INCREASED MEDICAID SPENDING AND IMPROPER PAYMENTS

 

According to federal agency data from PaymentAccuracy.gov and the Office of Management and Budget, the federal government spent an estimated $247 billion in improper payments in 2022. The data also revealed that the Department of Health and Human Services' Medicaid program made up the majority of these payments at $80.6 billion. Medicaid has become the largest single budget item on states' budgets, and in order for the program to continue being solvent, states must resolve Medicaid's improper payment problem.

Recently, states have started resuming Medicaid eligibility redeterminations because of the end of the Coronavirus Public Health Emergency continuous enrollment provision. Since June 29th, at least 1,536,000 enrollees have been disenrolled. Some states are expecting the eligibility redeterminations to lower program costs; however, KFF is predicting that it's possible that state Medicaid spending will increase as the enhanced FMAP expires. Medicaid can not afford increased program spending while losing billions in improper payments.

A frequent misunderstanding is that improper payments originate from fraud and abuse when in fact, the vast majority stem from prosaic, mundane issues such as eligibility errors and old data systems. One way Medicaid administrators could decrease improper payments and improve program efficiency immediately is to adopt technology solutions that help identify primary commercial payers in order to avoid making claims payments in error.

Cost Avoid Improper Payments With Quality Data

Health plans have difficulty identifying primary coverage on pharmacy and medical claims because the data they access is not current, available, complete, or accurate. Thus, plans have no choice but to pay claims in error and chase reimbursement once other health insurance (OHI) is found. Unfortunately, for Medicaid plans, the actual monies recovered remain around twenty cents on the dollar.

Syrtis Solutions understood that Medicaid plans needed a method to determine active OHI coverage to adjudicate claims properly. ProTPL, introduced in 2010, is a real-time point-of-sale cost avoidance service for government-funded healthcare programs that delivers powerful, accurate, and actionable eligibility data. The solution gives health plans the ability to cost avoid Rx and medical claims and the associated costs of recovery.

Medicaid's improper payments are costing billions of dollars each year, and program expenditures are climbing. Because of this, states are likely to begin considering trimming benefits. To remain solvent and continue providing care to the most vulnerable populations, Medicaid must strengthen its fiscal oversight of program expenditures and make certain that program resources are spent properly. Presently, the best place to start saving resources and reducing improper payments is to provide Medicaid payers access to clean and actionable eligibility data that they can rely on.

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MAY MEDICAID NEWS ROUNDUP

 

Syrtis Solutions publishes a monthly Medicaid news roundup to help you stay informed. The monthly summary concentrates on developments, research, and legislation that pertains to Medicaid program integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Here is a summary of last month's significant Medicaid developments.

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IMPROPER PAYMENTS KEEP MEDICAID ON GAO'S HIGH-RISK LIST

 

The GAO just recently published its updated High-Risk List. The update is part of the biennial High-Risk Series started in 1990 that identifies government operations susceptible to fraud, waste, abuse, and mismanagement. The current report marks the twentieth consecutive year that Medicaid has made the cut. According to the GAO, CMS must strengthen fiscal oversight of program expenditures to reduce improper claims payments and ensure that program resources are spent correctly.

Fiscal year 2022 was a demanding period for Medicaid as the program was dealing with the ongoing social and financial impact of the COVID-19 Public Health Emergency (PHE). Enrollment increased by almost 20 million people between 2020 and 2022. Consequently, initiatives to strengthen program integrity were often superseded by the necessity to act in response to the PHE and support states. In FY 2022, Medicaid provided close to 82 million beneficiaries with healthcare at an estimated cost of $516 billion.

High-Risk Segments of the Medicaid Program

The GAO's report pinpointed the following three segments that comprise the overall high-risk of the Medicaid program:

1. Improper payments hit $81 billion in FY 2022
2. The use of state-directed payments and supplemental payments
3. Limited oversight of Medicaid expenditures and utilization data

Recommendations from the GAO

Along with identifying segments of high-risk, the GAO's report also endeavors to help resolve these susceptibilities by making recommendations. Currently, seventy recommendations associated with Medicaid program integrity remain open. The GAO's recommendations to CMS for 2023 are:

• Expand its evaluation of states' implementation of provider screening and enrollment requirements and, for states not fully compliant with the requirements, annually monitor their implementation progress;
• improve oversight of Medicaid procurements;
• collect adequate provider-specific information from states on Medicaid payments to providers, including supplemental payments and the sources of funds states use to fund their share of the payments, and specify what criteria should be used to ensure that Medicaid payments at the provider level are economical and efficient;
• perform an assessment and take steps to ensure that resources to oversee state-reported expenditures are sufficient and allocated according to risk; and
• continue efforts to assess and improve T-MSIS data and articulate specific plans and associated time frames for using these data for broad program oversight.

