MEDICAID COST AVOIDANCE: UNLOCKING SAVINGS THROUGH BETTER COVERAGE IDENTIFICATION

Cost avoidance is receiving greater attention as Medicaid health plans search for ways to reduce unnecessary spending and make limited healthcare dollars go further. With budgets under pressure and federal oversight evolving, plans need savings strategies that improve financial performance without reducing benefits or creating additional barriers to care.

Some of those savings may already exist within an established Medicaid responsibility: making sure another insurer pays when it is responsible for a member's healthcare costs.

This issue has become increasingly relevant as federal policymakers examine how Medicare and Medicaid address improper spending. A September 2026 majority staff report from the House Committee on Energy and Commerce called attention to the shortcomings of relying heavily on "pay and chase" practices. The report also discussed greater use of data, analytics, and technology to identify potential payment issues earlier.

Although the congressional review is primarily focused on fraud and program integrity, its emphasis on using better information to protect healthcare dollars has clear relevance to coordination of benefits (COB) and third-party liability (TPL).

An Existing Responsibility With Greater Financial Potential

Medicaid is generally the payer of last resort. When other insurance is responsible for a member's healthcare expenses, identifying that coverage helps ensure the claim is directed to the appropriate payer.

The difficulty is that insurance coverage does not remain static.

Members regularly gain, lose, or change commercial coverage. Employment changes, dependent coverage, marriage, and transitions between insurers can all affect payer responsibility. Health plans may not receive information about those changes immediately, leaving active coverage missing from the data used to coordinate benefits.

That delay has a direct financial consequence.

If another insurer is identified only after Medicaid has paid the claim, the plan may need to recover the money retrospectively. When that coverage is identified sooner, the plan has an opportunity to avoid an expense that should have been another payer's responsibility.

For plans under pressure to find savings, improving that timing can make an existing COB/TPL function more financially valuable.

Turning Coverage Intelligence Into Savings

Retrospective recovery will continue to be necessary. Not every coverage change can be known immediately, and some third-party liability will inevitably be identified after claims have been paid.

The opportunity is to reduce the number of cases that reach that point.

A health plan's existing eligibility and coverage information may not capture every active commercial policy. Supplementing those sources with automated insurance discovery can provide a broader view of a member's coverage and identify additional opportunities to coordinate benefits correctly.

The financial impact can extend beyond recovered dollars.

Consider two claims involving members with other commercial insurance. In the first, Medicaid pays and later recovers the expenditure after discovering the other payer. In the second, the commercial coverage is identified in time for the appropriate insurer to assume responsibility.

Both represent successful COB/TPL outcomes. Only one produces a recovery.

The other produces savings by eliminating an unnecessary Medicaid expenditure.

That difference is increasingly important when plans evaluate the effectiveness of their payment-integrity programs. A September 2026 KFF analysis makes a related point in the broader program-integrity context: recovery totals do not fully account for the financial value of prevention and payments that never occur.

For Medicaid health plans, measuring avoided expenditures alongside retrospective recoveries can provide a more complete picture of the financial contribution of COB/TPL.

Expanding the Value of COB/TPL

The objective is not to choose between recovery and cost avoidance. Plans need both.

Recovery addresses claims when other insurance becomes known after payment. Cost avoidance captures savings when better coverage information is available soon enough to establish another payer's responsibility.

ProTPL from Syrtis Solutions is designed to strengthen that process. Using automated algorithmic analysis and insurance discovery engines (AAAIDE), Syrtis identifies other active commercial pharmacy and medical coverage that can supplement the information available to existing COB/TPL operations.

For health plans, the opportunity is straightforward: improve visibility into other insurance, identify more instances in which another payer is responsible, and reduce unnecessary Medicaid expenditures.

That is particularly valuable in today's financial environment because it does not depend on cutting services or reducing access. The savings come from improving the accuracy of payer responsibility and directing healthcare costs where they belong.

Cost avoidance can turn better coverage identification into measurable savings for Medicaid health plans while strengthening an obligation they already have as payer of last resort. As plans look for sustainable ways to manage constrained budgets, expanding visibility into other commercial insurance can help COB/TPL deliver greater financial value without compromising member care.

Continue reading.

MEDICAID REFORM AND TECHNOLOGIES HELP STATES CUT COSTS

As Medicaid enrollment swells and costs continue to rise, while budget cuts are being considered, state governments are reaching a critical decision point. What was already one of the most expensive state programs has become even more costly, now accounting for close to 33% of many state budgets. Pandemic-era protections and Medicaid expansion policies helped millions gain coverage, but they also exposed systemic inefficiencies that states can no longer afford to overlook.

