GAO: Medicaid Made $14.4 Billion in ‘Improper Payments’

By Ali Meyer | June 25, 2014 | 3:35pm EDT

(AP Photo)

( -- The Centers for Medicare and Medicaid Service (CMS) determined that the Medicaid program doled out $14.4 billion in improper payments in fiscal year 2013, according to a report from the Government Accountability Office (GAO).

Currently, the Medicaid program provides health care coverage to about 71.7 million individuals at an annual cost of about $431.1 billion. Because of the program’s large size, the GAO states it is vulnerable to improper payments.

A significant amount of growth of the Medicare program is due to the Patient Protection and Affordable Care Act (PPACA), popularly known as Obamacare.

The GAO report, Medicaid Program Integrity: Increased Oversight Needed to Ensure Integrity of Growing Managed Care Expenditures, was compiled to ensure Medicaid program integrity, but found gaps in state and federal efforts to maintain that integrity.  (See GAO Medicaid Program Integrity.pdf)

“The size and diversity of the Medicaid program make it particularly vulnerable to improper payments – including payments made for treatments or services that were not covered by program rules, that were not medically necessary, or that were billed for but never provided,” states the report.

“The Centers for Medicare and Medicaid Services, the federal agency within the Department of Health and Human Services (HHS) that oversees Medicaid, estimated that $14.4 billion (5.8 percent) of federal Medicaid expenditures for fiscal year 2013 were improper payments,” said the GAO.

To identify gaps in efforts to maintain integrity, the GAO interviewed federal officials as well as states, as part of the performance audit from June 2013 to May 2014. While states have the primary responsibility to reduce, identify and recover improper payments, federal entities provide the oversight as well as program and law enforcement support.

The GAO discovered that “most state and federal program integrity officials we interviewed told us that they did not closely examine Medicaid managed care payments, but instead primarily focused their program integrity efforts on fee-for-service claims.”

(AP Photo)

“Managed care organizations [MCOs] have responsibility for identifying improper payments to providers within their plans; however, state officials suggested that MCOs might not have an incentive to identify and recover improper payments. Officials from two of the seven state PI units we spoke with told us that they believed managed care organizations were not consistently reporting improper payments to the state to avoid appearing vulnerable to fraud and abuse,” reads the GAO report.

“Similar to states, federal entities – CMS and HHS-OIG – have taken few steps to address Medicaid managed care program integrity,” said the GAO. For example, CMS provides support and guidance to states regarding their managed care programs, yet the “guidance was not available on the CMS website, and six of the seven state PI unit officials we spoke with did not mention it when asked about the guidance they relied on in conducting program integrity activities,” said the GAO.

“Federal laws require the states and CMS to ensure the integrity of the Medicaid program, including payments under Medicaid managed care. However, most of the state program integrity units and Medicaid Fraud Control Units included in our review were not closely examining the activities of managed care organizations citing a lack of sufficient guidance and support,” reads the report. (See GAO Medicaid Program Integrity.pdf)

“Unless CMS takes a larger role in holding states accountable, and provides guidance and support to states to ensure adequate program integrity efforts in Medicaid managed care,” said the GAO, “the gap between state and federal efforts to monitor managed care program integrity leaves a growing portion of federal Medicaid dollars vulnerable to improper payments.”

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