BAD DATA IS COSTING MEDICAID BILLIONS

Medicaid currently fails at providing a system that efficiently and accurately stores and utilizes member data. As Medicaid is a joint state and federally run program, there are many problems with coordinating data platforms. Different states have their own unique data processing and storing, and while federal Medicaid data can reveal a clearer picture of consistent problems across state lines, lack of communication and data sharing produces significant barriers. While technology has advanced, gaps in existing data or errors in computation have direct consequences to the swift identification of third party liability (TPL), resulting in costly reimbursement strategies for Medicaid. The lack of uniformity in these systems prevents Medicaid from functioning smoothly.

One of the major challenges facing Medicaid is the lack of quality TPL data. In testimony before Congress in 2012, HHS Regional Inspector General Ann Maxwell delivered an alarmingly unfavorable evaluation pertaining to the reliability of data federal and state authorities use to identify overpayments and fraud in the Medicaid program. She stated, "much of the data used to identify improper payments is not current, available, complete, [or] accurate." A decade later, the exact same issues with TPL data that Maxwell outlined in her testimony to congress exist today. Apart from simple mistakes at the point of service with providers, there are fundamental problems in the health care data used by the Medicaid program that result in the loss of literally billions of dollars a year.

STATE DATA ISSUES

Each state Medicaid agency (SMA) is responsible for delegation of funds and detecting TPL through their own data sources. That being said, states have differing policies and benefits for Medicaid enrollees, producing inconsistent results. State policies may have existing gaps in information or may be so complicated that they are virtually impossible to navigate, leading to administration frustration. The Medicaid Management Information System (MMIS) works to centralize information and uses patient identification numbers to help with payment delegation. That being said, because of the large Medicaid population, in addition to continual churn, these datasets can be cumbersome and create missing information that causes difficult identification of TPL. Furthermore, Medicaid information is not communicated across state lines, creating repetitive errors that could be avoided. Health care organizations may share patient data with Medicaid for payment purposes, but the various types of data management could be an issue when trying to translate to Medicaid-specific forms.

FEDERAL DATA ISSUES

While states may send routine reports to federal Medicaid agencies, a working federal database may have a hard time deciphering the varying information from different SMAs. Data can be lost, infrequently collected, or incorrect across state lines. An individual in one state could move to an adjoining state and lose specific Medicaid benefits. Data might only show a small piece of the big picture and can not properly address the nuances of a social program and the problems that persist across states. Federal guidelines may only guide overarching procedures, and not have control over individual states' Medicaid programs and policies. This disjunction of administration proves difficult when trying to accurately find TPL data for not only individuals, but also states and federal overview.

Data sharing is therefore an efficient and effective way to decrease the number of inconsistencies between states and local organizations that require Medicaid payment. Nevertheless, a slew of issues stem from data sharing in totality. Even within states, health care organizations are hesitant to share patient data. Sacred protected health information (PHI) delegates immense responsibility to hospitals, providers, and care coordinators to handle data cautiously. Even if organizations are willing to share patient data, unique technology systems across health care do not always capture the same data or translate it in the same way. SMAs are responsible to intake this information and identify TPL, which increases difficulty when trying to smooth operations. This reluctance to share information translates to state and federal Medicaid agency issues. Sharing large amounts of diverse data has been troublesome and leads to inconsistent data and high costs to the Medicaid program.

For years Medicaid has struggled to effectively store and utilize program beneficiary data due to disparate data platforms and the inability to accurately share Medicaid data between states and the federal government. Moreover, much of the healthcare data that Medicaid plans do have access to is leading to billions of dollars in improper payments each year. Without having reliable, complete, and accurate TPL data, Medicaid plans will continue to make claims payments in error and rely on costly reimbursement strategies. Plan administrators must look to true TPL technology solutions for additional efficiency and cost avoidance opportunities to protect the program's valuable resources and ensure that plan members receive the care they need.