Now, with post-pandemic budget tightening underway, states are taking a hard look at how to rein in Medicaid spending without compromising access to care.

A DECADE OF BILLIONS LOST TO IMPROPER PAYMENTS

Improper payments remain one of Medicaid’s most persistent and expensive problems. In fiscal year 2023, more than $50 billion in payments were made in error, according to CMS. The primary culprits? Poor documentation and weak eligibility verification.

Improper Medicaid payments have topped half a billion dollars over the last ten years—money that could have been redirected to essential services or stretched existing healthcare budgets further. For states already facing economic headwinds, these avoidable losses are unsustainable.

STATES ENACT REFORMS TO STRENGTHEN PROGRAM OVERSIGHT

In response, many states are advancing legislation and policy changes to bring accountability and accuracy back to Medicaid operations:

• Indiana eliminated self-attestation in favor of regular eligibility checks using government databases and implemented quarterly reporting on fraud prevention efforts.

• Texas has expanded the use of third-party and federal tax data to verify Medicaid eligibility and has invested in modernized systems to increase automation and accuracy.

• Florida and Missouri are doubling down on frequent eligibility redeterminations and greater scrutiny of Managed Care Organizations (MCOs).

• Arkansas and Georgia have rolled out stricter redetermination schedules and automated eligibility verification to reduce enrollment errors.

These actions reflect a coordinated shift toward data-driven oversight and stricter controls to prevent ineligible individuals from remaining on the rolls.

TECHNOLOGY: THE ENABLER OF REAL-TIME INTEGRITY

To make these policies effective and scalable, states are increasingly adopting purpose-built technologies that can automate and enhance the integrity of the Medicaid program. One such solution is ProTPL from Syrtis Solutions—a real-time third-party liability detection platform.

ProTPL helps Medicaid programs meet federal coordination of benefits (COB) requirements and improve cost avoidance by:

• Flagging claims with existing commercial coverage before payment is issued,

• Automating verification tasks that would otherwise require manual follow-up,

• Minimizing administrative overhead while improving audit readiness,

• Ensuring that Medicaid remains the payer of last resort, as intended by law.

By shifting from “pay-and-chase” recovery tactics to preemptive cost avoidance, ProTPL supports faster, cleaner operations while saving states millions.

A MODERN MEDICAID SYSTEM REQUIRES BOTH POLICY AND TECH

For Medicaid to remain sustainable, states need to rethink not just what is being done, but also how it is being done. The best policy in the world can’t succeed if the systems enforcing it are outdated or underpowered. That’s why the combination of reform-driven governance and real-time technology is emerging as the most effective strategy.

States that align legislative reform with innovations like ProTPL will be better equipped to:

• Protect public funds,

• Deliver accurate, timely care,

• And restore confidence in the long-term viability of Medicaid.

This is not just about fixing what’s broken—it’s about building a smarter, stronger Medicaid program that can adapt to modern demands.

Click this link to learn more. 

MEDICAID TPL SOLUTION PRESENTS A CONSIDERABLE SAVINGS OPPORTUNITY

 

Dependence on the Medicaid program has increased exponentially over time. Currently, it is the single largest insurer in the country, and in FY 2019, it accounted for more than half of all federal monies distributed to states. Regrettably, as the safety net program has grown, waste has also become more widespread. Improper payments are costing the program billions of dollars every year.

Despite being on the GAO's High Risk List since 2003, Medicaid's improper payment rate continues to surge and put more pressure on budgets. In 2018, the program's improper payment rate was at nine percent, and by 2020 it had grown to twenty-one percent. That equates to a shocking $143 billion. However, according to analysts, these numbers are conservative estimates that do not take into account all the needed data. In reality, the improper payment rate is thought to be closer to twenty-seven percent or $100 billion annually.

Initiatives to Decrease Improper Payments

Fiscal integrity has been a problem for Medicaid since its conception. So much so that over the last 56 years, various policy and legislative efforts have occurred to focus on improper payments. These efforts primarily evaluate the risk of fraud, estimate the effect of TPL, increase reporting requirements, and increase data sharing. Unfortunately, while these actions help bring the problem into scope, they do nothing to prevent the improper payment rate from climbing.

Apart from these legislative efforts to manage costs, some policymakers have suggested transforming how the safety net program is funded to decrease waste. They think that the program should be incentivized to use funding more responsibly and efficiently. One thought is to implement block grants. These grants would take into consideration the size of the eligible population within a state and give the states the flexibility to distribute the funds with limited oversight from the federal government. The states would be responsible for ensuring that the appropriate care is being delivered to beneficiaries and that program resources are not wasted. Another idea is for Congress to establish tax-free health savings accounts to lessen the dependence on Medicaid and improve access to health care for those in need. The accounts would be financed with the savings achieved from decreasing waste in the Medicaid program.

