Improper payments, fraud, and waste cost the Medicaid program billions of dollars each year. In 2020 alone, Medicaid improper payments totaled $86.49 billion. These payments make up more than twenty percent of federal Medicaid expenditures, and one out of every four Medicaid dollars is spent improperly.
Since 1965, Medicaid has provided healthcare to the country's most vulnerable populations. In 2010, the ACA broadened program eligibility and raised the federal government's match percentage. Two years later, states had the ability to choose whether they would expand their programs under the ACA. Since then, thirty-eight states and Washington D.C. have expanded their Medicaid programs, and over seventy million people are enrolled. Medicaid has become the single largest insurer in the United States.
As reliance on Medicaid has grown, improper payments have only become more problematic. Eligibility errors, poor quality data, and outdated methodologies are costing the program billions of dollars every year. In 2019 an approximated 2.5 million Medicaid enrollees were actually ineligible. According to CMS, several states do not verify enrollee eligibility since there is "insufficient documentation to affirmatively verify eligibility determinations." Additionally, the GAO has placed Medicaid on its High-Risk List since 2003 due to improper payments.
Currently, Medicaid accounts for one-quarter of most state budgets, and 2021 estimates suggest that the program's share will only increase. In order for the safety net program to remain fiscally solvent as enrollment climbs and eligibility expands, states and Medicaid plans need to implement cost avoidance solutions to protect resources and mitigate improper payments.
By law, Medicaid is the payer of last resort. This means that if a recipient has healthcare coverage through any other third party, that third party must pay its legal liability first. If any liability remains, the Medicaid plan will then pay. Having said that, Medicaid plans routinely pay pharmacy and medical claims that are the obligation of a third party because they do not have access to reliable or accurate eligibility data. Unfortunately, this has been an issue for over ten years. In 2012, HHS Regional Inspector General Ann Maxwell testified before Congress and explained, "much of the data used to identify improper payments and fraud is not current, available, complete, [or] accurate."
Syrtis Solutions (Syrtis) recognized the need for a solution that would reduce improper payments in the Medicaid program. Syrtis is unique because it utilizes e-prescribing eligibility data to provide the payer of last resort market with a technology-based solution to cost avoid pharmacy and medical claims prospectively. Their solution provides plans with the data they need to coordinate benefits effectively and cost avoid on claims that are the liability of a third party. Medicaid plans that have implemented the new tool are saving resources by optimizing their adjudication processes' efficiency.
2020 demonstrated the importance of the Medicaid program, and enrollment data indicates that reliance on Medicaid for healthcare coverage will only rise in 2021. As an increasing number of Americans rely on Medicaid, the program cannot afford billions in improper payments. States and Medicaid plans must take steps to cost avoid and improve the efficiency of their Medicaid programs.