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COST AVOIDANCE MAKES MORE SENSE

 

Medicaid has become an integral safety net program that gives access to health care for millions of Americans. Payment for this health care is either delegated to Medicaid or other third party insurance coverage. In 2012, 7.6 million people on Medicaid had other private health insurance coverage, and 10.6 million had other public coverage. Medicaid is positioned as the "payer of last resort": if the Medicaid beneficiary has supplemental insurance, that third party insurance is liable for primary payment. The additional insurance coverage is commonly referred to as third party liability (TPL) and creates cost savings for Medicaid by rerouting payment to other forms of insurance before Medicaid must pay. Unfortunately, Medicaid is losing billions of dollars a year because plans are unable to identify TPL.

Identifying TPL is a very complex undertaking because of siloed data, antiquated technologies, and network latency. Medicaid plans attempt to ascertain liable third parties by making use of data matching in several health care data sources. However, they are rarely updated and create several barriers. The challenge of finding accurate TPL frustrates those on the frontlines and creates a stressful, time-consuming search that only occasionally generates results. Claims may already be in progress or completed when TPL is identified. In that case, Medicaid scrambles to get reimbursed for the money they paid for the health care provided when it should have been delegated to a third party for payment. This scrambling is called "pay and chase": Medicaid chases the payment from the third party. Once Medicaid plans identify the liable third party payer, they rarely receive a full refund from the amount originally distributed, and it's costing the program billions of dollars in waste. Typically, Medicaid only recovers a mere 17% of funds used for payment through the "pay and chase" method. "Pay and chase" is clearly ineffective and inefficient. Searching for TPL, identifying the correct distributor, and replacing funds all take additional time and increased administrative costs.

The obvious solution for all parties involved is to identify TPL at the start of the coordination of benefits. Providers are paid faster, administrators have ease identifying the accurate payment provider, and Medicaid enrollees have their services covered. Finding solutions for prospective TPL identification should be made a priority, even more so for a program with such a wide scope and reach as Medicaid. Medicaid plans agree that cost avoidance makes more sense, but until now, the ability to execute it effectively has not been widely available.

Syrtis Solutions realized that Medicaid plans needed a solution to identify active OHI coverage so that claims could be adjudicated correctly. So, in 2010, they launched ProTPL, a real-time point of sale cost avoidance service for the payer of last resort market. ProTPL delivers powerful and accurate eligibility data that can be acted upon. The solution enables plans to cost avoid Rx and medical claims and the associated costs of recovery. Moreover, the coverage identified by ProTPL can not be found by other vendors. Syrtis Solutions is able to accomplish this by checking claims against the nation's largest and most complete active healthcare coverage information database. Health plans that implement ProTPL see an average 25% increase in OHI discovery. This means Syrtis' customers get the best and latest eligibility responses when they need them.

Identifying primary commercial insurance coverage is incredibly difficult for payers of last resort. Due to the complexity of COB, the near-constant change in the Medicaid population, and bad quality eligibility data, health plans depend heavily on retrospective identification and recovery. Unfortunately, this is costing Medicaid billions of dollars in waste. To protect program resources and ensure that vulnerable populations receive the care they need, plan administrators should look to true TPL technology solutions for further efficiency and cost avoidance opportunities.

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THIRD PARTY LIABILITY REQUIREMENTS IN THE MEDICAID PROGRAM

The Social Security Act, signed into law by President Franklin Roosevelt in 1934, stipulates in the statute § 1902( a)( 25) of the law "... that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services" delivered to Medicaid recipients. Essentially, it means that Medicaid becomes the payer of last resort, a term also known as third party liability, or the coordination of benefits. In other words, Medicaid pays last, and if a Medicaid member holds other coverage, such as insurance from an employer, that insurer pays first, and then Medicaid pays any remaining costs.

As much as 10 percent of the Medicaid members across the nation hold additional insurance besides Medicaid, which is considered TPL. Types of TPL include employee insurance, Workers' Compensation, Medicare, COBRA insurance from past employment, casualty insurance, dental insurance, eye insurance, and insurance to cover pharmaceutical costs.

The Deficit Reduction Act passed by Congress in 2005 stipulates in Section 6035 that states are directed to pass laws that force health insurance companies to give the state health insurance premium data involving people who are eligible for Medicaid assistance. Specifics of the DRA include:

• Health insurance companies must hand enrollment information over to Medicaid, or its agent, so member benefits can be coordinated.
• This information is to be used to identify supplementary health insurance coverage so that improper payments are not made and payments made in error are recovered.
• Payments are required to be made as long as the claim is submitted within three years after the medical service was provided.
• Claims cannot be denied as long as the state started action on the claim within six years after the state submitted the claim.

