GAO: Require states to show cost benefits of anti-fraud systems

While the Centers for Medicare & Medicaid Services supports states' efforts to use technology to root out improper payments, its failure to require states to document the effectiveness of these systems means no one knows whether they really work, a Government Accountability Office report finds.

It should require states to quantify the cost benefits of these systems, the report states.

The report is based on a survey of state officials in Kentucky, Maryland, Mississippi, Virginia, North Carolina, Texas, California, Tennessee, Vermont and the U.S. Virgin Islands. It found only three of the states had methods to measure the financial benefits of the systems.

All had implemented some form of Medicaid Management Information System (MMIS), and had received financial and technical support, as well as extensive training on using the systems to detect and prevent improper payments. While CMS requires states to estimate their savings when initially applying for funding, it does not require effectiveness data when states request more money.

"Until states are able and required to identify and measure quantifiable benefits achieved as a result of using systems to help ensure the integrity of both fee-for-service and managed care programs, CMS cannot determine whether the systems help states save money by improving the outcomes of efforts to prevent and detect improper payments in Medicaid," the report's authors write.

Most state systems were set up for a fee-for-service model, while five states had problems using the systems for managed care plans, which required more extensive data. The report points to Tennessee as the only state that seems to have worked that out, by defining the content, level of detail and timeliness required to process and analyze the claims for managed care plans.

President Barack Obama's proposed fiscal year 2016 budget includes specific interventions to curb fraud, waste and abuse within Medicare and Medicaid that are expected to save $3 billion over the next 10 years. Those efforts include strengthening the Medicaid Integrity Program, which assists states in their anti-fraud efforts.

Improper payments totaled $106 billion in 2013, according to researchers at the Mercatus Center at George Mason University, who argue that federal budgets have outgrown the oversight required to prevent fraud, waste and abuse. They says improper payments in healthcare may represent as much as 20 percent of federal spending.

To learn more:
- read the report (.pdf)