Press release

CMS announces initiatives to strengthen Medicaid program integrity

Agency actions will help ensure the sustainability of vital safety net program for all beneficiaries 

Today, the Centers for Medicare and Medicaid Services (CMS) announced new and enhanced initiatives designed to improve Medicaid program integrity through greater transparency and accountability, strengthened data, and innovative and robust analytic tools. 

“The initiatives released today are essential to help strengthen and preserve the foundation of the program for the millions of Americans who depend on Medicaid’s safety net. With historic growth in Medicaid comes an urgent federal responsibility to ensure sound fiscal stewardship and oversight of the program,” said CMS Administrator Seema Verma. “These initiatives are the vital steps necessary to respond to Medicaid’s evolving landscape and fulfill our responsibility to beneficiaries and taxpayers.” 

Recent years have seen a rapid increase in Medicaid spending driven by several factors, including Medicaid expansion, from $456 billion in 2013 to an estimated $576 billion in 2016. Much of this growth came from the program’s federal share that grew from $263 billion to an estimated $363 billion during that period. While the responsibility for proper payments in Medicaid primarily lies with the states, oversight of the Medicaid program requires a partnership. CMS plays a significant role in supporting state efforts to meet high program standards. 

Administrator Verma has set forth three pillars to guide CMS’ work in the Medicaid program: Flexibility, Accountability, and Integrity. Emphasizing these, she expanded on the role of CMS saying, “As we give states the flexibility they need to make Medicaid work best in their communities, integrity and oversight must be at the forefront of our role. Beneficiaries depend on Medicaid and CMS is accountable for the program’s long-term viability. As today’s initiatives show, we will use the tools we have to hold states accountable as we work with them to keep Medicaid sound and safeguarded for beneficiaries.” 

The initiatives announced today include stronger audit functions, enhanced oversight of state contracts with private insurance companies, increased beneficiary eligibility oversight, and stricter enforcement of state compliance with federal rules. 

Important New Initiatives 

1. Emphasize program integrity in audits of state claims for federal match funds and medical loss ratios (MLRs). Audits are central to CMS’ partnership with states—not only encouraging compliance but also revealing how to improve integrity at all levels. Under this initiative, CMS will begin auditing some states based on the amount spent on clinical services and quality improvement versus administration and profit. The MLR audits will include reviewing states’ rate setting. Overall, audits will address issues identified by the Government Accountability Office (GAO) and Office of Inspector General (OIG), as well as other behavior previously found harmful to the Medicaid program.
    
2. Conduct new audits of state beneficiary eligibility determinations. CMS will audit states that have been previously found to be high risk by the OIG to examine how they determine which groups are eligible for Medicaid benefits. These audits will include assessing the effect of Medicaid expansion and its enhanced federal match rate on state eligibility policy. Current regulations will allow CMS to begin to issue potential disallowances to states based on Payment Error Rate Measurement (PERM) program findings in 2022. The PERM program measures improper payments in the Medicaid program and the Children’s Health Insurance Program (CHIP) on a rolling three year cycle and produces national and state-specific improper payment rates. 
    
3. Optimize state-provided claims and provider data: CMS will utilize advanced analytics and other innovative solutions to both improve Medicaid eligibility and payment data and maximize the potential for program integrity purposes. The Trump Administration has made partnering with states a priority. CMS is committed to work closely with states to ensure that the agency and oversight bodies have access to the best, most complete and accurate Medicaid data. For the first time, every state plus Washington, D.C. and Puerto Rico are now submitting enhanced data to CMS. Over the course of the coming months, we will be validating the quality and completeness of the data. 

Ongoing Integrity Work

Working with states to ensure Medicaid provides high-quality care for our most vulnerable people is a central part of CMS’ mission. To learn about noteworthy efforts in place to protect Medicaid’s integrity—including provider screening and education, streamlined access to data, and an enhanced Medicaid Scorecard—see https://www.medicaid.gov/state-resource-center/downloads/program-integrity-strategy-factsheet.pdf.