Medicaid System to Detect Fraud, Waste, and Abuse is Full of Holes

It did not capture 42% of billing information elements, such as dispensing fee payment information. "Without details regarding fees paid, fraud analysts cannot use MSIS data to assess whether the total amounts claimed and reimbursed contain inappropriate fees," the report said.

"For example, in a 2008 report, OIG analyzed data obtained directly from states to determine that Medicaid dispensing fee reimbursement rates were about $2 higher than the average Medicare Part D dispensing fee."

It did not capture 36% of the beneficiary eligibility data elements required to detect fraud, abuse, or waste. "Three of the four missing data elements were for the beneficiary's name (first, middle, and last name). Absence of beneficiary names may hinder analysts' ability to reliably match Medicaid claims data to other sources."

The MSIS is the only nationwide Medicaid eligibility and claims information source. It was approved in 1984 as a voluntary state reporting option for electronic Medicaid fee-for-service claims. In 1997, the Balanced Budget Act mandated MSIS-program participating in 50 states and the District of Columbia starting in 1999.

As of last month, 34 states were sending their MSIS files electronically. The system is also used for healthcare research and evaluation, program utilization and expenditure forecasts, congressional inquiry responses, and other health-related database searches.

Other findings included the fact that the MSIS data were on average 1.5 years old when they were publicly released. This was due to states missing the deadline for filing claims and for the lengthy time eligibility forms and claims spent in the quality review process.

Also, despite the fact that the Department of Justice and the OIG in 2007 identified 182 data elements that help with fraud, abuse, and waste capture, not all of those elements are in fact collected by the MSIS system.

"We determined that Medicaid Statistical Information System (MSIS) data were not timely, accurate, or comprehensive for fraud, waste, and abuse detection," the OIG said.

"CMS did not fully disclose or document information about the accuracy of MSIS data," the report added.

The 27-page document was prepared by Stuart Wright, OIG deputy inspector general for evaluation and inspections, and was addressed to Cindy Mann, director of the Center for Medicaid and State Operations.