A recent report by the Government Accountability Office (GAO) noted that oversight by the Centers for Medicare & Medicaid Services of state Medicaid managed care programs was inconsistent and did not ensure the quality of the data used to set rates.
GAO noted that it found significant gaps in CMS's oversight of 2 of the 26 states reviewed – in one case, CMS had not reviewed a state's rates in multiple years and had not completed a full review of another state's rates since the actuarial soundness requirements became effective. It blamed variation in practices across CMS regional offices contributed to these gaps and other inconsistencies in the agency's oversight of states' rate setting.
In testimony before a number of House subcommittees, Carolyn L. Yocom, director, Health Care with GAO noted that "the shared financing arrangement between the federal government and the states, however, presents challenges for program oversight and requires sustained vigilance on the part of CMS and the Congress. Our prior work has shown that CMS continues to face challenges overseeing the fiscal management of the Medicaid program."
Managed care is a significant component of many state's Medicaid program, and because the program is run on a cost sharing basis between the states, CMS oversight of these programs is critical.
According to the GAO report, managed care Medicaid programs serve nearly half of all Medicaid recipients, or more than 20.7 million people in 2008. In 2007, there was a total of over $62 billion in federal and state spending for managed care.
GAO studied different activities surrounding federal law for oversight of Medicaid managed care programs, including regulations created in 2002 to ensure that managed care rates for Medicaid are actuarially sound, as well as program integrity efforts that were expanded in the 2005 Deficit Reduction Act, which helped create the Medicaid Integrity Program aimed at providing effective federal support and assistance to states to combat fraud, waste and abuse.
In both cases, GAO found inconsistencies in the execution of these activities by CMS.
"We found inconsistencies in the reviews CMS completed," Yocom stated in her House testimony. "For example, the extent to which CMS ensured state compliance with some of the actuarial soundness requirements was unclear because CMS officials did not always document their review or cite evidence of the state's compliance. When officials did cite evidence, the evidence did not always appear to meet the actuarial soundness requirements."
It further found that CMS did not always effectively work to ensure the soundness of the data states were using to set managed care rates. "When reviewing states' descriptions of the data used to set rates, CMS officials focused primarily on the appropriateness of the data rather than their reliability," Yocom testified.
GAO also found that the Medicaid Payment integrity program has not proven cost effective, to date. While Medicaid audit contractors identified $15.2 million in overpayments in fiscal year 2010, the combined cost of the National Provider Audit Program was about $36 million.
As a result, CMS has begun to redesign its Medicaid integrity program, though Yocom noted that "it remains to be seen, however, whether CMS's redesign of the National Provider Audit Program will result in an increase in identified overpayments."