Reduce Improper Claims Payments with True Cost Avoidance

Improper claims payments has been recognized each year by the GAO as a significant factor in Medicaid waste and mismanagement. Improper payments cost the program billions of dollars every year, threatening the program's solvency and sustainability. One way Medicaid administrators could minimize improper payments immediately is to adopt technology solutions that help identify primary commercial payers in order to avoid making claims payments in error.

Health plans have difficulty determining primary coverage on pharmacy and medical claims because the data they access is not current, available, complete, or accurate. Thus, plans have no choice but to pay claims in error and chase reimbursement once other health insurance (OHI) is found. Unfortunately, for Medicaid plans, the actual monies recouped remain around twenty cents on the dollar.

Syrtis Solutions recognized that Medicaid plans needed a way to determine active OHI coverage to adjudicate claims properly. ProTPL, introduced in 2010, is a real-time point of sale cost avoidance service for government funded healthcare programs that delivers powerful, accurate, and actionable eligibility data. The solution gives health plans the ability to cost avoid Rx and medical claims and the associated costs of recovery.

Medicaid has remained on the GAO's High-Risk List since 2003. Throughout the years, the program has struggled with fiscal oversight and integrity. Medicaid's improper payment rate alone is costing billions of dollars each year. To remain solvent, Medicaid must improve its fiscal oversight of program expenditures and ensure that program resources are spent properly. At the moment, the best place to start saving resources and reducing improper payments is to provide Medicaid payers access to clean and actionable eligibility data that they can rely on.

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MARCH MEDICAID NEWS

 

Syrtis Solutions publishes a monthly Medicaid news roundup to help you stay up-to-date. The monthly summary highlights developments, analysis, and legislation that relates 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.

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FEBRUARY MEDICAID NEWS

 

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

Click here to read more. 

NY MEDICAID CARVE-OUT REPEAL AND SUIT

 

To reduce pharmaceutical drug costs and increase Medicaid program transparency, New York's Governor, Kathy Hochul, and the New York Medicaid Redesign Team announced earlier in the year that the state would carve-out the pharmacy benefit from the Medicaid program. After being postponed for two years, the carve-out is set to go into effect on April 1. However, lawmakers in the New York State Senate repealed the move in the one-house budget resolution this month.

Since the state's announcement to move to a fee-for-service model, there has been an ongoing clash in between safety net providers and pharmacists. Both groups are concerned about the state's vulnerable populations but disagree on how to serve them most efficiently. The legislators behind the repeal fear that the carve-out will interrupt the delivery of benefits, specifically at a time when the state will be executing eligibility redeterminations. Alternatively, advocates see it as an opportunity to simplify the Medicaid program.

Assembly Speaker Carl Heastie was among the legislators behind the repeal. He fears the carve-outs impact on entities that serve the states most vulnerable populations. Heastie is looking to protect 340b provisions that safety net providers rely on.

Pharmacists in support of the transition think that the move is long overdue. They believe the switch will improve the Medicaid program's transparency and help expand access for program beneficiaries by giving them more choice in who fills their prescriptions.

Aside from the repeal, a legal challenge opposing the carve-out also started recently. Shortly after the one-house budget resolution was passed, safety-net providers Evergreen Health and Heritage Health and Housing filed a lawsuit against the New York State Department of Health to halt the April 1st carve-out. According to the suit, the state's decision is discriminatory and violates the ACA.

In recent months, New York's decision to shift from a managed care model to a fee-for-service model has been a significant source of contention. While the carve-out is set to begin on April 1st, it now faces a repeal effort from the New York State Senate and a lawsuit from providers. It's not clear how the carve-out will be affected at this point, but given the repeal, lawsuit, and upcoming eligibility redeterminations, there are undoubtedly numerous issues for the state to work through.

