GAO report: CMS oversight of state rate-setting for Medicaid plans lacking

A new Government Accountability Office report chides the Centers for Medicare & Medicaid Services for lax supervision over how states set payment rates for Medicaid managed care plans.
The report, mandated by Congress last year, found that different CMS regional offices have been inconsistent in reviewing state compliance with Medicaid requirements for the actuarial soundness of rates. It discovered that CMS had failed to address Tennessee's non-compliance with the requirements for several years, and the agency hadn't completed a full review of Nebraska's rate setting. CMS efforts to check the quality of the data used in setting rates generally was limited to requiring assurances from states and health plans that the data were reliable.
The GAO study covered 26 of the 34 states with comprehensive Medicaid managed care programs. Medicaid managed care plans have complained that rates often are inadequate to cover plan costs, hurting beneficiaries' access to care, said Joe Reblando, a spokesman for Medicaid Health Plans of America, a trade group.

Critics have said for years that states pay Medicaid plans too little to ensure high-quality care. Reblando's group said state rate-setting methods often are influenced by budget issues rather than the true cost of serving the Medicaid population.
In a written statement, Senate Finance Committee chairman Max Baucus (D-Mont.) said that in order "to protect Medicaid, we need to ensure states are paying an appropriate price for the benefits private plans deliver." He added that wasn't "enough information to guarantee that prices were accurate and that Medicaid is protected."
Sen. Charles Grassley (R-Iowa) added that "Medicaid could be overpaying in some cases and underpaying in others."
As a result of the GAO review, CMS is requiring its regional offices to use a detailed checklist when reviewing states' rate setting. The GAO further recommended that CMS implement a system to track state compliance with the actuarial requirements.

To learn more:
- read the full GAO report
- see Kaiser Health News' summary of various reports
- check out this article in The Hill