Policy & Regulation News

The Difficulty in Quantifying Improper Medicaid Payments

By Jacqueline DiChiara

- Recently, the Government Accountability Office (GAO) recommended that state Medicaid agencies should mandatorily quantify improper Medicaid payments and inform the effectiveness of their electronic payment-integrity tools to the federal government.

RevCycleIntelligence.com reported earlier this week on this survey, which reviewed ten selected states’ use of information technology (IT) systems to determine effective prevention and detection of improper Medicaid reimbursements.

As a follow-up, RevCycleIntelligence.com reached out to Carolyn L. Yocom, GAO Director of Health Care, for further commentary on GAO’s findings and their long term implications for healthcare providers.

The states concluded substantial amounts of effort and time are needed to calculate investment return and cost avoidance for improper Medicaid payments, she states.

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  • Although CMS does not always require states to measure or report quantifiable benefits, the recommendations of GAO to actively do so are being actively considered, says Yocom.

    “CMS has required states to document expected costs and benefits for systems when they submit requests for federal financial assistance for new information technology investments,” she explains. “However, CMS concurred with our recommendations, and noted that it will continue to identify and evaluate effectiveness of the IT investments it makes in support of program integrity.”

    As GAO reported, some states were operating MMIS implemented two decades ago. There is a formal push for newer technology to be directly implemented.

    “GAO recently issued a study looking at funding for eligibility IT systems. Under the Patient Protection and Affordable Care Act, CMS expanded the availability of federal financial assistance to states for costs associated with IT changes,” adds Yocom.

    Reported spending for Medicaid 90/10 funds, which are eligible for IT system changes, has grown steadily, GAO indicated.

    Regarding the challenges involved with implementation, Yocom revealed that funding is appropriately addressing this concern.

    “GAO reported that $1.8 billion in funding for eligibility systems had been spent through September 2014,” she notes. “With regard to training, we have also reported on the Medicaid Integrity Institute, which was established in 2007. GAO’s work in this area found that states consider this a valuable resource for training and networking with other states.”

    Although GAO did not have information about the overall effectiveness of State Universities Retirement System (SURS), a specific report finding within its survey results provided potential insight, says Yocom.

    “One state [Mississippi] did provide a report generated by its SURS that identified payments of $10 million for potential improper claims for a specific service. Ultimately, program administrators attributed cost avoidance totaling $7.5 million to their use of SURS,” Yocom claims.

    With only three of the ten states quantifying benefits at all, Yocom provided further clarification on this matter by stating that states had several concrete reasons for not quantifying benefits.

    “In particular, [the states] noted the amount of effort and time that would be required to calculate return on investment or cost avoidance would outweigh the usefulness of the information. Others noted the difficulties of separating out costs specific to program integrity efforts, as well as questions regarding the accuracy of any results,” says Yocom.

    A 2012 GAO report which recommended the CMS Administrator reevaluate and publish its Return on Investment (ROI) methodology, confirmed that “Medicaid has the second-highest estimated improper payments of any federal program that reports such data.”

    Yocom concluded in revealing that CMS has not yet offered further comments.