GAO: MCOs need more oversight

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Thursday, June 7, 2018

WASHINGTON – CMS should take steps to mitigate program risks in managed care, according to a new report from the Government Accountability Office.

About 0.3% of the $171 billion that Medicaid paid managed care organizations for 2017 was improper, the GAO found.

CMS’s estimate of improper payments for managed care has limitations that are not mitigated by current oversight efforts, the GAO says. One component of the Payment Error Rate Measurement measures the accuracy of capitated payments made to MCOs. However, the managed care component of PERM doesn’t include medical review of services delivered to enrollees or reviews of MCO records or data.

Overpayments and unallowed costs that are not identified and removed from the cost data used to set capitation rates may allow inflated MCO payments and minimize the appearance of risks, the GAO says.

The GAO found 10 of the 27 federal and state audits and investigations conducted identified about $68 million in overpayments and unallowable MCO costs that were not accounted for by PERM estimates. Another investigation resulted in a $137.5 million settlement.

These audits and investigations were conducted over more than 5 years and involved a small fraction of the more than 270 MCOs operating nationwide as of September 2017, the GAO says.