There are waves of Medicaid beneficiaries that states have moved to MCOs over the last few years. This surge is attributable to the Affordable Care Act (ACA) of 2010 (“Obamacare”). The ACA was premised upon improving the quality of healthcare while increasing efficiencies. The Act includes provisions that encourage states to move their Medicaid populations into MCOs.
The managed care provisions in the ACA are actually the second major try at reducing Medicaid expenditures by hiring MCOs to manage Medicaid beneficiaries. The first large wave started in the 1990s as many states pushed Medicaid patients to MCOs. Instead of capping costs the states found that managed care increased their overall expenditures. States that had transferred the majority of their Medicaid populations to MCOs saw costs escalate and retreated to traditional fee-for-service Medicaid programs. The ACA contained incentives in the managed care approach intended to protect state expenditures as motivation for states to move to MCOs. For example, ACA extends Medicaid manufacturer rebate requirements to apply to MCOs. The states that took advantage of Medicaid expansion by utilizing MCOs to handle the large volume increases in beneficiaries.
Medicaid is a federally mandated, but state managed program created in 1965. It provides healthcare for the indigent. The majority of funding comes from federal matching funds. To qualify for federal matching funds States must operate their Medicaid programs within federal guidelines. Traditionally, Medicaid programs operated as fee-for-service plans meaning that the states process claims and makes direct payments to providers. Under risk-based Medicaid managed care MCOs contract with a state and receive capitation payments (example: dollars per patient per month) to manage and administer the care of Medicaid beneficiaries. In turn MCOs contract through PBMs to pay providers for services on a fee-for-service basis.
Program Integrity Responsibilities
In July, 2018, the Senate Committee on Homeland Security and Government Affairs reported they had found $37 billion in overpayments to providers in 2017.
Program integrity encompasses efforts to ensure Medicaid beneficiaries receive high quality and efficient care—with minimal waste. CMS is ultimately responsible for oversight of program integrity efforts across the country. CMS requires states as well as their MCOs to share the responsibilities for program integrity.
While states are directly responsible to monitor potential fraud and abuse, MCOs are obligated under state contracts to administer actions on behalf of states to detect, investigate and in some instances refer and report fraud and abuse. These responsibilities also include the recoupment of overpayments to providers.
Although MCOs are not required to establish Special Investigation Units (SIUs) many do. This is an attempt to meet program integrity responsibilities incorporated into their state contracts. Most MCOs establish SIUs to battle fraud, conduct investigations, identify and recover overpayments, refer cases and take corrective actions.
CMS drafted rules to address program integrity provisions and issued a Final Rule in 2016, with an effective date of July 1, 2017. But many of the provisions have been delayed and are yet to be enforced.
Two Government Reports
In July 2018, two government reports were published addressing the inadequacy of oversight of MCOs—one by the HHS Office of the Inspector General (OIG) and the other by the Government Accountability Office (GAO). Although both studies employed different methodologies, their findings arrive at similar conclusions. There are many gaps and deficiencies in the oversight of MCOs at the federal and state levels. These challenges have resulted in many MCOs delivering less than minimal efforts to maintain program integrity.
OIG MCO Report
HHS OIG report July 2018 (OEI-02-15-00260) “Weaknesses Exist in Medicaid Managed Care Organizations’ Efforts to Identify and Address Fraud and Abuse”
The OIG reported concerns of managed care fraud and abuse back in 2011, noting the lack of fraud and abuse referrals. Currently MCO programs serve 80% of all Medicaid enrollees with 2016, MCO payments from state and federal funds exceeding $236 billion. MCOs are responsible to identify and recoup overpayments.
The OIG methodology included a review of 2015, MCO data submitted to CMS. They focused upon the MCO with the largest expenditures in each of 38 states. In addition, the OIG conducted interviews with key Medicaid personnel in five states and five MCOs. Here is what they found.
- Seven MCOs identified fewer than 30 instances in 2015, of fraud or abuse.
- The median number of cases per MCO was 116.
- Three MCOs identified over 800 cases.
- Three MCOs averaged only about 1 case per month.
- Thirteen MCOs referred few cases to their state.
