Medicaid in an Era of Health & Delivery System Reform: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015

Program Integrity Initiatives

Medicaid has always focused on detection and prevention of fraud and abuse. As Medicaid has grown in size and scope, those efforts have intensified at both the federal and state levels.¹ For example, the ACA included a number of provisions aimed at preventing fraud and abuse in the Medicare, Medicaid and CHIP programs. According to CMS, these measures, including enhanced provider screening, expanded audit efforts and new enforcement tools, will help shift fraud and abuse efforts “from a ‘pay and chase’ approach to one that makes it harder to commit fraud in the first place.”² Medicaid Directors have also noted strong support for the Medicaid Integrity Institute, the first national Medicaid program integrity training center for states established in 2007 and operated under an interagency agreement with the US Department of Justice in South Carolina.³ In this year’s survey, states were asked to describe any significant new program integrity initiatives or enhancements implemented or planned for FY 2014 or FY 2015.

Advanced Data Analytics and Predictive Modeling. Medicaid claims data contain a wealth of information that can be “mined” to detect aberrant and suspicious billing patterns. Predictive modeling and other analytic technologies can be used both to prevent improper payments from occurring and to flag specific claims and providers for post-payment review and investigation. Seventeen states reported plans to implement, enhance or expand predictive modeling or other analytical technologies. Ten states also reported new or planned system procurements that would enhance their program integrity efforts including MMIS’s (Medicaid Management Information Systems), Decision Support Systems, Data Warehouses, Surveillance and Utilization Review (SUR) systems, Fraud and Abuse Detection Systems and fraud case management systems.

Managed Care Initiatives. Thirteen states commented on efforts to expand program integrity activities to managed care including applying data analytic technologies to managed care encounter claims, increased MCO site visits and audits, implementation of a managed care pharmacy utilization collaborative, and reviews of MCO providers. New York also reported that it was building a provider encounter transaction intake system which adds Qualified Health Plan encounters from private plans selected through the Marketplace. Recent recommendations on program integrity efforts from the National Association of Medicaid Directors (NAMD) include, among others, a focus on managed care plans; the recommendations call for CMS to mandate that all Medicaid managed care entities submit an annual fraud, waste and abuse plan to the state with the states establishing the specific requirements as part of their policies and contracts with risk-bearing entities. NAMD also recommends that states establish minimum standards for compliance staffing for risk-bearing entities. To ensure Medicaid is the last payer of resort, NAMD recommends that CMS require state to maintain and provide to risk-based entities centralized lists of Medicaid clients that have commercial insurance coverage.⁴

Enhanced Provider Screening. New and enhanced provider screening initiatives are designed to avoid payment of fraudulent claims by preventing dishonest entities from enrolling as providers. Seven states reported plans to implement or expand an enhanced provider screening initiative. For example, Alabama reported requiring DME and home health providers to re-enroll annually (instead of once every three and five years, respectively); Arizona’s Office of Inspector General (OIG) is automating the provider registration process to increase its efficiency and effectiveness and has also prioritized the development of the automated Excluded Provider Screening process and the expansion of this initiative to include provider employees; California will launch the Provider Application and Validation for Enrollment (PAVE) system in FY 2015; Nebraska will contract with a vendor in FY 2015 to implement ACA compliant provider screening and enrollment services; New Jersey and New Mexico are expanding provider screening site visits; New Mexico reported more extensive background checks, and Pennsylvania is working to streamline the provider enrollment process and achieve a single entry point for all provider enrollment.

Public/Private Data Sharing Initiatives. All health care payers, public and private, are vulnerable to fraud and abuse and therefore have an incentive to share data and information that could enhance their detection and prevention efforts. In this year’s survey, four states commented on public/private data sharing initiatives. For example, Alabama reported that its staff participates in a task force that meets quarterly to share information and audit findings. Task force members include the U.S. Attorney’s Office, the Medicaid Fraud Control Unit, private insurers, the FBI and the OIG. New Mexico reported on its efforts to conduct joint investigations with sub-contractors, MCOs and other government agencies. Vermont reported that it had recently joined the Healthcare Fraud Prevention Partnership (HFPP) facilitated by CMS. The HFPP exchanges facts and information between public and private sectors to detect and prevent healthcare fraud. Data is collected by a trusted third party and analyzed and reported through CMS back to the partners. West Virginia reported that its Office of Program Integrity began structured collaboration with the state’s MCOs by hosting quarterly meetings with the MCOs, Medicaid Fraud Control Unit and the Office of Program Integrity.

Other Program Integrity Initiatives. Seventeen states reported on a wide range of other program integrity efforts or initiatives. Three states identified initiatives related to home health or personal care services (Maryland, Nebraska and New Jersey); three states reported on increased provider education efforts (Florida, Indiana and Maryland); two states enhanced pharmacy lock-in programs (South Carolina and Utah); two states reported initiatives relating to member eligibility and redeterminations (Illinois and Oklahoma); Virginia reported on reviews of LTC facilities for compliance with federal and state requirements regarding RUG (Resource Utilization Group) reimbursement limits; Alaska reported implementing a Super Utilizer program; Arizona reported that its OIG was planning to create a False Claims Act statute for Medicaid; Finally, Georgia reported expanding the use of PARIS⁵ starting with interstate data matches and moving to Department of Veteran Services matches thereafter; Hawaii reported contracting with a new vendor to perform data matches for commercial insurance; Iowa is working towards obtaining permission to use dual eligible data for program integrity activities; Mississippi reported generally on plans to enhance to its Surveillance Utilization Reviews and case tracking activities, and Ohio reported increasing onsite audits.