The Government Accountability Office (GAO) recently released a report examining why Medicaid managed care programs made an estimated $14.4 billion in improper payments for fiscal year 2013.  GAO found that the improper payments were due, in part, to having multiple federal and state entities involved in Medicaid program integrity.  Although procedures are in place to promote coordination amongst those entities, GAO concluded that those procedures have not been wholly successful, leading to gaps in the program integrity review process.

In addition, GAO found that the states’ program integrity efforts generally are not focusing enough on Medicaid managed care programs, and instead are concentrating on traditional fee-for-service programs.  GAO noted that state officials believe the complexity of Medicaid managed care payments make program integrity reviews regarding such payments more difficult than reviews of fee-for-service program payments.

GAO also concluded that CMS has not provided enough training and support to the states on how to conduct Medicaid managed care program integrity reviews.  Although CMS issued guidance on handling Medicaid managed care program integrity reviews in 2000, at the time of GAO’s review, that guidance was not available on the CMS website.  According to the GAO report, CMS officials have said they are in the process of updating the guidance, but do not have a timeline for its completion.  Additionally, CMS regulations permit states to exclude Medicaid managed care claims from review by the Medicaid RACs mandated by the Affordable Care Act, thereby allowing states to avoid completing reviews of managed care claims.

GAO set forth three recommendations to CMS for improving the efficiency and effectiveness of Medicaid program integrity efforts: 1) require states to conduct audits of payments to and by Medicaid managed care organizations; 2) release updated guidance on how to handle Medicaid managed care program integrity reviews and conduct payment recoveries; and 3) provide states with more support and assistance in conducting the reviews.  GAO believes these recommendations would create greater accountability for Medicaid managed care program integrity reviews, and ensure that the federal government gives the states the tools necessary to conduct such reviews more effectively.

HHS generally agreed with GAO’s recommendations, but stopped short of endorsing GAO’s first recommendation to require states to conduct audits, commenting that “CMS has provided state Medicaid agencies with the required authority to audit managed care entities.”