- One-third of the MCOs referred fewer than 10 cases.
- Two MCOs did not refer any cases.
- Four MCOs referred more than 100 cases.
- 38 MCOs identified $57.8 million in overpayments because of fraud and abuse.
- The median was $402,000 per MCO.
- Four MCOs did not identify any overpayments
- Overall MCOs recovered only 22% of the amounts they identified as overpayments.
- Seven of the MCOs only recovered 2% or less of the amounts they identified as provider overpayments.
- The MCOs with SIUs consisting of five or more employees referred four times as many cases to states as MCOs with fewer than five employees.
- The OIG emphasized the importance of proactive data analysis to detect overpayments but not all the MCOs used proactive data analysis to detect potential fraud and abuse.
- The OIG found disincentives for the MCOs to refer cases to the states because when the State takes a case the MCO is prevented from collecting the overpayment. Some states include “finders’ keepers” incentives in their contracts to allow MCOs to keep a portion of recoveries.
- The study found the states to be inconsistent in their expectations of MCOs to refer cases to them with a general lack of direction or continuity from state to state.
OIG Recommendations
The most pertinent recommendations included:
- Improve MCO identification and referral of cases of suspected fraud or abuse.
This recommendation will translate into more Medicaid Managed Care audits of pharmacies
- Increase the MCO reporting of corrective actions taken against providers for fraud or abuse to the State
Expect tougher audits wider in scope—more claims, greater detail
- Improve coordination between MCOs
Expect the possibility of several MCO plans working together.
Expect States to take a more active role in making sure their MCOs operate strong anti-fraud and abuse programs
GAO MCO Report
GAO report July, 2018, (GAO-18-528) “Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks”
In 2017 Federal spending for Medicaid Managed Care was $171 billion, nearly half of total federal expenditures. This figure does not include state funds matched with federal money. Between 2013 and 2016 Medicaid enrollments in MCOs increased from 35 million to 54.6 million beneficiaries. The GAO noted that, up to this point, state audits focus upon Medicaid fee-for-service providers and not MCOs. GAO found that payment risks with managed care are more difficult and complex to manage than traditional Medicaid fee-for-service.
The GAO study spanned from October, 2016, to July, 2017. To conduct their study, they reviewed federal and state audit reports, particularly Medicare managed care. They also reviewed previous reports regarding Medicaid program integrity. From these actions the GAO identified payment risks. They also conducted structured interviews with key state employees—managed care offices, program integrity units, state auditors, Medicaid Fraud Control Units (MCFU) and a MCO.
The GAO identified six risk areas. At the top of their list is MCO fee-for-service payments to providers. Of their interviews 59% of the stakeholders rated incorrect MCO fee-for-service payments as “high risk.”
Key GAO Findings
- States are not providing an adequate level of oversight over MCO risks.
- Gaps exist in CMS and state program integrity oversight.
- CMS does not receive full information on the breadth of MCO overpayments
- .CMS does not have methods in place to regularly collect overpayment information.
- CMS does not know if overpayments are accounted for by the states in setting MCO capitation payments.
GAO Recommendations
- CMS must publish the long-delayed guidance to address many oversight issues.
This translates into greater controls of MCOs which will force them to conduct more audits and investigations.
- CMS must increase collaborative audits.
This means MCOs will work more closely with each other and state Medicaid agencies comparing notes.
- CMS must up their game to reduce managed care payment risks.
As CMS pushes harder it will produce a domino effect eventually filtering down to provider pharmacies.
PAAS Final Takeaways
The heat is on. CMS will begin to penalize states where their Payment Error Rate Measurements are excessive. CMS plans to increase its activity of auditing state claims for federal matching payments.
With the information from the HHS OIG and GSA reports it is easy to understand how PAAS came up with their prognosis—Expect Medicaid Managed Care Plans to drastically increase audits.
- Expect larger numbers of Medicaid Managed Care organization audits of provider pharmacies.
- Expect the scope of these audits to increase in terms of breadth and depth.
- Expect to see new and cleverer audit strategies.
- PAAS sees a strong likelihood of multiple MCOs and state Medicaid programs collaborating efforts.
