June 26, 2014

GAO Report Finds Medicaid Managed Care Vulnerable To Fraud

By Marlene Koury

A new study conducted by the US Government Accountability Office (“GAO”) shows that the Medicaid managed care program is vulnerable to serious health care fraud.  The study found that the weakness is primarily due to the Centers for Medicare and Medicaid Services (“CMS”) delegating managed care oversight to the states – but without providing them with clear guidance and resources to combat fraud.

The report concluded that, while CMS delegates much of its managed care program oversight to the states, it has not updated its program integrity guidance in fourteen years.  In addition, it does not provide the resources states need to audit payments and uncover fraud.  Perhaps the most significant failure is that, while CMS requires states to audit payments made from Medicaid’s other program (fee-for-service), it does not require states to audit managed care payments.  You can guess where the states focus their efforts.  This means that a large portion of Medicaid managed care claims are rarely reviewed for accuracy or fraud.

The report advised CMS to: (i) require states to audit the appropriateness of payments to and by managed care organizations; (ii) update its guidance on Medicaid managed care program integrity; and (iii) provide states additional support for managed care oversight, such as audit assistance from existing contractors.  GAO also strongly urged that CMS quickly move on these recommendations given that many states will likely expand their managed care programs under the Patient Protection and Affordable Care Act.  And unless CMS takes a larger role in holding states accountable, a quickly growing portion of Medicaid dollars will be vulnerable to fraud.

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