Reducing Improper Payments with Medicaid TPL Tech Solutions

While lawmakers think about program reform, one area of opportunity to dramatically reduce costs lies within Medicaid's coordination of benefits. Currently, the majority of Medicaid's improper payments actually stem from bad quality data and inefficient TPL processes, not deliberate fraud and abuse. Payers of last resort struggle to identify primary coverage on pharmacy and medical claims. Much of the data they have access to is not current, available, complete, or accurate. Consequently, plans have no choice but to pay claims in error and chase reimbursement once other health insurance (OHI) is found. Unfortunately, the actual funds recovered are around twenty cents on the dollar.

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

In March, enrollment in the Medicaid program reached nearly 75 million people, and that number continues to rise. As a result, the chances for waste and improper payments are likely to increase also. This is problematic considering that Medicaid is losing billions every year in improper payments already. Due to strained budgets, program integrity issues, and enrollment surges, some policymakers and states are considering innovative ideas and program reform to reign in costs and decrease waste. While these efforts are being considered, they have yet to be implemented. At this time, one of the most significant opportunities for reducing Medicaid's improper payments lies within the coordination of benefits. Plan administrators should turn to TPL technology solutions for further efficiency and cost avoidance opportunities.

Click here and learn more.

MEDICAID TPL AND IMPROPER PAYMENTS LEGISLATION

Throughout the last fifty years, Medicaid has helped provide health services to the most vulnerable populations in the United States. As member enrollment rises, Medicaid TPL and fiscal responsibility have been problematic. To address these challenges, numerous legislative efforts have occurred to curb fraud, waste, and abuse. Unfortunately, these measures have done very little to protect program integrity and Medicaid's improper payment rate continues to climb.

Improper Payments and Medicaid TPL Legislation

The federal government's efforts to combat improper claims payments and improve TPL processes fall into four categories:

• Assessing the risk of fraud
• Estimating the impact of TPL
• Requiring more reporting
• Increased data sharing

Here is an overview of the legislation aimed towards improving Medicaid TPL and reducing improper payments.

1974 - ERISA

Congress passed the Employee Retirement Income Security Act (ERISA) in 1974. This law was aimed at self-insured companies to ensure that they abided by the same health insurance criteria as other large group plans. Additionally, it placed them under Medicaid TPL requirements.

2002 - IPIA

The Improper Payments Information Act (IPIA), passed in 2002, required agencies to actively identify programs or activities subject to high levels of improper payments. Agencies were now directed to make an annual report to Congress pertaining to overpayments or underpayments and measures taken to address such issues. In compliance with the IPIA, the Payment Error Rate Measurement (PERM) was created. PERM reviews Medicaid and CHIP data to measure improper payments and determine program-level error rates.

2005 - The Deficit Reduction Act

The Deficit Reduction Act (DRA) added additional entities to the list of those considered third parties. By law, all entities identified as third parties are mandated to observe Medicaid TPL processes, which includes supplying beneficiary eligibility data to states (much like ERISA dictates for self-insured plans).

2006 - Medicaid Integrity Program

The DRA also introduced the Medicaid Integrity Program (MIP) under section 1936 of the Social Security Act. The MIP was the first extensive federal initiative to combat fraud, waste, and abuse. It allowed contractors to review provider activities, audit claims, identify improper payments, and educate providers on integrity issues. It also provided support to states to address fraud and abuse.

2008 - Qualifying Individual Program Supplemental Funding Act

The Qualifying Individual (QI) Program Supplemental Funding Act of 2008 modified state participation criteria of the Public Assistance Reporting Information System (PARIS). It called for states to link their eligibility systems through PARIS, providing data for matching purposes across participating entities. CMS discovered that beneficiaries crossing state lines were one source of improper payments since a mechanism did not exist for states to share data and "match" beneficiary information.

2009 - Executive Order 13520

Executive Order 13520 was an effort to lower Medicaid improper payments. It looked to intensify efforts to eliminate payment errors, waste, fraud, and abuse while at the same time ensuring that Medicaid and other federal programs would continue to serve their beneficiaries. EO 13520 tracked federal programs with the highest dollar amount of improper payments and established reduction and recovery target rates.

2010 - Improper Payments Elimination and Recovery Act

Congress passed the Improper Payments Elimination and Recovery Act of 2010 to improve data sharing, coordination between state agencies and third parties, and increase reporting requirements. Some of the measures taken include:

• Amendment of the IPIA to require the leader of each federal agency to review and determine vulnerabilities in their programs that could lead to improper payments

• Modifications of the criteria related to improper payment estimations

• Requirement of a report from agencies as to whether it has "sufficient resources with respect to internal controls, human capital, and information systems and other infrastructure to prevent improper payments"

2015 - Fraud Reduction and Data Analytics Act

The Fraud Reduction and Data Analytics Act called for the Office of Management and Budget to establish new guidelines for federal agencies to improve TPL management. Under the act, agencies needed to "establish financial and administrative controls to identify and assess fraud risks." Furthermore, agencies were expected to submit annual reports to Congress regarding their progression on these efforts.