Audit proof your pharmacy today!
Disputing Humana’s Bogus $5 Administrative Fees
By now, most pharmacies are probably aware of Humana’s $5 administrative fees to correct, what other plans consider, educational discrepancies. We commonly see these fees assessed for incorrect prescriber (for legend drugs), invalid days’ supply, and incorrect origin code. State audit laws have been ineffective at protecting pharmacies from these clerical errors as Humana classifies these takebacks as “Administrative Fees”, not recoupments on the initial claim.
What should your pharmacy do when assessed a $5 fee?Join today!
First, check the claims to make sure Humana is valid in their assertion. PAAS has recently seen numerous audit results where the auditor made a mistake on days’ supply, which was subsequently overturned. Auditors are not immune to mistakes with origin codes or prescribers, either.
- Invalid Days’ Supply: Check the math to make sure the auditor did not make a mistake.
- Wrong Origin Code: Double check the origin code that you billed. Does Humana’s assessment make sense?
- Incorrect Doctor: Check the NPI billed. Is your system set up to correctly link the doctor’s name with their NPI?
- If you find a mistake, use the Humana Corrected Values Form (CVF) to appeal the fee. This CVF should have been included with the result materials.
Reviewing these fees are easy to do and should not be overlooked on appeal. These fees apply to the original fill and all refills, so a prescription with 12 fills can have $60 in fees. These fees are in addition to any discrepancy Humana may be assessing on a claim; which could lead to > 100% recoupment! PAAS recommends you dispute all recoupments, big or small.
PAAS Tips:
Remember to send your results to PAAS to have the best chance during appeal!
Split Billing Opioid Prescriptions
PAAS has received numerous questions related to split-billing opioid prescriptions to insurance and cash. The current state of the opioid crisis has made these claims targets for audit recovery and DEA scrutiny.
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against split billing or processing a claim as cash to circumvent a plan limit or prior authorization requirement. Most limits are based on appropriate clinical use. Bypassing these edits for opioids can lead to overdoses, diversion, and even death. Especially for controlled substances, pharmacists have a corresponding responsibility to ensure that prescriptions are for a legitimate medical purpose 21 CFR 1306.04(a).
- PBMs will monitor and flag claims that are rejected for plan limits and reprocessed with changed quantity and/or days’ supply
- Claims will be recovered in full if billed with the wrong days’ supply and exceed plan limits
- For example, Oxycontin 30 mg #90 1 po TID, plan limit 2/day: billing #60 as 30 days’ supply is incorrect for TID dosing and will likely be recovered in full
- PBMs may have access to state prescription drug monitoring programs (PDMPs) to look for cash claims
- Charging the patient cash can be considered non-compliance with the provider manual and could lead to remediation, including potential network termination
- If you have exhausted all plan options and the patient insists on paying cash for the full prescription, be sure that you document authorization from the patient that they are willing to pay the full cost and will not seek reimbursement from the insurance. This may protect you from accusations of non-compliance.
- Multiple transactions on the PDMP may raise red-flags for state and DEA agents as a possible diversion
- Always call for an override or prior authorization. Most edits can be overridden with appropriate clinical documentation
- Obtaining prior authorization can often resolve the problem for six months to a year
- Prescribers that are unwilling to obtain prior authorization or to change the prescription to a clinically appropriate dose may be a red-flag for diversion
- Don’t be afraid to enlist the patient’s help. Having them file a complaint with their insurance can help expediate the PA approval process.
PAAS Tips:
Prime Recovering Claims on Drug Substitutions
PAAS has seen Prime Therapeutics recover claims for the following reasons:
Inappropriate Billing Practices are discussed in the Prime Provider Manual, Section 2 and Unacceptable Billing Practices are found in Section 6. Here are a few examples:
PAAS Tips:
Pharmacist Sentenced to 10 Years in Prison for Fraud Scheme
Ademola Adebayo was convicted on January 11th, 2019 of conspiracy to commit health care fraud, wire fraud and money laundering. His sentence included 120 months (10 years) in prison followed by three years of supervised release and an order to pay $3.2 million in restitution and $1.4 million in forfeiture.
