MEDICAID NEWS FROM OCTOBER

 

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


Read October's news here.

MEDICAID IMPROPER PAYMENTS CAUSE CONCERN AMONG SENATORS

Under the Payment Integrity Information Act of 2019, the Centers for Medicare & Medicaid Services (CMS) was instructed to assess federal programs in danger of improper payments. The bill tasked CMS to evaluate what programs are at risk, estimate the number of improper payments, and report on steps taken to lower improper payments.

In November, CMS issued its Medicaid Payment Error Rate Measurement (PERM) review discoveries. CMS determined that the national Medicaid improper payment rate estimate reached 21.36 percent in FY 2020, representing $86.49 billion in improper payments. Medicaid improper payments represented more than twenty percent of federal Medicaid expenditures, and one out of every four Medicaid dollars was spent improperly. Furthermore, the majority of improper payments stemmed from eligibility errors.

As November approaches and legislators consider additional Medicaid expansion, some representatives are concerned about the climbing improper payment rate and what the FY 2021 audit will uncover. The upcoming report will be the first full audit of all fifty states after program expansion.

On Monday, thirteen Senate Finance Committee Republicans sent a letter to Administrator Brooks-LaSure at CMS to voice their concerns and to request data to inform policy discussions.

Read the letter below.

Dear Administrator Brooks-LaSure:

As some in Congress consider proposals to expand the Medicaid program by potentially half a trillion dollars over the next decade, it is vital that both Senators and Members of the House of Representatives have accurate information about how the program is using taxpayer resources. Every November, the Centers for Medicare and Medicaid Services (CMS) releases estimates of improper payment rates for programs within its jurisdiction. The November 2020 report showed that the Medicaid improper payment rate reached 21.4 percent, with total federal improper payments in the program amounting to $86.5 billion annually. Medicaid’s improper payment rate has significantly increased since the passage of the Affordable Care Act, which dramatically expanded Medicaid. In 2013, the year before the ACA’s Medicaid expansion took effect, the improper payment rate was just 5.8 percent.

According to last year’s report, eligibility errors are the major drivers of the increased Medicaid improper payment rate. According to CMS, “Eligibility errors are mostly due to insufficient documentation to affirmatively verify eligibility determinations or non-compliance with eligibility redetermination requirements.” One of the most common eligibility errors often occurs when failing to verify information provided by the applicant, including income. Failure to properly verify that applicants are eligible for the program, especially to this extent, harms the nation’s taxpayers and takes resources away from those who are eligible and who truly need the program.

There is concern that the November 2020 improper payment rate estimate of 21.4 percent was unrealistically low because the eligibility reviews excluded one-third of states. Since the Obama Administration canceled eligibility audits from 2014-2017, this year’s forthcoming report will be the first complete assessment of all states since the expansion took effect. Given its more complete nature, the upcoming assessment has the potential to show that the improper payment rate in the program exceeds 25 percent, totaling above $100 billion annually. Such a high improper payment rate demonstrates that the program requires a stalwart defense to ensure those that are eligible receive the care they need. This rate also raises questions of whether Congressional and regulatory actions have made Medicaid too complicated for the Federal government to properly oversee it, especially given the differing improper payment rates among states. Congress needs complete and updated information about the improper payment rate in Medicaid as well as the corresponding drivers of this problem. We understand that the essential work on the 2021 CMS improper payment report has concluded, and drafts of the report have been completed. While state and Federal responses to COVID-19 halted some payment and eligibility reviews in 2020, this work is too vital to remain paused when the consequences are so dire. Given the importance of accurate data to inform ongoing policy discussions, by Monday, November 8, we ask that you provide:

• The updated improper payment rate in Medicaid;
• A breakdown of improper payment rates by state; and
• The corresponding estimated total of improper payments from insufficient verification or non-compliance with eligibility requirements.

When asked about this at a June hearing in front of the Senate Finance Committee, Secretary Becerra committed to making available such data. We also request a briefing with Committee Members’ staff, so that Congress can ask informed questions on this important matter. Thank you for your prompt attention to this shared concern.

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ASCERTAINING MEDICAID TPL

The majority of Medicaid improper payments occur as a result of antiquated data systems that lead to eligibility errors. As the Medicaid program has expanded, finding primary commercial coverage, also referred to as Third Party Liability (TPL), has become significantly more complicated and challenging. By law, Medicaid plans are payers of last resort. This means if a plan member has health care coverage through any other third party, that third party must pay its legal liability first. If any liability remains, Medicaid plans will then pay. According to the Centers for Medicare and Medicaid Services (CMS), "States are required to take all reasonable measures to ascertain the legal liability of third parties to pay for care and services that are available under the plan."

This rule has been in place since the Employee Retirement Income Security Act (ERISA) modified the Social Security Act in 1974. To this day, ascertaining TPL remains a difficult challenge. Coordination of benefits (COB) is no easy task. CMS explains that COB is achieved by, "determining Medicaid benefits when an enrollee has coverage through an individual, entity, insurance, or program that is liable to pay for health care services."

WHERE TPL IS IDENTIFIED

The discovery of liable third parties happens at three points in the lifecycle of a Medicaid beneficiary. This identification of unknown primary insurance coverage may occur in the course of the enrollment process, prospectively before claims are paid, and retrospectively after an improper claims payment has been made.

In the enrollment phase, Medicaid applicants are approved and their self-reported TPL is validated and reported to the state. The main challenge is that over 13% of the Medicaid population has unreported TPL. Applicants are often not aware of other health insurance or fail to disclose it at the time of enrollment. At the point of service-- when recipients are presenting insurance information to care providers-- they might not furnish proof of primary coverage. The system is undoubtedly complex, and members may not realize that they have valid primary coverage, and even if they do, it is unlikely that they are familiar with the concept of payers of last resort. Compounding the confusion, the Medicaid population is in near-constant flux, with individuals becoming eligible and ineligible for services depending on a number of factors such as income and disability status.

Once an applicant is enrolled, plans undertake ongoing prospective identification of other insurance coverage. The difficulties here are the same issues that are responsible for the high amount of improper payments in the Medicaid program. That is, existing data mining and matching models are antiquated and need constant verification. Sometimes, a Medicaid plan uses an outside vendor to conduct monthly eligibility checks in an attempt to discover a Medicaid member's TPL. However, the data available to these vendors suffer the same antiquation and inaccuracy problems. Though health plans make an effort to discover TPL in as timely a manner as possible, there are many obstacles.

The final point at which health plans can discover TPL is retrospectively after claims are paid in error. At present, pharmacy and medical claims reviews are profoundly retrospective, which creates a multitude of problems for improper payments. Consequently, a post-payment recovery process, known as 'pay and chase,' is needed to recoup the claims payments that were made in error.

Beyond simple mistakes at the point of service with providers, there are fundamental problems in the health care data used by the federal government that lead to the loss of literally billions of dollars a year.

One of the major challenges facing Medicaid is the lack of high-quality eligibility data. In testimony before Congress in 2012, HHS Regional Inspector General Ann Maxwell gave an alarmingly unfavorable assessment relating to the reliability of data the federal government uses to detect overpayments and fraud in the Medicaid program. She explained, "much of the data used to identify improper payments and fraud is not current, available, complete, [or] accurate."

Identifying primary commercial coverage is extremely difficult for payers of last resort. Due to the complexity of COB, the near-constant flux in the program's population, and bad quality eligibility data health plans rely greatly on retrospective identification and recovery. Unfortunately, this is costing Medicaid billions in waste. To coordinate claims effectively, payers of last resort must look to new data solutions that determine TPL before claims are paid in error.

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