2015 - Federal Improper Payments Coordination Act

Congress also passed the Federal Improper Payments Coordination Act in 2015. It addressed administrative operations, reporting guidelines, and data-sharing to improve TPL and cost avoidance. Under the act, the judicial branch, legislative branch, and state government agencies managing federal programs were authorized to use the U.S. Treasury Department's Do Not Pay Program.

2015 - Medicare Access and CHIP Reauthorization Act

The Medicare Access and CHIP Reauthorization Act of 2015 consisted of several sections relevant to Medicaid programs, including a section impacting TPL data sharing. It instructed the Secretary of HHS to look at "incentives for states to work with the Secretary under the Medicare-Medicaid Data Match Program."

ProTPL Saves Medicaid TPL Millions

Discovering Medicaid TPL is very difficult for program administrators as they deal with bad quality data that is not up to date, usable, or correct. Since they are not able to effectively determine TPL before claims are paid, improper payments are costing Medicaid billions of dollars. Medicaid plans agree that cost avoidance makes more sense than pay and chase, but the ability to execute it effectively has not been widely available. Now, through Syrtis Solutions' ProTPL, payers of last resort are able to cost avoid pharmacy and medical claims on the front end. Their solution minimizes the need for recovery and the associated expenses while cost avoiding payments. Those involved in the process of Medicaid claims adjudication have been working with the best tools they had available. Now, they have new and better tools through Syrtis.

Click here and learn more. 

MEDICAID NEWS RECAP - MARCH 2020

Syrtis Solutions distributes a Medicaid newsletter on a monthly basis to help you stay informed. Here is a roundup of last month's Medicaid news, legislation, and industry developments relating to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

Read the March newsletter here. 

MEDICAID NEWS RECAP FROM SYRTIS SOLUTIONS - FEBRUARY 2020

Every month, Syrtis Solutions puts together a Medicaid newsletter to help you stay up-to-date. Here is a roundup of last month's Medicaid news, legislation, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse.

Open the newsletter. 

MICHIGAN OPTS OUT OF RX CARVE-OUT

FROM CARVE-OUT TO SINGLE PDL

Back in September, Michigan proposed policy 1936-Pharmacy to carve-out the State's Managed Medicaid outpatient pharmacy drug coverage and move to a Fee-for-Service (FFS) model. That being said, plans to carve-out pharmacy benefits have recently been updated. After considering the plan, the State has made a decision to instead implement a single Medicaid Preferred Drug List (PDL). The single PDL was a recommendation in the Governor's Executive Budget and serves to maximize manufacturer rebates to increase savings. Along with the PDL, MDHHS is also advising raising MHP's dispensing fee to $3 for independent pharmacies. Currently, the department is preparing an updated policy and there will be an opportunity for public comment.

Click the link to continue reading. 

MI MEDICAID PBM PHARMACY CARVE-OUT

To reduce costs in its Medicaid Health Plan (MHP), Michigan is carving out pharmacy benefit managers (PBMs) and transitioning to a fee for service (FFS) model for the delivery of prescription drugs. In October, the state's Department of Health and Human Services (MDHHS) revealed that outpatient prescription drug coverage will no longer be a MHP benefit. Beginning December 1, 2019, prescription drugs will be provided through a FFS model and the state will contract with a single PBM to bill its health department.

Michigan hopes to save about $10 million in general funds each year under the FFS model. According to MDHHS, these savings will be achieved "through a combination of increased pharmaceutical rebates and elimination of related MHP administrative capitation costs. The transition to a single formulary will also result in significantly streamlined administration for Michigan's health care providers and coverage consistency for program beneficiaries."

To allow for a smooth shift for recipients, "MDHHS will partner with MHPs and its PBM contractor by utilizing recent MHP PAs and paid claims data to create system edits. The intent of these edits is to continue the beneficiary's medication coverage that was provided by their MHP and to minimize and/or eliminate PA obstacles during the first three-months of the coverage transition."

In addition, the transition will apply coverage limitations and prior authorizations to all program beneficiaries. Members over the age of 21 will incur co-pays beginning the first of December. For Rx services, copays will be $1 for preferred and $3 for non-preferred medications.