Adebayo was involved in a $121 million-dollar scheme that submitted false and fraudulent claims to Medicare, TRICARE, and private insurance companies. The claims involved compounded pain and scar creams, as well as other prescription medications that were either not medically necessary, never provided or both.
Adebayo was originally the pharmacist at A to Z Pharmacy in New Port Richey, FL. When the fraud was discovered in 2014 and plan contracts terminated with A to Z Pharmacy, Adebayo became a straw owner of Havana Pharmacy & Discount in Miami, which was used to continue the fraud scheme.
Eight other defendants have also been convicted. Others involved in the scheme admitted to paying kickbacks for prescriptions (and patient information) and physicians signing prescriptions for patients they never saw. All were sentenced to prison from one to fifteen years.
PAAS reminds pharmacies to have comprehensive Fraud, Waste, & Abuse Compliance policies and training. Contact PAAS today for more information on our customized Fraud, Waste, & Abuse and HIPAA Compliance Program at (608) 873-1342 or info@paasnational.com.
Test Claims are Prohibited and Put Pharmacies at Risk
Pharmacies may receive requests to determine if a specific medication is covered on formulary or what the copay will be in the absence of an actual prescription. While this may seem like a harmless request, “test claims” are generally prohibited by third-party payers. If your pharmacy submits a claim to insurance without a prescription, a PBM could cite this as a false claim or even fraud.
Payer concerns with test claims include:
PAAS Tips:
PBM audits for rejected or reversed claims are uncommon but may put your pharmacy at risk.
Authorized Generic vs. ANDA Generic
Since the recent launch of authorized generic albuterol inhalers, PAAS has received numerous requests for clarifications on substitution, therapeutic equivalence codes and DAW codes. PAAS Audit Assistance members can see our January 2019 article Generic Albuterol HFA Inhalers for additional background.
Q1: Is an Authorized Generic drug the same thing as a generic drug?
The FDA has a complete explanation on its website, here is an excerpt:
“No. The term “authorized generic” drug is most commonly used to describe an approved brand name drug that is marketed without the brand name on its label. Other than the fact that it does not have the brand name on its label, it is the exact same drug product as the branded product.”
Q2: How Is an Authorized Generic Drug Different from what Is Commonly Understood to Be a Generic Drug?
A generic drug is the same as the brand-name drug in active ingredient, conditions of use, dosage form, strength, route of administration, and (with certain permissible differences) labeling. To obtain approval of a generic drug, a company must submit an Abbreviated New Drug Application (ANDA) to the FDA and prove that its product is the same as the brand-name drug in the ways described above, and that it is “bioequivalent,” meaning it gets to the part of the body where the drug works at the same time and in the same amount.
An authorized generic drug is the same as the brand-name drug but does not use the brand name on the label. Because an authorized generic drug is marketed under the brand name drug’s New Drug Application (NDA), it is not listed in FDA’s Approved Drug Products With Therapeutic Equivalence Evaluations (the Orange Book). An authorized generic is considered to be therapeutically equivalent to its brand-name drug because it is the same drug. This is true even if the brand-name drug is “single source,” meaning there are no ANDAs approved for that product, or coded as non-equivalent (e.g., BX) by FDA in the Orange Book
Q3: What DAW code do I need to submit when dispensing Ventolin®?
PAAS recommends that all prescriptions are transmitted with a default of DAW 0, unless the prescriber has indicated brand medically necessary (DAW 1) or the patient has requested the brand (DAW 2).
Q4: Can I substitute the Prasco albuterol HFA for Ventolin® when it has a “BX” therapeutic equivalence code?
Yes, as per Q2 above, authorized generics are “considered to be therapeutically equivalent to its brand-name drug because it is the same drug.” Since there are no ANDA generics available, the brand inhalers are still considered “single-source” and retain the BX codes.
Q5: What if the payer prefers the brand name inhaler?