Specifications must be made that health insurance consists of other entities that are by statute, agreement, or contract, legally responsible for paying a claim of a healthcare service; pharmacy benefit managers; managed care organizations; group health plans; and self-insured plans.

IDENTIFYING THIRD PARTY LIABILITY IN MEDICAID

Determining primary health insurance coverage of Medicaid beneficiaries can be achieved by a state through one of three different approaches and still allow the state to comply with TPL criteria, under federal law. The problem is that if only one approach is implemented by the state, savings and recovery are not at their greatest possible amount. The highest level of savings consists of processing at all three of the following points in the process by the state. Here are those processes:

Applicants enrolling in the program are asked about other insurance coverage.

The issue is that some enrollees assume they will be disqualified from Medicaid, so this information is withheld. And, since adding Medicaid coverage might also imply an employment change in which employer insurance coverage is lost, this disclosure might be immaterial soon after the applicant's enrollment.

The state looks for TPL coverage in order to avoid extra cost.

Medicaid eligibility names are cross-referenced with names enrolled in state and national health insurance companies in order to detect primary insurers before the submission of Medicaid claims. But, this practice becomes impossible unless state rules require the timely delivery of insurance data when a state also requires the prompt payment of insurance claims. Additionally, a number of medical services, like those dealing with a pregnancy, must be paid at the time that they are claimed, according to federal law. That means that pregnancy claims have to be paid immediately before recovery can be made from responsible insurers.

Improper payments are recovered.

The third part of a comprehensive TPL plan involves Medicaid's payment, which occurs one of two ways. Medicaid can offset the service provider during the next payment issued for the amount that was overpaid. This is called "provider disallowances." Or, Medicaid receives the overpayment from the correct insurance carrier. This is called commercial insurance direct billings. Strong state policies are required for this third step in a TPL plan to function, since without it, the state can receive denials from insurance companies. The bottom line is that when payment errors are cost avoided, time is not wasted in pay and chase activities.

WHAT AN EFFECTIVE TPL PLAN NEEDS TO INCLUDE

So, in order to gain an efficient TPL plan, immediate and effective discovery of additional coverage is needed at Medicaid enrollment. Also, cost avoidance discovery must take on immediacy when claims are made and past errors need to be resolved quickly. What works best is when the federal directives and state laws mesh to form a truly thorough DRA policy that realizes other health insurance coverage with quick recovery of each claim.

ProTPL offers a solution that provides this critical information in real-time, at the point of sale.

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MEDICAID'S BILLION-DOLLAR PROBLEM

Improper payments cost Medicaid $86.49 billion in 2020 alone. A frequent misconception is that improper payments stem from fraud and abuse when in fact the majority come from prosaic, mundane problems like eligibility errors and antiquated data systems. Fraud in Medicaid may well still be a significant problem, but when improper payments are the outcome of eligibility errors rather than fraud, the true scope of the challenge can better be addressed.

By law, Medicaid plans are payers of last resort. This means if a beneficiary 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. As the program expands, determining liable third party payers for claims has become increasingly difficult. Plans simply do not have access to the quality eligibility data required to identify third party liability (TPL) before claims are paid. Much of the data traditionally used to prevent improper payments has not been current, available, complete, or accurate. As a result, Medicaid plans continue to make claims' payments in error.

Once new eligibility information is made available and plans discover overpayments, they then try to recoup the funds with a process referred to as "pay and chase." This process has resulted in the development of a multibillion-dollar post-payment recovery industry. Unfortunately, for payers trying to recoup improper claims payments, the actual funds recovered are around 20 cents on the dollar.

Medicaid programs have struggled to effectively identify TPL for decades. One reason is that for the last 40 years, the technology needed to correctly identify TPL has not existed. Over time, improper payments continued to increase, even landing Medicaid on the Government Accountability Office's high-risk list in 2003. Since then, a number of federal efforts have taken place to rein in costs. Legislators have passed new laws, formulated regulations, and held hearings over the issues, and government oversight offices (GAO and OIG) have presented written reports to Congress. Despite legislation and existing TPL processes, the improper payment rate has only increased. While all the initiatives have helped to uncover the scope of the problem, at present, they do nothing to curb improper payments.

