In August, the Office of Inspector General (“OIG”) of the U.S. Department of Health and Human Services (“HHS”) introduced a new “Strategic Plan for Oversight of Managed Care for Medicare and Medicaid” (the “Strategic Plan”). The introduction of the Strategic Plan is in response to the continued growth of managed care in government sponsored health plans over the last several years. Medicare Advantage hit a milestone in the last year, with now a majority of Medicare beneficiaries being enrolled in a Medicare Advantage Plan.[1] That growth is expected to continue; the Congressional Budget Office predicts that the share of beneficiaries enrolled in Medicare Advantage Plans will increase to 60% in ten years.[2] For Medicaid, almost seventy-five percent (75%) of beneficiaries are now enrolled with comprehensive Managed Care Organizations.[3]

Traditionally, the perception of regulators and industry members was that managed care was less susceptible to fraud, waste, and abuse than traditional fee for service payment models. However, with the increased share of government dollars being spent on managed care, the fraud, in the OIG’s view, has followed.[4] In response the OIG has increased its review of managed care over the last few years and this year officially announced it as a priority area along with the publication of the Strategic Plan. The Strategic Plan, meant to align the OIG’s activities regarding its oversight of managed care, identifies three areas of focus for OIG: (1) promoting access to care for enrollees, (2) providing comprehensive financial oversight, and (3) promoting data accuracy.

Promoting Access to Care

To ensure that managed care plans fulfill their role in providing access to safe and effective care, OIG will be reviewing plans and assessing whether they are meeting network adequacy standards. Specifically, the OIG will focus on whether managed care plans are providing access to mental health services and not preventing timely access to care through onerous prior authorization processes. For instance, a prior study conducted by the OIG found that among prior authorization requests that Medicare Advantage Plans denied, thirteen (13%) percent of such requests actually met Medicare coverage rules. Managed care plans should be prepared for greater scrutiny not just into the breadth of their networks, but also into their internal processes related to providing timely access to providers and treatments.

Financial Oversight

Regarding financial oversight, OIG emphasized that it will be both working with managed care plans to identify and prevent fraud within the plans while also reviewing the plans themselves to ensure the accuracy of the risk-adjusted capitated payments provided to managed care plans. The Strategic Plan notes that to combat the growing level of fraud against managed care plans OIG will expand “its engagement with plans and their special investigation units…to prevent and detect fraud because plans are on the front lines to spot it.” While OIG envisions greater collaboration with the plans, the Strategic Plan also notes that the OIG will focus on plans seeking to increase payments from HHS by gaming the data behind their risk-adjusted capitated payments, especially the use of chart review and health risk assessments to increase risk scores.

Data Accuracy

Finally, the OIG stressed the importance of accurate data to safeguarding government program dollars. The Strategic Plan specifically gives two examples of missing or inaccurate data in the Medicare and Medicaid programs. First, the OIG notes that “the lack of provider identifiers on Medicare Advantage encounter data” prevents it from providing the necessary oversight of the program. Second, the OIG stated that its audits have previously identified that States make approximately $1 billion in overpayments annually due to individuals being concurrently enrolled in two different states or managed care organizations. Considering this goal, managed care plans should review their internal processes around ensuring the accuracy of their own data.

While managed care plans should be prepared for greater OIG scrutiny into their practices, they can also view this increased attention as an opportunity to collaborate with HHS to help their own efforts to combat fraud within their programs and ensure the reputation and future growth of managed care as a whole.