PBMs may continue to prefer the brand name inhalers due to formulary/rebate agreements as the price drop for an authorized generic is often minimal. It is not until multiple ANDA generics enter the marketplace that this competition brings the price down to a point where it is cheaper to cover the generic. Payers may reject claims for “generic” (authorized or ANDA) at point-of-sale and provide messaging that they prefer brand. You may need to bill the brand NDC with DAW 0, DAW 9 or follow online claim messages. See March 2019 article What DAW Code Do I Bill on a Brand Product? for additional discussion.
Here are some details about recent authorized generic and ANDA generic launches.
Albuterol Inhalers
Since there are no ANDA generics available, the albuterol inhalers are still considered “single-source” and have BX ratings. Note that the authorized generic has the same FDA application number as the referenced brand product.
Advair Diskus®
Additionally, there have been recent Authorized and ANDA generic launches of Advair Diskus® this year. Since there is an ANDA generic available, Advair is now considered “multi-source” and has an AB rating.
See examples for the 100 mcg/50 mcg strength below:
Patient Copay Collection, and Documentation, is a MUST
Copayments are used by insurers to sensitize patients to the cost of their medications and give patients financial incentives to reject medications that are not medically necessary or add little to no value to patients’ treatments.
Third Party contracts obligate pharmacies to collect patient copayments in full; however, merely collecting copayments upon dispensing is not nearly enough. You must also be able to show proof of copay collection. PAAS continues to see pharmacies struggle with copay collection documentation due to inferior Point of Sale systems, poor record keeping, and banking relationships.
In order to show proof of copay collection, PBMs may ask for: front and back copies of canceled checks, bank deposits, and even Credit Card Merchant Account Reporting, including evidence of settlement and payment through bank records.
Stop and think for a moment about how you would prove copay collection.
Patients paying with cash also create record keeping headaches. Being able to show the copay receivables for a given time period, and the corresponding bank deposits can be challenging. How often do you make deposits? Do you ever pull money out of the till to pay vendors where amounts wouldn’t reconcile?
House charge accounts add another layer of complexity for pharmacies. Developing a robust policy and procedure on billing, collection, record keeping, and management of accounts is an absolute necessity to prevent issues. When payments are received, are you using a tick and tie accounting practice, or applying payments to the oldest outstanding balance? How do you handle payments that only cover a partial copay? See our November 2018 Newsline article: Beware If You Offer Patient or House Charge Accounts for additional guidance.
Be wary of copay collection schemes and artifices. Some pharmacies have tried to ‘bury’ the copay in the reimbursement for compounded prescriptions (e.g. with pain and scar creams). They create house charge accounts with no intent to collect outstanding balances, thereby waiving the copay.
Pharmacies may claim that patients are indigent and unable to pay and in the case of Medicaid, this is an acceptable practice. However, for other insurers, you must have a formal, written policy to address a potential hardship waiver. This includes having patients apply for a waiver, tax return documentation collected by the pharmacy to show proof of need, and a host of other requirements.
As a reminder, manufacturer copay discount cards cannot be used with Medicare, Medicaid, and TRICARE patients. Many PBMs have additional restrictions on what manufacturer copay cards they will allow pharmacies to use.
Financial recoupment on claims where you cannot show proof of copay collection should be the least of your worries. Network termination may ensue, and the pharmacy risks a Fraud, Waste, and Abuse investigation and charges stemming from the False Claims Act. Copay collection is not worth putting your license, and pharmacy, at risk!
Generic Albuterol HFA Inhalers
On January 15, 2019, GSK announced the availability of the first authorized generic Albuterol Sulfate HFA inhaler. This inhaler is the authorized generic for GSK’s Ventolin HFA® and will continue to be manufactured by GSK and distributed by Prasco Laboratories, LLC.
As the authorized generic, it is only a substitute for Ventolin HFA®. Other albuterol HFA inhalers, including Proventil HFA® and ProAir HFA®, continue to be BX-rated and not considered equivalent.
Not to be outdone, on January 17th, 2019, Teva launched an authorized generic. This inhaler is the authorized generic for Teva Respiratory’s ProAir HFA® and will be manufactured by IVAX Pharmaceuticals (IVAX was acquired by Teva in 2006) and marketed by Teva.
