MEDICAID IMPROPER PAYMENTS REACH $86.49 BILLION

Medicaid is the single largest payer of health care in the country. As the program has increased in size and scope, it has dealt with fraud, waste, abuse, and improper payments. Over the years, there have been several federal initiatives to rein in costs; nevertheless, Medicaid has remained on the GAO's High-Risk List since 2003. Last month, CMS reported on fiscal year 2020 Medicaid estimated improper payments.

CMS recently announced, "the FY 2020 national Medicaid improper payment rate estimate is 21.36 percent, representing $86.49 billion in improper payments." Improper payments in the Medicaid program now account for more than twenty percent of federal Medicaid expenditures and one out of every four Medicaid dollars is spent improperly.

CMS estimated FY 2020 Medicaid improper payments with the PERM program by examining claims submitted between July 1, 2018 and June 30, 2019. They noted that the 2020 estimates are not comparable to previous years due to the reintegration of the PERM eligibility component. In the most recent report period, adjustments were made to include ACA requirements. The report revealed that eligibility errors are driving Medicaid improper payments. In many cases, program recipients are ineligible either because of their income or they are not lawful residents. The report cited the following as the primary contributors to the rise in improper payments:

• Eligibility errors from insufficient documentation to confirm eligibility determinations and non-compliance with redetermination requirements.
• Non-compliance with provider revalidation of enrollment and rescreening.
• Non-compliance with provider enrollment, screening, and NPI criteria.

While reporting on improper payments brings the problem into focus, it does nothing to mitigate them. States and Medicaid plans must find ways to strengthen program oversight to minimize payments made in error.

It is important to note that improper payment rates are not necessarily indicative of fraud. Actually, many improper payments are the result of low quality data and outdated methodologies. This is evident when states attempt to coordinate benefits but struggle to identify liable third parties of pharmacy and medical claims. Currently, the majority of the data that states access for TPL discovery is not current, available, complete, or correct. Without reliable, complete, and accurate data, Medicaid plans cannot help but make claims payments in error.

Syrtis Solutions (Syrtis) saw the need for a remedy to reduce the improper payment rate within the Medicaid program. Syrtis is unique in that it uses e-prescribing eligibility data to provide the payer of last resort market with a technology-based solution to prospectively cost avoid pharmacy and medical claims. By implementing ProTPL, Medicaid plans can maximize the efficiency of their adjudication processes while saving valuable resources.

Millions of Americans are looking to Medicaid for health care because of the pandemic driven recession. Simultaneously, improper payments are costing the program billions of dollars when resources are needed most. Moving forward, accurately identifying claims before they are paid, and cost avoidance measures will be critical steps to maximizing program efficiency.

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NOVEMBER MEDICAID NEWS RECAP

Syrtis Solutions distributes a monthly Medicaid news summary to help you stay informed. The monthly summary concentrates on developments, analysis, and legislation that relates to Medicaid integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a summary of last month's noteworthy Medicaid news.

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MEDICAID MANAGED CARE FINAL RULE

Medicaid's Managed Care Final Rule, CMS-2408-F, was finalized in November. The new rule implements recommendations from the Notice of Proposed Rule Making from last November. Provisions from the policy will begin taking effect as early as December 14, 2020.

According to Medicaid enrollment data from 2018, 66 million people are enrolled in managed care, making managed care arrangements the primary delivery system for Medicaid benefits. To assist these programs, the rule cuts back administrative burdens on Medicaid managed care plans and provides states more flexibility to determine capitation rates and appropriate payment rates.

These regulations were last finalized by the Obama administration in 2016. Shortly after the Trump administration transitioned into office it started a "full review of managed care regulations to prioritize beneficiary outcomes and state priorities." The administration sent letters to state governors for input on how to more effectively manage the Medicaid program and improve health outcomes.

In response, states pointed out that the 2016 regulations added cost and additional administrative burdens to Medicaid programs. With the support of state Medicaid directors and the National Association of Medicaid Directors (NAMD), CMS determined the problematic areas from the 2016 regulations. In the Notice of Proposed Rule Making in 2018, the group proposed methods to improve federal oversight, state flexibility, beneficiary protections, fiscal integrity, and the delivery of quality care.

According to CMS, "This rule finalizes many of those proposals and helps ensure that state Medicaid and CHIP agencies are able to work efficiently and effectively to design, develop, and implement Medicaid and CHIP managed care programs that best meet each state's local needs and populations."

CMS-2408-F makes changes in the following managed care regulations: setting actuarily sound capitation rates, pass-through payments, state-directed payments, network adequacy standards, risk-sharing mechanisms, quality rating system appeals and grievances, and requirements for beneficiary information.

That being said, the new rule does not fully revise the 2016 regulations. The most notable revisions appear in capitation rates and payments, network adequacy standards, requirements for beneficiary information, and quality ratings and oversight.

Capitation Rates and Payments-
States are authorized to set capitation rate cell ranges as opposed to a single rate per cell. States are restricted from changing capitation rates based upon the amount of federal aid for a population that would raise federal costs. States cannot add or adjust risk-sharing mechanisms after the beginning of a rating period. The rule establishes two minimum fee schedules for directed payment arrangements from plans to providers. States transitioning a population from FFS to managed care are authorized to make supplemental pass-through payments for up to 3 years.

Network Adequacy Standards-
States are no longer obligated to create and enforce enrollee travel time and distance standards. Alternatively, states can set a quantitative adequacy standard.

Requirements for Beneficiary Information- 
Mandated taglines are only necessary for materials that are critical to receiving services instead of all written materials. Provider directories are to be updated quarterly rather than month-to-month. Managed care plans can issue notice of provider terminations to the later of 30 days before the effective date of the termination or 15 days after the receipt or issuance of a termination notice.

Quality Rating System (QRS)-
The rule only requires that states alternative managed care quality rating systems (QRS) secure information comparable to the CMS QRS whenever it is feasible. States can now expand the definition of disability in regard to health disparities within their quality strategy, however, they are not obligated to. On a yearly basis, states must post which plans are exempt from external quality review.

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