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This month members of the Senate Finance Committee will hold a roundtable with Republican governors to discuss changes that will be needed to the Medicaid program in a post Affordable Care Act (ACA) environment. In preparation for the roundtable, members of the Committee posed questions to the Republican Governors Association to be discussed in the session. The questions included “How to balance the needs of individuals who obtained Medicaid coverage through the ACA while ensuring sustainability of the program?”
The question posed by the Senate Finance Committee may imply that to be sustainable Medicaid will have to reduce benefits to recipients. Before a wholesale reduction of benefits or funding, lawmakers and regulators have an opportunity and a responsibility to first true up inefficiencies in the program that lead to unnecessary and wasteful spending.
By law, Medicaid is the payer of last resort, meaning if a Medicaid recipient has overlapping coverage under another healthcare plan, the other plan pays the primary cost of healthcare for that recipient to the extent of its liability. Unfortunately, many of these liable health insurance plans have found loopholes that force financial responsibility on Medicaid. For example, nationally insurers deny claims valued at upwards of $136 million because the member received a service that should have undergone prior authorization, forcing the cost of the procedure to Medicaid.
If Medicaid believed the service was medically necessary, then the liable insurer should accept their decision and pay the claim. Georgia has recognized this and adopted policies to stop this cost shifting. Similarly, as health insurance trends towards smaller and closed provider networks, Medicaid should not bear an increased burden.
Another example of cost shifting to Medicaid occurs when an insurer rejects Medicaid claims that are otherwise their responsibility simply because an out of state Medicaid program is attempting to hold them liable. Border states experience this frequently as people live in one state and seek treatment in another. Besides health insurers, cost are shifting to Medicaid from workers compensation and casualty insurers as well as from other government programs such as TriCare and Medicare. As such, these plans and programs should be held to the same data sharing, claims processing and payment standards as traditional health insurers to facilitate Medicaid’s payer of last resort status.
Further, the Centers for Medicare & Medicaid Services’ (CMS) Payment Error Rate Measurement (PERM) program found that Medicaid pays 9.8% of claims improperly, which is equivalent to $50 billion annually. The top two causes of improper payments are non-covered services and pricing errors, both of which can be avoided with better pre-payment claim screening and post payment review for assurance of adjudication procedures. Programs like the Medicaid Recovery Audit Contract (RAC), which works to reduce Medicaid’s payment error rate and recover overpayments, should not only be maintained, but should be strengthened by empowering states to devise a program that suits their needs rather than a one size fits all federal program.
And finally, addressing the approximately 20% of Medicaid recipients that account for nearly 80% of Medicaid costs by using available claims history to pro-actively manage care will reduce overlapping expenditures and prevent expensive hospitalizations. These high-utilization recipients, who typically have serious chronic conditions, are often enrolled in multiple healthcare programs, i.e. Medicare and Medicaid or Medicaid and commercial health plans, and can be better managed by aggregating claims data available from these programs to identify and pro-actively engage high risk recipients, avoiding repeated and unnecessary tests and procedures.
It’s time for our lawmakers and Medicaid administrators to get serious about rooting out fraud, waste and abuse by mandating robust Medicaid integrity programs and rewarding Medicaid agencies that have achieved success in reducing waste. Additionally, closing loopholes in laws and regulations to support Medicaid payer of last resort principles can save the program billions of dollars annually without reducing benefits to recipients. I urge the Senate Finance Committee, Governors and the Trump Administration to make Medicaid efficiency a priority for the program in the post ACA environment.
Bill Lucia is CEO of HMS Holdings which provides cost containment solutions to government and private healthcare payers, including more than 47 state Medicaid programs and 250 Medicaid managed care programs.
The views expressed by authors are their own and not the views of The Hill.