Healthcare payers and PBMs oppose the move. They claim that such a move does not align with MHP's objective to provide whole-person integrated care. The decision will increase out of pocket costs and members will not have the necessary overview of their prescriptions.

Click this link to read more. 

MEDICAID SPENDING TO EXCEED MORE THAN $1 TRILLION ANNUALLY

Over the past decade, Medicaid has turned into one of the fastest and largest growing items on state budgets. In 2015, the program made up 20 percent of state budget spending and in 2018 it had grown to 30 percent. Last month, a report from the Foundation of Government Accountability found that Medicaid had cost states over $603 billion in 2018. Moving forward states need to ensure eligibility and address fraud, waste, and abuse in the Medicaid program to decrease costs and protect the program's resources.

The FGA points out that, "ultimately, this means fewer dollars are available for education, corrections, transportation, and other important budget priorities." For example, as Medicaid has expanded, state education spending has dropped by 13 percent and items outside of core budget items have decreased by 12 percent.

In Ohio, Missouri, and Pennsylvania, Medicaid spending has reached as high as 40 percent of their budgets.

The report reveals that in Ohio, Medicaid spending increased 260 percent in eighteen years. In 2000, its Medicaid budget made up 19 percent ($7.3 billion) of the entire budget. Nine years later, it rose to 24 percent ($14 billion) and in 2018 it's grown to 38 percent ($27 billion). That is more than the state's entire general revenue in 2000.

Likewise, Louisiana spent $3.4 billion on Medicaid in 2000 and by 2009 it nearly doubled to $6.2 billion. Three years after program expansion under the Affordable Care Act, Louisiana's Medicaid budget grew again to over $11 billion in 2018. Presently, Medicaid spending in the state sits at 35 percent of the budget. The report cites Medicaid expansion as part of the problem claiming it "has blown the lid off of every state and third-party cost and enrollment projection."

The FGA predicts that in the next ten years Medicaid spending will exceed more than $1 trillion each year.

Nicholas Horton is the author of the report and research director at the FGA. He stated, "States are watching their Medicaid spending climb to extraordinary levels. Hopefully, state leaders will continue to recognize the need to rein in their Medicaid programs and implement commonsense reforms like work requirements and Medicaid expansion enrollment freezes."

The study also includes suggestions geared towards protecting Medicaid's integrity and freeing up resources for other important budget items. One of which is to implement work requirements for non-disabled adults enrolled in Medicaid. The FGA points out that there is evidence that this would aid beneficiaries in becoming more self-sufficient and less dependent on the state.

Groups in opposition to work requirements, like the Center on Budget and Policy Priorities (CBPP), argue that they would limit the access to care for people who rely on it.

According to the CBPP, "State proposals for Medicaid work requirements will cause many low-income adults to lose health coverage, including people who are working or are unable to work due to mental illness, opioid or other substance use disorders, or serious chronic physical conditions, but who can not overcome various bureaucratic hurdles to document that they either meet work requirements or qualify for an exemption from them."

Apart from work requirements, the report also advised that states make a concentrated effort to deal with fraud. The National Bureau of Economic Research found that over 500,000 people enrolled in the program as a result of expansion were ineligible because of their income. The study also mentioned that the states evaluated only represented 25 percent of the 37 states to expand Medicaid and that the number of ineligible members could be as much as three times more.

Improper payments have also been an enormous cost to the program in the last ten years. In the FY 2018 HHS Agency Financial Report the department discovered that Medicaid improper payments totaled $36.25 billion. DHHS recommended incorporating IT solutions at the state level to address the waste. They feel that by making use of technology solutions, Medicaid will have a more comprehensive data structure and improved oversight.

The Medicaid program is costing states billions of dollars and over the next ten years, that figure will climb to $1 trillion. As it expands, it is also pulling away from other necessary budget items such as education, infrastructure, transportation, and corrections. To remain fiscally solvent while providing healthcare to low-income people, state officials and plan administrators must implement reform and present-day technology solutions.

Continue reading here.

A TIMELINE OF LEGISLATIVE INITIATIVES TO ADDRESS MEDICAID THIRD PARTY LIABILITY

Since Medicaid's inception in 1965, the program has expanded to become the largest provider of healthcare coverage in the country. As the size of the member population has increased, Medicaid third party liability (TPL) efforts and fiscal responsibility have been persisting concerns. To protect Medicaid's solvency, there have been several legislative efforts focused on curbing fraud, waste, and abuse. Unfortunately, these actions have done very little to preserve the program's integrity and Medicaid's improper payment rate has hovered around 10% for the last ten years.

Federal initiatives to fight improper payments fall under the following categories: assessing the risk of fraud; estimating the impact of TPL; requiring more reporting, which in turn creates administrative burden; and efforts to increase data-sharing. Here is a review of legislation aimed at strengthening TPL and decreasing improper payments.

