Sneak Preview: CMS Urged To Better Identify Improper Payments

June 22, 2018 | By Jerry Ashworth | Post a Comment

xgran_bookshot(The following was excerpted from a recent article in the Federal Grants Management Handbook.) The Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) plans to review its regulatory authority and audit resources to determine how to better identify the risk of improper payments in the Medicaid program that its current risk measurement process is not capturing, in response to a recent report from the Government Accountability Office (GAO).

Due to its size, structure and diversity, Medicaid is vulnerable to improper payments, and the Office of Management and Budget has deemed Medicaid an improper payment high-priority program. In accordance with the Improper Payments Information Act of 2002 (Pub. L. 107-300), as amended, CMS developed the Payment Error Rate Measurement (PERM) to estimate the national Medicaid improper payment rate.

Under the PERM, CMS computes an annual rolling average of improper payment rates across all states based on a 17-state, three-year rotation cycle. PERM measures the following three components: (1) payment errors for fee-for-service (FFS) claims; (2) errors in capitalized payments that state Medicaid agencies make to managed care organizations (MCOs); and (3) errors in state determinations of whether enrollees meet categorical and financial criteria to be eligible for Medicaid benefits.

Using the PERM, CMS in federal fiscal year (FY) 2017 estimated the Medicaid managed care improper payment rate at 0.3 percent, or about $500 million in federal expenditures. This compares to the FFS estimated improper payment rate of 12.9 percent, or about $25 billion in federal expenditures. CMS estimated total improper payments in the Medicaid program for FY 2017 at about $37 billion, or 10.1 percent of $364 billion in federal spending on the program.

Because of the disparity between the FFS improper payment rate and the managed care rate, the GAO report focused on the PERM’s effectiveness in determining improper payment errors in managed care. “The difference [in the rates] does not signal better [managed care] oversight; rather, it represents differences in the review criteria between FFS and managed care, which result in a less-complete accounting for the program integrity risks in managed care,” GAO found.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)

As a reminder, we have all of our Federal Funding Training Forums scheduled for 2018. Please let me know if you have questions or can make any of these. We hope to see you there!

  • Wednesday July 25 – Friday July 27 in MINNEAPOLIS

http://www.federalgrantsforum.com/minneapolis/index.html?src=AT

  • Wednesday October 17 – Friday October 19 in ATLANTA

http://www.federalgrantsforum.com/atlanta/index.html?src=AT

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