News & Views

The Irony in a Low Error Rate: Is CMS Doing Enough to Avoid Improper Medicaid Payments?

The integrity of any system, from payroll good manufacturing practices to tax returns, is the documentation to support an ultimate result. 

Of course, the same holds true for massive programs like Medicare and Medicaid.  Documentation supports whether reimbursement has been proper or not, including Healthcare Fraud

In its report to Congress titled, CMS Should Assess Documentation Necessary to Identify Improper Payments, in March 2019, the GAO wrote the number of improper payments based on insufficient documentation for the Medicaid program was alarmingly low.  While a relatively low number of improper payments might seem like good news at first blush, the GAO uncovered the fact that the Centers for Medicare & Medicaid Services (CMS) might be missing a great deal of improper Medicaid payments based on insufficient documentation because CMS does not have the information to address Medicaid program risks.

What Motivated the GAO’s Attention on this Issue?

In 2017, the GAO noted that the Medicare fee-for-service (FFS) program had an estimated $23.2 billion in improper payments due to insufficient documentation.  By contrast, CMS reported that the Medicaid fee-for-service program only had $4.3 billion in improper payments based on insufficient documentation.  Noting the significant difference in improper payment numbers, the GAO decided to look further.

The GAO recognized that the most likely reason for the difference was due to the way in which each program is administered.  In particular, Medicare FFS is generally handled nationally, and the Medicare program pays providers directly.  Medicaid FFS, by contrast, gives states the flexibility to design coverage policies, and then both the federal government and state governments share in the financing of the program. 

What Study Did the GAO Conduct?

 Given the discrepancy in the improper payment figures, the GAO conducted a study focused on two data points:

  1. The documentation requirements for both Medicare and Medicaid, and the factors that may contribute to improper payments for each program because of insufficient documentation.
  2. The extent to which reviews of the Medicaid program give states enough information to take action and prevent improper payments.

Focused on two data points, it reviewed Medicare and Medicaid documentation requirements and improper payment data for a 12-year period, from 2005 to 2017.  The GAO also interviewed CMS officials, CMS contractors, and six separate state Medicaid programs.  The GAO selected the states it wanted to interview based on their variation in estimated improper payment rates, FFS spending, and FFS enrollment.

The GAO’s Findings

To begin with the bottom line, the GAO found that CMS could do more with regard to avoiding improper Medicaid payments.  It determined that CMS lacks the state-specific information to really identify and address the risks posed by insufficient documentation.

CMS uses estimates of improper payments in order to identify program risks, and to develop strategies to minimize those risks.  CMS’s estimates are partially derived from “medical reviews.”  These medical reviews are essentially analyses of provider-submitted medical record documentation to determine whether services were medically necessary and in compliance with coverage policies. 

As noted, the GAO recognized that the number of improper payments in the Medicare program was substantially higher than those in the Medicaid program over the last decade.  The GAO found that the reason for that is because Medicare generally has more documentation requirements than Medicaid, and because Medicaid requirements vary state-by-state, while Medicare has more nationwide standards.  This problem, we believe, will continue unless and until the patchwork of state Medicaid programs become more uniform.

If you have further questions on this or any Healthcare Fraud subject, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP.  We have the experience and resources to protect healthcare fraud whistleblowers.  Contact us online, or by calling 800-372-8304 today.

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