Federal healthcare auditors think Medicaid managed care organizations aren't doing enough to combat fraud and that states might have to step in with policy changes.
The 2013 fiscal year saw a total of $2.5 billion recovered from civil and criminal Medicaid fraud cases, out of some $453 billion in state and federal dollars spent on the program across the country. While Medicaid fraud control units, or MFCUs, have made headway in recent years preventing and catching outright fraud and improper billing schemes, many state fraud control officials have "concerns about a lack of fraud referrals from MCOs," the HHS Office of the Inspector General wrote in its latest annual report.
"Specifically, officials from 21 MFCUs reported that their units received fewer fraud referrals from Medicaid MCOs than the respondents expected on the basis of the number of managed care-covered beneficiaries in their states," OIG staff wrote. Moreover, they relayed, "only 25 MFCUs reported receiving any referrals from Medicaid MCOs in FY 2013."
That comes as 37 states are now using Medicaid managed care and as some of the largest states, including Illinois, Florida and Texas, are expanding the use of managed care organizations in efforts to control unpredictable costs and bring more coordinated care to beneficiaries.
Under federal law, Medicaid managed care organizations have to create formal procedures to curb and detect fraudulent and abusive billing, such as through claims edits or retrospective reviews. Some state contracts also require MCOs to report all suspected fraud to state Medicaid agencies and/or the MFCUs.
But why are the referrals of the suspected fraud cases so low?
Some MFCU leaders told the OIG they think that MCOs in states with burgeoning managed care programs are still developing and refining their anti-fraud processes, and others said that MCOs in their states have fairly small staffs assigned to fraud control.
Other MFCU leaders, though, argued that MCOs in some states "lack the incentive to detect and refer potential fraud and may even have an incentive not to do so," citing comments from some MCO leaders that referrals and investigations can be too time-consuming to justify the benefits -- especially if their contracts don't offer the ability to share in fraud-related recoveries.
"Thus, some MCOs may find it preferable to remove a provider from their networks, rather than compiling supporting documentation and making a fraud referral to the state Medicaid agency or MFCU," the OIG wrote.
With Medicaid spending promising to remain a huge chunk of state and federal budgets, the OIG is hoping to find ways to increase MCO participation in anti-fraud efforts.
This year, the HHS watchdog is going to evaluate how effectively Medicaid MCOs are identifying and preventing potential fraud and survey the landscape of state policies on requirements and incentives for MCO anti-fraud participation.