GAO: Differing Documentation Requirements May Muddy Medicare, Medicaid Risk

Medicare and Medicaid fee-for-service issued an estimated $27.5 billion in improper payments in fiscal year 2017, according to a GAO report, which issued four recommendations.

Differing documentation requirements between Medicare and Medicaid may be clouding the government's ability to assess and improve each program's operation, according to a Government Accountability Office report published Wednesday.

Although the two programs pay for similar care, Medicare's documentation requirements are generally more extensive than Medicaid's for certain services, such as those that involve physician referrals, the GAO report states.

The Centers for Medicare & Medicaid Services uses these documentation requirements in determining whether an individual payment was improper, then CMS estimates total improper payments based on these individual cases and uses that information to inform its strategies to reduce such improper payments in the future. But CMS officials haven't assessed how the differing requirements between the two programs may affect their perceptions of each program's risks, the report states.

"Without a better understanding of how documentation requirements affect estimates of improper payments, CMS may not have the information it needs to effectively identify and analyze program risks, and develop strategies to protect the integrity of the Medicare and Medicaid programs," the GAO report states.

The report found that Medicare fee-for-service issued an estimated $23.2 billion in improper payments due to insufficient documentation in fiscal year 2017, while Medicaid fee-for-service issued $4.3 billion in improper payments due to insufficient documentation.

The CMS officials interviewed by the GAO reportedly said any differences in the documentation requirements between the two programs results from each state's involvement in jointly managing its own Medicaid program.

The GAO report includes four recommendations:

1. The CMS administrator should institute a process to routinely assess the necessity and efficacy of Medicare and Medicaid documentation requirements. Health and Human Services concurred with this recommendation in a response letter earlier this month and said HHS has already established this process.
    
2. The CMS administrator should ensure Medicaid medical reviews provide actionable information on improper payments. HHS declined to concur with this recommendation. Using data from other sources to adjust state-specific program risks to adjust the Payment Error Rate Measurement (PERM) sampling approach "could jeopardize the statistical validity of the PERM program," HHS wrote.
    
3. The CMS administrator should minimize the potential for PERM medical reviews to compromise fraud investigations. HHS concurred with this recommendation and said it already provided guidance last year to states and will consider clarifying that guidance in the future.
    
4. The CMS administrator should address disincentives for state Medicaid agencies to notify the PERM contractor of providers under fraud investigation. HHS concurred with this recommendation and said it will consider increasing educational for states.
    

The full report is available on the GAO website.