CMS to increase oversight of Medicaid enrollment, managed-care plans

The CMS is ratcheting up scrutiny of state Medicaid programs.

The agency announced Tuesday that it is boosting audits to confirm that Medicaid beneficiaries are correctly identified as expansion or pre-expansion enrollees. States receive higher federal match rates of around 90% for expansion enrollees, while the match rate can be as low as 50% for pre-expansion enrollees.

"This imbalance in the federal matching rate creates financial risks for taxpayers by incentivizing states to shift cost to the federal government," CMS Administrator Seema Verma told reporters Tuesday. "This requires us to make sure that states are making accurate eligibility determinations."

The CMS also said it will audit states found by HHS' Office of Inspector General to be at high risk for enrolling ineligible people in Medicaid. California, Kentucky and New York have been cited by the OIG for doing this in the past.

The federal government's share of Medicaid spending hit $363 billion in 2016, up from $263 billion in 2013, fueled largely by coverage expansion under the Affordable Care Act. Overall, Medicaid spending increased from $456 billion to $576 billion during the same period, according to the CMS.

The strategy is part of a multi-faceted plan to reduce improper payments within the Medicaid program. Improper payments include fraudulent claims, payments distributed to the wrong recipient or for the wrong amount, payments with insufficient documentation and cases when the recipient uses the funds improperly.

States understand that audits are part of the compact they have with the CMS, said Matt Salo, executive director of the National Association of Medicaid Directors.

"We don't have any reason to believe that there is any more waste, fraud or abuse today than there was five years ago or 20 years ago, but its important to be constantly vigilant to ensure that remains true," he added.

The plan comes days after the Senate Budget Committee sent a June 19 letter to HHS Secretary Alex Azar urging the department to address approximately $89 billion in improper payments within Medicare and Medicaid.

Medicare and Medicaid improper payments accounted for 63% of the U.S. government's entire volume of improper payments.

The agency also intends to take a closer look at Medicaid managed-care plans to ensure that they are complying with medical loss ratio standards. In 2016, the agency finalized a rule that set the medical loss ratio at 85%. That means all insurers must spend at least 85% of their Medicaid revenue on medical care and other activities that improve quality.

The remaining 15% can be spent on employee salaries, marketing, profits and other administrative tasks. Plans that don't meet the 85% standard will have their state rates lowered in the future.

"Pretty much all of the folks in the Medicaid expansion had been served through private insurance companies or managed-care organizations, and we're actually going to get in and start auditing some of the health plans to make sure that the claims for actual healthcare spending match the reporting," Verma said.

Salo said figuring out MLRs can be tricky, especially when factoring in social determinants of health.

"If a plan pays for housing for the homeless or nutritious meals for diabetics, those things aren't administrative or profit or overhead, but they're not medical either," he said.