CMS Proposes Revisions to Medicaid Improper Payment Programs
CMS has asked healthcare stakeholders to comment on a proposed rule that would change eligibility components of two Medicaid improper payment programs.
By - The Centers for Medicare and Medicaid Services (CMS) is calling on healthcare stakeholders to comment on a proposed rule that would change how states identify improper payments stemming from Medicaid and Children’s Health Insurance Program (CHIP) eligibility issues.
According to a recent fact sheet, CMS has released revisions to the Payment Error Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs that are intended to strengthen eligibility reviews on claims and enforce stricter corrective actions.
“The proposed rule addresses the new eligibility provisions of the Affordable Care Act and makes other general improvements to the PERM and MEQC programs,” explained the fact sheet. “The proposed rule also includes policies that, if implemented, would reduce state burden and increase the focus on the continuous reduction of improper payment rates.”
The Affordable Care Act mandated changes to Medicaid and CHIP eligibility processes, such as using Modified Adjusted Gross Income for income determinations, offering a variety of application types for consumers, and increasing data sharing practices between state and federal agencies. The original Payment Error Measurement methodology did not account for these eligibility requirements, said CMS.
In one part of the proposed rule, CMS developed a new method for managing the eligibility measurement aspect of the Payment Error Measurement program, a system that was established under the Improper Payments Information Act of 2002 to help federal agencies identify programs that were vulnerable to significant erroneous payments.
Under the proposed revisions, the Payment Error Measurement program would perform eligibility reviews in addition to medical and data processing audits on the same samples of fee-for-service and managed care reimbursements. The review would be conducted on the beneficiary associated with the claims. Currently, states separate the samples for medical and data reviews and eligibility audits.
The definition of improper payment would expand to include payments that have incorrect federal share amounts, even if the total computable amount is accurate, added the fact sheet. The current rule states that improper payments are only reported if the total amount is incorrect.
States would also face stricter corrective action plans and consequences if eligibility improper payment rates are over three percent for several review periods in a row. This could mean payment reductions or disallowances if the rule goes into effect.
“CMS will only pursue disallowances if a state does not demonstrate a good faith effort to meet the national standard, which is defined as meeting PERM CAP and MEQC pilot requirements,” stated the fact sheet.
The agency has also proposed revisions to the organizational component of the program. The Payment Error Measurement system would review Medicaid and CHIP payments made by states from July to June in a given year rather than during the federal fiscal year. States would also collaborate with a federal contractor to complete eligibility reviews.
In light of the potential changes, CMS has suspended the eligibility measurement part of the program for the fiscal years 2015 to 2018 and states will participate in Medicaid and CHIP Eligibility Review Pilots. The 2014 national eligibility improper payment rate will be used until a final rule goes into effect.
The recent proposal would also modify the Medicaid Eligibility Program, a separate initiative that requires states to report erroneous excess payment rates for medical assistance compared to total medical assistance expenditures. Under the current rule, states review a sample of Medicaid cases to determine if beneficiaries meet eligibility requirements.
“The proposed rule restructures the program into a tool that can be used to help states lower their eligibility improper payment rates and into a program that more effectively compliments the PERM program,” wrote CMS.
Some of the potential changes to the Medicaid Eligibility Program include requiring states to review a number of claims not fully audited through the Payment Error Measurement program, restructuring the initiative into a pilot program to be performed on the off-years from the Payment Error Measurement system, and mandating corrective action plans from states for identified errors.
CMS also suggested that states have flexibility to focus the pilot programs. However, if a state’s Payment Error Measurement eligibility improper payment rate continues to be above the three percent threshold, then CMS will oversee the reviews.
To update the regulation, CMS has halted the program for the 2015 to 2018 fiscal years and it is scheduled to resume on the effective date of the final rule.
Healthcare stakeholders can make comments on the proposed rule by August 22, 2016.
To view the complete proposal, click here.
Dig Deeper:
• The Difficulty in Quantifying Improper Medicaid Payments
• OIG: CMS Not Reducing Medicare, Medicare Improper Payments
