How to improve program integrity for Medicaid managed care

State program integrity teams face many challenges when overseeing Medicaid managed care. But if they get data, start small and share findings, they can reduce fraud, waste and abuse.

By | 3 minute read | May 19, 2021

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Two out of three Medicaid beneficiaries receive their care through managed care organizations (MCOs).1 These health plan and provider organizations received more than USD 359 billion in state and federal Medicaid dollars in 2020.2 Unfortunately, state Medicaid program integrity offices are not effectively overseeing these funds, which can lead to fraud, waste and abuse (FWA).3

In our review of the last two years of audits from Centers for Medicare and Medicaid Services (CMS) Center for Program Integrity, we found that more than 80% of audits indicate that states fell short of managed care requirements.4 What’s holding states back in their program integrity efforts? How can they improve?

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The challenges of overseeing managed care

As the Medicaid Program Integrity Director for the state of Tennessee starting in 2012, I can attest that it’s not an easy task to oversee Medicaid funds paid to MCOs for several reasons. One of the key challenges is having enough staff resources in place. Funds for hiring experts in data analytics and investigators can be difficult to secure; sometimes the resources simply aren’t available.

A second challenge is training. Traditionally, program integrity offices have teams that are very skilled at medical coding and evaluating medical records to identify FWA. But the data coming into these offices is very different today. Program integrity offices need forensic investigators who are familiar with healthcare payer and business data. Some of the state program integrity office teams I meet with are receiving reports from MCOs, but they don’t know how to interpret them, or what to do with the information to enhance program integrity within their agency.

Another challenge is the long list of competing priorities for states. States have several federal reporting requirements that have stronger penalties should they not comply than they would face for failing a MCO program integrity audit. Given that there are resource issues and sometimes complex political or relationship considerations when pursuing cases, states have not always prioritized program integrity.

Read: A smarter fight against fraud

3 ways states can improve program integrity oversight of MCOs

Despite the challenges of program integrity oversight of MCOs, there is significant opportunity to recover overpayments, create cost savings and improve care for Medicaid beneficiaries. I extended our team’s investigative reach at the State of Tennessee by sharing intelligence and collaborating closely with MCOs. Working together we identified and removed 250 providers responsible for FWA from the network, saving USD 50 million in our first year.5

Based on my experience, I offer three suggestions on how states should approach program integrity oversight of MCOs:

  • Meet and get information. Many state program integrity offices don’t meet regularly with their MCOs or receive data from MCOs. The first step is to require information, such as what cases are under investigation, how cases are moving, or which providers they’re taking money back from and why. 
  • Start small and ask questions. The second step is to analyze this information. But program integrity offices can quickly be overwhelmed by the size and complexity of reports. Start small and work your way up. For example, track the sources for the tips that the MCOs receive and obtain the results of their investigations.
  • Share findings. Once the MCO opens a case, share that information with other MCOs; it may protect non-auditing MCO funds. Quarterbacking the MCO audits enables states to safeguard Medicaid funds and reduce provider abrasion.

Starting with these three steps can help program integrity teams prepare for CMS audits and make more efficient use of the billions of dollars spent on Medicaid managed care. From meeting with the MCOs and learning about their FWA efforts, to auditing the MCOs to validate their data and activities there is room to grow your program integrity efforts. Working together, program integrity units and MCO FWA units can reduce FWA and remove bad providers from the roles.

  1. 10 Things to Know about Medicaid Managed Care. Elizabeth Hinton, et al. Kaiser Family Foundation. Published Oct. 29, 2020.
  2. Medicaid Managed Care Spending in 2020, by Kristin Allen Feb. 25, 2021, HMA
  3. Government Accountability Office. Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks. GAO-18-528. July 2018.
  5. “Shutting down fraud, wase, and abuse” Viechnicki, et al, Deloitte University Press, 2016