GAO: Medicaid managed care contracts need better CMS oversight

Aug 6 2010

The Government Accountability Office released a report Wednesday that says the Centers for Medicare and Medicaid Services needs better oversight of Medicaid managed care contracts.

The Hill: "The report found regional gaps in oversight and in the data the states collect to ensure the rates insurance companies charge for the care of Medicaid beneficiaries are accurate." As a result, CMS will require regional offices to use a checklist to review rate-setting submissions. "The report raises questions with Medicaid contracts in two states in particular. Tennessee received $5 billion a year in federal funds for rates that had not been certified by an actuary, as required by federal regulations, the report says. And in Nebraska the Centers for Medicare and Medicaid Services (CMS) did not complete a full review of rate setting since new requirements became effective, leaving doubts as to whether they are in compliance" (Pecquet, 8/4).

CongressDaily: Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, the leaders of the Senate Finance Committee, called on CMS to improve oversight of the contracts. "'To protect Medicaid, we need to ensure states are paying an appropriate price for the benefits private plans deliver. This report makes clear that we don't have enough information to guarantee that prices are accurate and that Medicaid is protected,' said Finance Chairman Max Baucus, who called on CMS to be more aggressive in their oversight." Said Grassley: 'Medicaid could be overpaying in some cases and underpaying in others. … CMS isn't checking behind adequately to know either way. In a program that spends hundreds of billions of dollars, that's a problem.'" Medicaid's managed care programs contract with health plans to pay a fixed, monthly rate per enrollee that covers most health care for the patient (McCarthy, 8/5).

CQ Healthbeat: "Medicaid Health Plans of America, a trade group representing Medicaid HMOs, said in a statement that inconsistent rate reviews 'could lead to failure of plans being paid at appropriate rates, resulting in decreased access of our nation's poor to quality health care.' States 'use a variety of rate-setting methods that are often influenced by state budgetary factors and not by the cost of health care expenditures,' said Thomas L. Johnson, the CEO of the group" (Reichard, 8/4).

Reuters: "Medicaid, administered by the states with reimbursements from the federal government, increasingly relies on insurance companies like UnitedHealth Group Inc. and Coventry Health Care Inc. to deliver its services. In 2007 more than $62 billion was spent on managed care" (Lentz, 8/4).

Modern Healthcare: "The GAO in its report recommended that the CMS implement a mechanism to track state compliance with the requirements, clarify guidance on rate-setting reviews, and make use of information on data quality in overseeing states' rate setting. HHS agreed with the GAO's recommendations, describing some initiatives under way to improve CMS' oversight" (Lubell, 8/4).