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)

ERISA was directed towards self-insured companies and mandated that they abided by the same health insurance criteria as other large group plans. This was important because self-insured plans were now subjected to Medicaid TPL stipulations.

IMPROPER PAYMENTS INFORMATION ACT OF 2002 (IPIA)

The IPIA concentrated on evaluating and reporting improper payments. It required that agencies, on an annual basis, identify programs and activities susceptible to substantial improper payments. In addition, agencies needed to estimate the amount of overpayments or underpayments and then report on steps being taken to decrease the payments.

DEFICIT REDUCTION ACT OF 2005 (DRA)

In an effort to rein in costs, Congress signed the DRA into law in 2006. It included key Medicaid provisions and broadened the list of entities regarded as third parties. In a similar way to ERISA, the DRA required all third parties to abide by Medicaid TPL processes and to supply beneficiary information to states so as to improve cooperation in data sharing.

The DRA also launched the Medicaid Integrity Program (MIP) under section 1936 of the Social Security Act. The MIP was the first comprehensive Federal effort to deal with fraud, waste, and abuse. It allowed contractors to review provider activities, audit claims, identify improper payments, and educate providers on integrity issues. It also provided assistance to states to address fraud and abuse.

QUALIFYING INDIVIDUAL (QI) PROGRAM SUPPLEMENTAL FUNDING ACT OF 2008

The QI changed state participation requirements for the Public Assistance Reporting Information System (PARIS). Under the legislation, states were required to have in operation a Medicaid eligibility determination system for data matching through PARIS and medical assistance programs operated by other states.

EXECUTIVE ORDER 13520

In 2009, President Barack Obama authorized Executive Order 13520 "to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal programs serve and provide access to their intended beneficiaries." A few of the order's notable plans involved identifying Federal programs with the highest dollar value of improper payments, developing reduction and recovery target rates for these programs, guidance for implementation of the order, and reporting on how agencies planned to meet the targeted rates.

IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010

The Improper Payments Elimination and Recovery Act took several steps to further enhance data sharing, coordination between state agencies and third parties, and increase reporting requirements. These included:

• Amendment of the IPIA to require the agency leaders, such as the Secretary of HHS, to review and identify vulnerabilities in their programs that could lead to improper payments.
• Modifications of the criteria for improper payment estimations.
• Requirement of a statement from agencies as to whether it has "sufficient resources with respect to internal controls, human capital, and information systems and other infrastructure to prevent improper payments."

FRAUD REDUCTION AND DATA ANALYTICS ACT OF 2015

The Fraud Reduction and Data Analytics Act required the Office of Management and Budget to develop new guidelines for Federal agencies. Under the act, Federal agencies needed to "establish financial and administrative controls to identify and assess fraud risks," and they were also required to submit annual reports to Congress regarding their progress on these efforts.

FEDERAL IMPROPER PAYMENTS COORDINATION ACT OF 2015

After the Fraud Reduction and Data Act of 2015, Congress successfully passed the Federal Improper Payments Coordination Act. This authorized the judicial branch, legislative branch, and also state government agencies managing Federal programs to utilize the U.S. Treasury Department's Do Not Pay (DNP) Program. The DNP is a "no-cost robust analytics tool which helps Federal agencies detect and prevent improper payments made to vendors, grantees, loan recipients, and beneficiaries." Through the Fraud Reduction and Data Act and The Federal Improper Payments Coordination Act, Congress focused on administrative procedures, reporting requirements, and data-sharing; all of which were devised to improve cost-avoidance and address TPL.

CHIP REAUTHORIZATION ACT OF 2015 (MACRA)

MACRA included a variety of sections relating to Medicaid programs, including a section affecting TPL issues. Sec. 510 "requires the Secretary to study and detail incentives for states to work with the Secretary under the Medicare-Medicaid Data Match Program to coordinate appropriate actions to protect the Federal and state share of expenses under the Medicare and Medicaid programs."

TECH SOLUTIONS FOR MEDICAID THIRD PARTY LIABILITY

The identification of Medicaid third party liability has become difficult for program administrators and is costing plans billions of dollars in improper payments. Medicaid plans agree that cost avoidance makes more sense than pay and chase, but until now the ability to execute it successfully has not been widely available. With the help of Syrtis Solutions and their exclusive ePrescribing data, payers of last resort are now able to cost avoid pharmacy and medical claims on the front end. EPrescribing data surely was not originally intended for these purposes. However, its ability to mitigate the need for recovery and the associated expenses while cost avoiding payments is undeniable. Those involved in the process of Medicaid claims payments have been working with the best tools they had available. Now, they have new and superior tools through Syrtis.

