In a statement made my CMS administrator Seema Verma dated August 21, 2018, it was announced that CMS will begin auditing some states’ managed care organization financial reporting based on the amount spent on clinical services and quality improvement versus administration and profit. Verma’s statement was made before the U.S. Senate Committee on Homeland Security and Governmental Affairs Committee in order to explain CMS’ efforts to improve the integrity of the Medicaid program following the GAO’s June 2018 findings and recommendations for addressing growth in overall Medicaid spending.
“The Administration is aware of concerns that managed care rates resulted in significant profits for insurance companies, and is committed to reviewing these rates and is taking action when appropriate,” said Verma. Her statement further explains that reviewing managed care capitation rates for newly eligible adults – a population covered by managed care programs in most states – was more challenging than for individuals traditionally eligible for Medicaid due to limited historical data and experience.
“As part of this new strategy, CMS will make sure claims experience used to set capitation rates actually match what plans have been reporting. Audit activities will include review of high-risk vulnerabilities identified by the GAO and OIG, as well as other behavior previously found detrimental to the Medicaid program,” said Verma.
In a related effort to reduce Medicaid spending, CMS announced in a letter dated August 22, 2018 addressed to state Medicaid directors that the agency will not approve Medicaid demonstration projects that are not expected to be budget neutral.
CMS has already seen improvements in managing the Medicaid program in partnership with states according to a recent press release, which highlights the successes of four strategies implemented at the end of 2017.
To read Verma’s full August 21 testimony to the Senate, click here.