- CMS plans to ratchet up efforts to crack down on Medicaid fraud by launching new initiatives using analytical tools “to hold states accountable,” Administrator Seema Verma announced Tuesday.
- The agency noted that Medicaid has grown significantly, in particular as part of the Affordable Care Act's expansion. The program cost an estimated $576 billion in 2016, up from $456 billion in 2013. The majority of that growth has been in the federal government's share.
- Specifically, the agency will step up audits of state claims for federal matching funds, medical loss ratios and state beneficiary eligibility determinations. CMS says that for the first time every state, plus Washington D.C. and Puerto Rico, is submitting enhanced Medicaid data, which the agency said it will verify.
Verma told reporters Tuesday that the new audits, set to begin later this year, are partially in response to Office of the Inspector General findings in Kentucky, California and New York, as well as from the Government Accountability Office.
In its report, GAO recommended that CMS take steps to mitigate Medicaid overpayments not being properly measured by revising the Payment Error Rate Measurement methodology or by focusing additional audit resources on managed care.
CMS says that the MLR audits will focus on states “based on the amount spent on clinical services and quality improvement versus administration and profit.”
Audits of state beneficiary eligibility determinations will include an examination of the effect of Medicaid expansion. “Current regulations will allow CMS to begin to issue potential disallowances to states based on Payment Error Rate Measurement (PERM) program findings in 2022,” CMS said.
The agency plans to add state program integrity performance measures to the Medicaid Scorecard, according to Verma. "We have a responsibility to make sure that taxpayer dollars are spent only on those who are truly eligible, even as we return greater control of Medicaid program to the states," she said.
Leerink analyst Ana Gupte said in a research note the announcement bodes well for HMS Holdings Corp.
“With 44 State Medicaid agencies as clients and ~75% of its commercial business coming from Managed Medicaid plans, HMS is the dominate player in Medicaid Coordination of Benefits (COB) and Payment Integrity (PI) space. The Federal Government’s acute focus on controlling Medicaid costs through new COB and PI initiatives should hasten the adoption of HMS' solutions,” Gupte wrote.
The Senate Committee on Homeland Security and Governmental Affairs is set to hold a hearing Wednesday morning on Medicaid fraud.