CMS ( Center for Medicare and Medicaid Services) recently announced it will increase its audits of state Medicaid programs.
They need to confirm that Medicaid beneficiaries are correctly identified as expansion enrollees. Right now, States receive higher federal match rates of 90% for expansion enrollees, while the match rate is 50% for pre-expansion enrollees.
CMS wants to root out any potential fraud as under the present plan, States are motivated to push enrollees into the 90% group and have the Federal government pay out the higher rate.
In addition,CMS is also auditing California, Kentucky, and New York for enrolling ineligible people in Medicaid. The Office Of The Inspector General has cited these States for doing this in the past.
CMS: Current Spending
The federal government’s share of Medicaid spending hit $363 billion in 2016, up from $263 billion in 2013. This increase is mostly due coverage expansion under the Affordable Care Act. Overall, Medicaid spending increased from $456 billion to $576 billion during the same period, according to the CMS.
CMS wants to reduce fraud caused by improper payments within the Medicaid program. Improper payments include fraudulent claims, payments to the wrong recipient, payments with insufficient documentation, or when the recipient uses the funds improperly. An Inspector general audit found approximately $89 billion in improper payments within Medicare and Medicaid.
Right now, Medicare and Medicaid improper payments account for 63% of the U.S. government’s entire volume of improper payments.
CMS: Additional Audit
The agency will also look at Medicaid managed-care plans to ensure they are complying with medical loss ratio standards. In 2016, the loss ratio was set at 85%. That means all insurers must spend at least 85% of their Medicaid revenue on medical care and other activities that improve quality.
The remaining 15% can be spent on employee salaries, marketing, profits and other administrative tasks. Plans that don’t meet the 85% standard will have their state rates lowered in the next funding cycle.
The goal is to eliminate fraud and waste.