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SAFETY NET COALITION URGES NY TO RECONSIDER CARVE-OUT

 

In March 2020, under former Governor Andrew Cuomo's administration, the New York Medicaid Redesign Team recommended that the state carve-out pharmacy benefits from the Medicaid program because of concerns pertaining to pharmacy spend and provider transparency. The reform essentially changes prescription drug reimbursement from a managed care model to a fee-for-service model, making the state responsible for the Rx benefit rather than MCOs and PBMs. To date, seven other states, including California, West Virginia, Wisconsin, Missouri, Ohio, Kentucky, and Tennessee, have carved-out pharmacy benefits from their Medicaid programs.

The state's decision was instantly met by opposition from safety net providers, 340B entities, community leaders, and nonprofits. They warned legislators of the harmful impact the move would have on the Medicaid prorgam and its beneficiaries' access to care. As a result, the carve-out was postponed in April 2021.

After a two-year postponement, the New York State Department of Health announced earlier this year that it would continue with the carve-out. Beginning April 1, 2023, Medicaid members will begin receiving their pharmacy benefits under the state's new delivery model, NYRx.

In spite of the state's decision, those in opposition to the change continue to make a concentrated effort to derail the carve-out as the April start date approaches. Save New York's Safety Net is a statewide coalition of providers and community organizations that represent vulnerable populations in the state. The coalition is fighting the transition because of its potential to disrupt access to specific drugs and its repercussions for community health centers.

For example, State officials that support the move to a fee-for-service model believe that it will increase program revenue by $250 million. That being said, under the current program framework, this money goes to safety-net providers around the state as a part of the 340B drug discount program. The program provides qualifying hospitals and clinics that treat low-income and uninsured patients with pharmaceutical drugs at a significantly lower cost. These savings help to fund programs such as vaccination clinics, housing assistance, transportation, outreach, and nutrition services. If the carve-out is carried out, it will divert these funds and lead to a reduction of services, clinic closures, and disruptions to the coordination of care.

Jacqui Kilmer, CEO of Harlem United, is amongst those in opposition to the state's decision. She expects the carve-out to drive up healthcare costs and views the measure as bad government from a policy and legal standpoint. However, the former business attorney is hopeful and strongly believes there is still a chance to convince Gov. Hochul to repeal the carve-out. According to Kilmer, "she can do that on her own without legislative approval, any kind of other oversight, budgetarily, or from the Department of Health."

Among lawmakers, several representatives sponsored bills in the former legislative session to repeal the pharmacy carve-out, but they were unsuccessful. These efforts are expected to be reintroduced this year, and legal challenges are anticipated if NYRx is implemented.

Along with the coalition's concerns surrounding the shift, there is also data that suggests New York and other states may want to reevaluate carving-out pharmacy benefits. In a 2018 report from the Association for Community Affiliated Plans (ACAP), the trade association found that when compared to fee-for-service models, managed care improves the quality of care and saves significantly more on brand name and generic drugs. ACAP analyzed Medicaid drug spending over a six year period and found the following:

• Managed care drug benefits produced considerable savings despite increasing prescription drug costs. "The average net (post-rebate) cost per MCO-paid Medicaid prescription during 2016 was $37, 73 percent of the average net cost of Medicaid prescriptions paid in the fee-for-service (FFS) setting during 2017, which was $50.".
• Managed care Rx services had greater utilization of generic drugs, which helped to decrease drug expenses. "In 2017, generic drugs represented 88.1 percent of MCO-paid Medicaid prescriptions versus 83.7 percent in the FFS setting.".
• Six states that implemented managed care prescription benefits only had a 1 percent increase in net costs per prescription between 2011 and 2014. On the other hand, seven states that carved-out pharmacy benefits saw a 20 percent increase in net costs per prescription during the same period. These seven states missed out on an estimated $307 million in savings in 2014 in comparison to the six states that transitioned to managed care.
• Carving-in prescription drug benefits decreases complexity and improves the quality of care for beneficiaries because managed care plans can coordinate with providers more efficiently.

In 2021, Medicaid expenses were the largest spending category, accounting for 27 percent of state budgets on average. In the same year, Medicaid spent around $80.6 billion on outpatient prescription drugs. Some states have elected to transition to fee-for-service models and carve-out pharmacy benefits to reduce program expenditures. While this is one strategy to try and reduce costs, states should also turn to opportunities to improve efficiency and cost avoid in their Medicaid plans.

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