If Medicaid payers can detect whether a member has primary coverage before claims are paid, the need for post-payment recovery is mitigated. Additionally, the subset of Medicaid beneficiaries who have unreported primary commercial coverage creates a tremendous opportunity for payers of last resort to get in front of the problem.

How can payers of last resort get access to timely, accurate eligibility data?

Currently, some of the best, most accurate, and current data on patients' health insurance coverage resides in ePrescribing infrastructures. Making use of this resource enables more timely identification of TPL by capturing the needed information on primary coverage that Medicaid members may have. EPrescribing, as a platform, electronically connects patients, providers, pharmacies, and pharmacy benefits managers, and ensures patient eligibility data are accurate and up to date.

Syrtis Solutions realized the potential of ePrescribing data to help Medicaid plans identify primary payers. The solution, ProTPL, uses ePrescribing eligibility data to provide Medicaid plans with a technology-based solution to prospectively avoid pharmacy and medical claims that are the liability of commercial payers. ProTPL is the only service in the marketplace that utilizes proprietary logic required to decipher the complex coding of pharmacy transactions and translate it into actionable eligibility data. Furthermore, Syrtis uses its superior matching algorithm to find primary coverage on members that no other vendor in the marketplace can find.

Syrtis deals with the problem of improper payments on the front end, gathering better data and applying it to avoid claims costs and the expenses associated with recovery efforts. ProTPL has the added benefit of making the claims process better for all involved, including providers. Those involved in the process of Medicaid claims payments have been working with the best available tools. Now, they have new and better tools with Syrtis Solutions.

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MEDICAID COSTS PUT EMPHASIS ON RECOVERY EFFORTS AND COST AVOIDANCE

In 1965, Title XIX of the Social Security Act established the Medicaid program to provide health care coverage to low-income individuals. Over time it has developed into one of the nation's largest payers for health care, covering one out of five Americans. In FY 2017, the jointly funded program made up 9.5% of federal spending. Because of Medicaid expansion and climbing health care costs, the program has become an even greater component of state budgets. To ensure that the program meets its goals and objectives, legislatures and plan administrators are working to improve program integrity by resolving its vulnerabilities.

COB Challenges

There are presently 56 unique Medicaid programs and each state is responsible for administering its program while remaining compliant to federal guidelines. These broad requirements give states the flexibility to determine covered populations, services, delivery models, and methods of payment. Additionally, states can also test and implement approaches outside of federal standards by obtaining Section 1115 waivers.

While the ability to tailor individual programs helps states meet their individual needs, problems emerge in the Coordination of Benefits (COB) and Third Party Liability (TPL), which is "the legal obligation of third parties to pay part, or all of the expenditures for medical assistance furnished under a Medicaid state plan."

Factors including the complexity of COB and TPL, the continuous flux of the Medicaid population, and uncoordinated eligibility data between federal and state systems leave the Medicaid program vulnerable to improper payments.

Medicaid Expansion Creates Added Complexity

Medicaid expansion has experienced intense debate after the Affordable Care Act revised Medicaid eligibility in 2010. Two years later, the Supreme Court ruled expansion optional and since then 37 states have chosen to expand their eligibility requirements. While more individuals are eligible for coverage, the increased population size has also added to the complexity of the program and emphasized the need for improved program integrity and recovery processes. Existing vulnerabilities, such as improper payments, must be resolved with effective cost avoidance solutions to help ensure the program's sustainability.

$36.2 Billion In Improper Payments

A High-Risk Issue from the Government Accountability Office (GAO) reported, "Medicaid covered about 75 million people in fiscal year 2018, at an estimated cost of $629 billion--$ 393 billion of which was paid by the federal government. CMS has projected that Medicaid spending will grow at an average rate of 5.7 percent per year from fiscal years 2017 through 2026. In fact, Medicaid spending is expected to reach $1 trillion by fiscal year 2026."

