The Case for Program Integrity in Medicaid Managed Care

Supplementary Insight – OIG Identified Concerns with Managed Care Plans Fraud Referral Process

In our previous posts about program integrity (PI) and fraud, waste, and abuse (FWA) within the managed care space, our Benefit/Program Integrity team raised several critical issues, starting with the headlines around PI and FWA within managed care organizations (MCOs). We looked at how contract language may not support proper PI and how disincentives against it affect rate setting. In this special edition post, we share recommendations from the Office of Inspector General (OIG) for state-led training of their MCOs – based on concerning findings. Read on to see why.

Report Findings

In its report, Some Medicaid Managed Care Plans Made Few or No Referrals of Potential Provider Fraud, the OIG clearly describes the potential for FWA to diminish resources, waste funding, and diminish outcomes, and both the OIG and CMS “have cited concerns about plans’ efforts to combat fraud, including a lack of fraud referrals and few incentives to produce them.” These are a few of the very issues we are addressing in the extended series.

The OIG found that in 2022, only 10 percent of MCO plans, which covered 1.6 million enrollees and received $8 billion in payments from 13 states, did NOT elevate any potential cases of FWA or make any referrals. Of those that did, more than 50 percent said they made only two or less referrals…per 10,000 enrollees.

The OIG found that plans with state- or MFCU-led training made more referrals, but only half the plans reported receiving this training. The OIG also said:

“Plans with fraud referral staff dedicated solely to that Medicaid plan made more provider referrals than plans with staff working across programs. However, 78 percent of plans reported that their fraud referral staff shared program integrity responsibilities across programs (e.g., another health care line of business).”

OIG Recommendations

The OIG report recommended that states lead training of their MCOs on the fraud referral process. Citing Medicaid requirements for MCOs to perform PI, identify FWA, and refer those cases to the state itself and/or to the Medicaid Fraud Control Unit (MFCU) for investigation and enforcement, the OIG deemed training appropriate and even necessary – a recommendation backed by the Centers for Medicare & Medicaid Services (CMS). The OIG said:

“CMS should (1) follow up with States that had Medicaid managed care plans with no referrals of potential provider fraud, waste, or abuse in 2022, and (2) encourage States to increase the number of Medicaid managed care plans that have received State-led training on the fraud referral process.

“For the first recommendation, CMS did not explicitly concur or nonconcur but indicated that it has undertaken and plans to continue such follow-up. CMS concurred with the second recommendation.”

In addition, as we highlighted in our previous post, managed care contract language is critical to support state program integrity goals. The contract language should be explicit about what is expected of the managed care plan as it relates to the minimum level of effort required by the special investigations unit (SIU), the communication and reporting chain for fraud referrals, and how mis-paid funds should be returned to the state.

It is critically important that MCO personnel understand the process of fraud referral and its significance. And states will want to ensure contractual compliance from their MCOs for PI actions that protects member access to quality care and safeguard the taxpayer dollars that fund it.

Our next regularly scheduled post is a continuation of issues raised previously. In that post, titled The Medical Loss Ratio at the Intersection of PI and FWA, the team delves into how the MLR and its structure can work against PI and create reasons for MCOs to avoid pursuing FWA.

Myers and Stauffer

Purpose driven. Exclusive focus. Government programs.

Established in 1977, Myers and Stauffer is a nationally based consulting and certified public accounting firm. For nearly 50 years, we have worked exclusively with local, state, and federal government health and human-services agencies to help them accomplish their most critical goals for the nation’s most fragile people.

Our Benefit/PI program area covers a range of services, disciplines, and areas of focus, including stakeholder training. Our team has considerable experience in developing and providing education and training to many clients and stakeholder groups on a variety of topics. Our training activities include, but are not limited to, the development of training materials and curriculum; development of training tools (e.g., recorded training modules, course assessments, and webinars); and facilitation of dynamic and interactive training and hands-on exercises.

We develop evaluation tools to accompany each of our training modules to identify areas that may require more focused follow-up education and outreach. We believe training and ongoing communication with our clients and other stakeholders are critical components of successful change and objectives met.

We are here to answer any questions and help with any health care and human services needs your agency may encounter. Contact a member of our team today.