PAAS Tips:
Humana Begins Enforcing Mail Order Prohibition
In July of 2017, Humana updated its Retail Pharmacy Provider Agreement to prohibit the delivery of prescription drugs, Durable Medical Equipment, and prescribed diabetic supplies through mail delivery services. These services include the U.S. Postal Service, UPS, DHL, FedEx, or any similar national, regional, or local common carriers.
PAAS National® is seeing termination notices sent to pharmacies that Humana believes are using mail delivery. Humana is basing these terminations on review of claims submitted by pharmacies to Humana. Likely, Humana is comparing
Humana is providing an opportunity to resolve termination. Pharmacies must sign an attestation confirming and agreeing to cease all mail delivery. Attestations must be signed and submitted within 30 days of the termination notice. Any subsequent violations will result in immediate termination.
PAAS Tip: PAAS is aware of four PBMs that restrict mail delivery:
Pharmacies may be able to obtain separate mail order agreements or amendments. Prescriptions can still be picked up in-store or delivered to patients’ preferred address using pharmacy employees or contractors.
Expect Medicaid Managed Care Plans to Drastically Increase Audits
The Heat is on
Expect increased audit activity in the near future
PAAS expects to see increased audit activity from Medicaid Managed Care Organizations (MCO) across the country. Our predictions include larger numbers of MCO audits, increased scope of audits and new audit strategies. We also believe we will see collaborative audits with coordination between CMS, state Medicaid programs and multiple MCOs working together. Now is the time for you to take proactive measures to audit proof your pharmacy.
PAAS bases these predictions upon the signs coming from the federal government that point toward efforts to push state Medicaid programs to step up program integrity efforts by placing much higher levels of scrutiny on state MCOs. Government reports from the HHS Office of the Inspector and Government Accountability Office published in July, 2018, highlight deficiencies in the states’ oversight of program integrity of their MCOs. These reports conclude that many MCOs are not performing their responsibilities related to the detection, reporting and reduction of fraud, waste and abuse. They are also sure to stimulate CMS to enforce much higher levels of accountability upon states and in turn states to enforce stronger oversight of their MCO plans. CMS will expect state Medicaid agencies to strengthen program integrity with stronger audits, stricter enforcement, corrective action plans and greater overpayment recoveries.
Background
There are waves of Medicaid beneficiaries that states have moved to MCOs over the last few years. This surge is attributable to the Affordable Care Act (ACA) of 2010 (“Obamacare”). The ACA was premised upon improving the quality of healthcare while increasing efficiencies. The Act includes provisions that encourage states to move their Medicaid populations into MCOs.
The managed care provisions in the ACA are actually the second major try at reducing Medicaid expenditures by hiring MCOs to manage Medicaid beneficiaries. The first large wave started in the 1990s as many states pushed Medicaid patients to MCOs. Instead of capping costs the states found that managed care increased their overall expenditures. States that had transferred the majority of their Medicaid populations to MCOs saw costs escalate and retreated to traditional fee-for-service Medicaid programs. The ACA contained incentives in the managed care approach intended to protect state expenditures as motivation for states to move to MCOs. For example, ACA extends Medicaid manufacturer rebate requirements to apply to MCOs. The states that took advantage of Medicaid expansion by utilizing MCOs to handle the large volume increases in beneficiaries.
Medicaid is a federally mandated, but state managed program created in 1965. It provides healthcare for the indigent. The majority of funding comes from federal matching funds. To qualify for federal matching funds States must operate their Medicaid programs within federal guidelines. Traditionally, Medicaid programs operated as fee-for-service plans meaning that the states process claims and makes direct payments to providers. Under risk-based Medicaid managed care MCOs contract with a state and receive capitation payments (example: dollars per patient per month) to manage and administer the care of Medicaid beneficiaries. In turn MCOs contract through PBMs to pay providers for services on a fee-for-service basis.
Program Integrity Responsibilities
In July, 2018, the Senate Committee on Homeland Security and Government Affairs reported they had found $37 billion in overpayments to providers in 2017.