To keep reading, click here.

MEDICAID THIRD PARTY LIABILITY REVIEW FROM THE GAO

Identifying third party liability continues to be a challenge within the coordination of benefits for Medicaid. By law, plans are payers of last resort so whenever beneficiaries have other active coverage (OHI), those third parties should pay first. Presently, plans are required to incorporate new payment procedures to aid in ensuring that they do not pay more than they should. Despite the requirement, CMS is unsure as to whether or not plans have implemented the new procedures and the GAO is advising that the agency determines compliance.

The new payment procedures were enacted as part of The Bipartisan Budget Act of 2018. Before the legislation, Medicaid plans would regularly pay providers for services and then look for reimbursement from any liable third parties. This retrospective approach is known as Pay and Chase. Additionally, the law included a provision for the GAO to evaluate the potential impact of the legislation.

In August, the GAO released their report which included their discoveries and recommendations. They found that nine of the states reviewed are in various stages of implementing the law's third party liability changes. These changes affect whether providers must seek payment from a liable third party before the Medicaid plan pays for services. The new procedures apply to prenatal care services, pediatric preventive services, and services for children subject to child support enforcement. The report went on to point out:

"Officials from four of the nine selected states reported having fully implemented the changes for prenatal care services, which were required to be implemented starting in February 2018. Officials from the remaining five states were discussing the changes internally, researching how to implement the changes in their Medicaid payment systems, or waiting for additional guidance from the Centers for Medicare & Medicaid Services (CMS), the federal agency responsible for overseeing states' Medicaid programs."

"None of the nine states had implemented the changes to pediatric preventive services and services for CSE beneficiaries, which must be implemented starting in October 2019. Officials from six states told GAO that they were in the early stages of exploring how they would make the changes, while the remaining three states had not developed such plans."

The GAO also found issues with the guidance that CMS issued to states for implementation of the third party liability changes. CMS's guidance incorrectly informs plans that providers are not required to seek payments from OHI before plans pay for some prenatal services.

The report also reveals that CMS is not adhering to its oversight responsibilities. It specifies that the agency has not effectively determined whether plans are complying with the updated third party liability requirements. CMS expects plans to comply, yet it does not verify that the changes have been implemented unless informed of non-compliance.

The GAO also discussed the impact of the changes with Medicaid specialists and stakeholders. According to the stakeholders, the new requirements could possibly result in a reduction in beneficiary access to care because providers would be less willing to see Medicaid patients. The two primary reasons are:

1. "The changes may increase administrative requirements for providers by requiring them to identify sources of coverage, obtain insurance information, and submit claims to third-party insurers before submitting them to Medicaid."
2. "The changes may result in providers waiting longer to receive Medicaid payment for certain services to the extent that states require providers to seek third-party payments before paying the providers' claims."

Lastly, the GAO report featured two recommendations to CMS. One of which was to ensure that the agency's guidance on third party liability requirements reflects current law and the other was to figure out the extent to which plans are complying with third party liability requirements.

Click here to learn more. 

CONCERNS RELATING TO CA's PHARMACY CARVE OUT

California's Governor, Gavin Newsom, signed an order at the beginning of 2019 to transition all pharmacy services for Medi-Cal from managed care to a FFS model. The consolidated purchasing power would make use of the state's population size to negotiate drug prices with pharmaceutical manufacturing companies. Private payers and insurance providers would also be allowed to participate in the public health system and negotiate prices.

The state's plan to take control of the pharmacy benefits for all of Medi-Cal's recipients has been controversial. There are concerns over its likely impact on MCOs, PBMs, pharmacies and the coordination of care. Currently, California's pharmacy benefit for Medicaid managed care is administered by ten separate PBMs. They are responsible for 90 percent of the state's Medicaid beneficiaries.

L.A. Care CEO, John Baackes, believes that the carve out will make coordinating care more challenging. He stated, "I think one of the advantages of a managed Medi-Cal plan like ours is that for people who are in very difficult circumstances health-wise, we do provide an element of care management that's important and if there's an element of the benefit that we don't control, then it's awkward."

In addition, critics are concerned about the impact that the pharmacy benefit carve out could have on pharmacies. While purchasing in bulk directly from manufacturers could drive down costs, it's unclear as to how drugs will be dispensed and how local pharmacies will maintain a profit.

Find out more here.

EXECUTIVE ORDER: MEDI-CAL TO NEGOTIATE PRESCRIPTION DRUG COSTS

California's newly elected governor; Gavin Newsom (D) has recently taken a legislative measure to address skyrocketing drug prices. Shortly after he was sworn in last week, Newsom signed an executive order making the state responsible for negotiating drug prices directly with pharmaceutical drug companies. In addition, the governor is seeking increased funding for Medi-Cal and a state-level individual mandate.