The GAO estimated that improper payments represented 9.8 percent ($36.2 billion) of Medicaid spending in 2018.

Medicaid has been on the GAO's high-risk list since 2003 due to the lack of federal oversight, it's size, and the complexity of the program. As health care costs increase and program eligibility expands, it is becoming a significant expenditure for the federal government and state budgets. Plan administrators need to implement cost avoidance technology solutions in order to save their plans money.

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LOWERING MEDICAID'S PRESCRIPTION DRUG COSTS

Since state Medicaid programs are responsible for the healthcare of a number of populations, increasing pharmaceutical drug costs have become a major budgetary concern. Currently, health care spending is dominating a number of their budgets and on a per capita basis, inflation-adjusted retail prescription drug spending has increased from $90 in 1960 to $1,025 in 2017.

As a result of the pressure from these rising costs, states are turning to a variety of approaches to rein in costs with the use of legislation and revised purchasing models. While the impact of politics and policy are unclear, both Medicaid enrollment and drug costs continue to rise. For that reason, it will be important for state Medicaid programs to examine every opportunity to improve efficiency.

CALIFORNIA TURNS TO SINGLE PURCHASER MODEL

In California, Medi-Cal alone uses 15% of the state's general funds, and over the last several years, the proportion of the population on Medi-Cal has reached 29%. With nearly one-third of the state's population enrolled in the program, California's Governor, Gavin Newsom, signed an executive order in January to consolidate the state's purchasing power in order to negotiate lower drug prices.

The order is part of the governor's "California For All" agenda and is scheduled for implementation on January 1, 2021. Having said that, in order for the change to go into effect, it will need approval from CMS and it is uncertain as to how they will react to the ambitious proposal.

OHIO: PASS-THROUGH PRICING

In 2018, Ohio announced that its managed care plans could no longer contract with PBMs that employ "spread pricing". The state's Medicaid department objects to the payment model since it lacks transparency and also because PBMs can profit from it by purchasing the medication from a dispenser at a lower rate than what they bill plan providers.

Starting in January, The Ohio Department of Medicaid required that MCOs use "pass-through" payment models to promote transparency and reduce costs. Under the new payment model, Medicaid plans are billed the same amount for pharmaceutical drugs that a PBM purchases them for. PBMs are then paid an administrative fee for each prescription filled.

WEST VIRGINIA: FEE-FOR-SERVICE

In West Virginia, employee health plans were paying 1% more for pharmacy claims than the PBMs paid the dispensing pharmacy. Lawmakers calculated that the 1% cost the state $10 million each year and made a decision to eliminate the use of PBM's completely.

Since then, West Virginia has returned to a fee-for-service model that employs the help of West Virginia University to identify which medications are offered. The Bureau of Medical Service's Office of Pharmacy Services (OPS) then purchases each prescription.

COST SAVINGS FROM IMPROPER PAYMENTS

Even though the state's administrative initiatives could alleviate some pressure, they also need to understand that there is a tremendous amount of opportunity for cost savings in relation to improper payments.

Improper claims payments in the Medicaid program have become a $37 billion dollar problem and a common misconception surrounding these payments is that they are primarily a consequence of fraud and abuse. While fraud and abuse do add to payments made in error, they only account for 43% of improper payments. The majority of these payments actually arise from Third Party Liability (TPL) identification issues.

Improper payments take place in government-funded health care systems for three reasons:

1. The Coordination of Benefits (COB) and identifying TPL is complicated. It requires timely data and the management of several data sources.
2. The Medicaid population has a high rate of churn and is in near-constant flux.
3. Eligibility data is not coordinated among federal and state systems and is often unreliable.

Up until now, there has been no reliable way to identify unreported primary health coverage. For the sole purpose of supporting the TPL needs of Medicaid programs, Syrtis Solutions offers a proactive cost avoidance approach to improper payments. By leveraging e-prescribing, the company has the ability to access active Rx coverage while identifying the corresponding medical coverage as well. This means that Medicaid plans can prospectively cost avoid pharmacy and medical claims accurately and timely. Additionally, their solution can target beneficiaries that are actually generating claims rather than trying to maintain data on each plan member.

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