Program integrity encompasses efforts to ensure Medicaid beneficiaries receive high quality and efficient care—with minimal waste. CMS is ultimately responsible for oversight of program integrity efforts across the country. CMS requires states as well as their MCOs to share the responsibilities for program integrity.
While states are directly responsible to monitor potential fraud and abuse, MCOs are obligated under state contracts to administer actions on behalf of states to detect, investigate and in some instances refer and report fraud and abuse. These responsibilities also include the recoupment of overpayments to providers.
Although MCOs are not required to establish Special Investigation Units (SIUs) many do. This is an attempt to meet program integrity responsibilities incorporated into their state contracts. Most MCOs establish SIUs to battle fraud, conduct investigations, identify and recover overpayments, refer cases and take corrective actions.
CMS drafted rules to address program integrity provisions and issued a Final Rule in 2016, with an effective date of July 1, 2017. But many of the provisions have been delayed and are yet to be enforced.
Two Government Reports
In July 2018, two government reports were published addressing the inadequacy of oversight of MCOs—one by the HHS Office of the Inspector General (OIG) and the other by the Government Accountability Office (GAO). Although both studies employed different methodologies, their findings arrive at similar conclusions. There are many gaps and deficiencies in the oversight of MCOs at the federal and state levels. These challenges have resulted in many MCOs delivering less than minimal efforts to maintain program integrity.
OIG MCO Report
HHS OIG report July 2018 (OEI-02-15-00260) “Weaknesses Exist in Medicaid Managed Care Organizations’ Efforts to Identify and Address Fraud and Abuse”
The OIG reported concerns of managed care fraud and abuse back in 2011, noting the lack of fraud and abuse referrals. Currently MCO programs serve 80% of all Medicaid enrollees with 2016, MCO payments from state and federal funds exceeding $236 billion. MCOs are responsible to identify and recoup overpayments.
The OIG methodology included a review of 2015, MCO data submitted to CMS. They focused upon the MCO with the largest expenditures in each of 38 states. In addition, the OIG conducted interviews with key Medicaid personnel in five states and five MCOs. Here is what they found.
OIG Recommendations
The most pertinent recommendations included:
This recommendation will translate into more Medicaid Managed Care audits of pharmacies
Expect tougher audits wider in scope—more claims, greater detail
Expect the possibility of several MCO plans working together.
Expect States to take a more active role in making sure their MCOs operate strong anti-fraud and abuse programs
GAO MCO Report
GAO report July, 2018, (GAO-18-528) “Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks”
In 2017 Federal spending for Medicaid Managed Care was $171 billion, nearly half of total federal expenditures. This figure does not include state funds matched with federal money. Between 2013 and 2016 Medicaid enrollments in MCOs increased from 35 million to 54.6 million beneficiaries. The GAO noted that, up to this point, state audits focus upon Medicaid fee-for-service providers and not MCOs. GAO found that payment risks with managed care are more difficult and complex to manage than traditional Medicaid fee-for-service.
The GAO study spanned from October, 2016, to July, 2017. To conduct their study, they reviewed federal and state audit reports, particularly Medicare managed care. They also reviewed previous reports regarding Medicaid program integrity. From these actions the GAO identified payment risks. They also conducted structured interviews with key state employees—managed care offices, program integrity units, state auditors, Medicaid Fraud Control Units (MCFU) and a MCO.
The GAO identified six risk areas. At the top of their list is MCO fee-for-service payments to providers. Of their interviews 59% of the stakeholders rated incorrect MCO fee-for-service payments as “high risk.”
Key GAO Findings
GAO Recommendations
This translates into greater controls of MCOs which will force them to conduct more audits and investigations.
This means MCOs will work more closely with each other and state Medicaid agencies comparing notes.
As CMS pushes harder it will produce a domino effect eventually filtering down to provider pharmacies.
PAAS Final Takeaways
The heat is on. CMS will begin to penalize states where their Payment Error Rate Measurements are excessive. CMS plans to increase its activity of auditing state claims for federal matching payments.
With the information from the HHS OIG and GSA reports it is easy to understand how PAAS came up with their prognosis—Expect Medicaid Managed Care Plans to drastically increase audits.
Audit proof your pharmacy today!