The order outlines a singular purchasing model which intends to achieve better drug pricing for the state's Medicaid program. Newsom is attempting to making use of the purchasing power that comes along with a Medicaid population of over 13 million and growing. In addition, there is very little doubt that executing the order will have ramifications with California's relationship with big pharma. Under the order, California will develop a list of drugs to be purchased in bulk as well as target specific medications for negotiation. It would also enable private payers to enter into the public system and negotiate prices.

Advocates of the initiative view it as an opportunity to not only reduce costs locally but also at the federal level. Jack Hoadley, a researcher at Georgetown University's Health Policy Institute, believes that the order could encourage the use of costly pharmaceuticals and make them more common.

Hoadley explained, "States like California could bring a lot of leverage to a sole-source drug that is priced very high."

Friso van Reesema concentrates on Medicaid pharma at Cipher Health and sees Newsom's order as an "interesting move that shows that states are diving deeper into their budgets to identify ways to allocate funds to priority programs." Reesema believes that pharmaceutical companies will have to comply with the state's new purchasing model, thus allowing payers to negotiate drug pricing based on health outcomes rather than models that are based solely on volume.

On the other hand, some experts are concerned about the fact that managed care plans will no longer have complete control over their formularies. This could lead to denied prescriptions and could greatly impact patient and provider satisfaction.

Dr. Adam Fein from Pembroke Consulting is skeptical of the governor's order. Fein points out, "It sounds like a supplemental rebate play. States can negotiate supplemental rebates with manufacturers (either through state pools or via managed care). Nearly all states already do this as single states or as part of a multistate group."

Sandeep Wadhwa, MD, chief health officer and senior vice president of government programs at Solera Health, agrees with Fein's observation. According to Wadhwa, "This is a bit like other state-administered services such as long-term services or dental care which may not be part of managed care contract. This will almost certainly require a state plan amendment to be approved by feds."

Discover more here.

BILLIONS LOST AS A RESULT OF IMPROPER MEDICAID PAYMENTS

Medicaid is losing billions of dollars from improper payments. According to HHS Agency Financial Reports, improper Medicaid payments reached $30 billion in 2015 and grew to nearly $37 billion in 2017. The vast majority of these improper payments were determined to be improper claims payments due to data errors.

The federal government often points out such substantial figures as evidence of prevalent fraud, waste, and abuse that purportedly is present in federal government health care programs. Yet in point of fact, a 2013 HHS-OIG report presents some much needed perspective, pointing out that 57 percent of the "improper" Medicaid payments originate from more commonplace, routine issues, involving the "eligibility errors" that occur when a patient moves from one state to another and doesn't provide Medicaid with a change of address. Fraud in the Medicaid program may well still be a dramatic problem, but when "improper payments" are the outcome of such "eligibility errors" instead of fraud, the true scope of the challenge can better be recognized.

With the increased awareness that government officials have paid to the need for accurate Medicaid claims information within federal government healthcare systems, one may have expected that now, nearly five years since an inspector general testified that much of the data used to identify improper payments and fraud is not "current, available, complete, [or] accurate", the issues would certainly be tended to and the federal government's records rendered more reliable.

In a statement to the House Oversight and Government Reform Committee, Carolyn Yocom, GAO Health Care Director mentioned, "despite efforts to reduce improper payments in the Medicaid program by the Centers for Medicare & Medicaid Services, which oversees the program, overall improper payments continue to increase."

The climb in improper payments can be contributed to the large size of the program and unsatisfactory oversight. Director Yocom testified that Medicaid has been on the list of high-risk programs dating back to 2003 and that its oversight is insufficient. She stated, "the size and complexity of Medicaid make the program particularly vulnerable to improper payments-- including payments made for people not eligible for Medicaid or made for services not actually provided."

The GAO characterizes an improper payment as "any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. Reducing improper payments-- such as payments to ineligible recipients or duplicate payments-- is critical to safeguarding federal funds, but the federal government has consistently been unable to determine the full extent of improper payments and whether its actions to reduce them are appropriate."

Improper payments also consist of:

• Any payment made in error when the payment was the liability of a third party
• Any payment to an ineligible recipient
• Any payment for an ineligible service
• Any duplicative payment
• Payment for services not received (except where authorized by law).
• Any payment that does not account for credit for applicable discounts.

In a two-year time span, improper Medicaid payments have risen by $8 billion dollars. This is an obvious sign the program does not have effective oversight. To preserve the vital federal-state health insurance program and safeguard taxpayer dollars, the complications that develop from poor eligibility data within the Medicaid program must be resolved.

Read more here.