity of the program. Additionally, he testified that in order to preserve the program there needs to be more robust efforts made in regards to prevention, detection, and enforcement.

According to Ritchie, "CMS must do more to ensure that Medicaid payments are made to the right provider, for the right amount, for the right service, on behalf of the right beneficiary."

DHHS emphasized the importance of complete and reliable national Medicaid data for successful oversight and program management. They determined that the deficiency in quality data obstructs enforcement efforts. DHHS advised that CMS do the following:

"Ensure the completeness and reliability of data in the Transformed Medicaid Statistical Information System"

"Ensure that States report encounter data for all managed care entities"

"Reduce improper and wasteful payments and ensuring compliance with fiscal controls"

"Improve the oversight of Eligibility Determinations"

"Ensure that national Medicaid data are complete, accurate, and timely" 

"Facilitate State Medicaid agencies' efforts to screen new and existing providers by ensuring the accessibility and quality of Medicare's enrollment data"

Read through the department's complete list of recommendations here.

CMS's Efforts To Address Medicaid's Improper Payments, Waste, Fraud, and Abuse

Nearly a month after the meeting, the Senate Homeland Security and Governmental Affairs Committee conducted an additional hearing with the Administrator of The Centers for Medicare and Medicaid Services and the US Comptroller General. The hearing concentrated on examining CMS's efforts to protect against fraud and overpayments within Medicaid. The GAO expressed that while CMS has taken measures to address these threats, additional action is needed in order to strengthen the program's integrity.

CMS's Administrator, Seema Verma, testified at the hearing and presented CMS's efforts. She discussed the following:

• 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 1115 Medicaid demonstration projects

Furthermore, Administrator Verma promoted the optimization of data. She also pointed out it's significance in protecting the integrity of the program

According to CMS, "Improving Medicaid and CHIP data and systems is a high priority. Through strong data and systems, CMS and States can drive toward better health outcomes and improve program integrity, performance, and financial management in Medicaid and CHIP."

CMS is working to strengthen the Medicaid program's integrity by employing advanced analytics and technologies for the collection of health services data. In June, each of the 50 states, including Washington D.C. and Puerto Rico, began sending data from their programs to the Transformed - Medicaid Statistical Information System (T-MSIS). The system is designed to keep track of key information such as: enhanced information about beneficiary eligibility, beneficiary and provider enrollment, service utilization, claims and managed care data, and expenditure data for Medicaid and CHIP. Moving forward, the agency will be in charge of determining the quality and completeness of the data submitted.

Click here to read Administrator Verma's full statement.

The Medicaid program is one of the nation's largest sources of funding for medical and health-related services. As a result of concerns over the program's fiscal oversight and it's substantial amount of improper payments, Medicaid has been on the GAO's "High Risk List" since 2003. As the program continues to expand, government officials and federal agencies are working to address issues rooted in waste, fraud, and abuse.

Learn more here.