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Budgetary challenges may limit ability to recoup Medicaid overpayments
In fiscal year 2008, Alabama's Program Integrity Division's Pharmacy Audit unit reviewed 143 medical providers and 629 pharmacies to assure proper claim payment and recovery of identified overpayments. This resulted in about $4.7 million in medical provider recoupments and $429,422 in pharmacy recoupments. In FY 2009, $332,000 was recovered for the state due to three hospitals' overbilling for a chemotherapy drug.
"We have always been very aggressive on this front," says Alabama Medicaid Commissioner Carol H. Steckel, chair of the Washington, DC-based National Association of State Medicaid Directors. "Maximizing all available taxpayer dollars for the benefit of Alabama Medicaid recipients is an ongoing priority for the agency."
System edits and program efforts have been designed to prevent inappropriate payments before these are made. For example, prior authorization programs head off problems prospectively, while ensuring that recipients get medically necessary care or medications.
"We also have some other program initiatives that contribute to the overall efficiency of our program while preventing overuse or misuse of Medicaid dollars," says Ms. Steckel. "Our radiology management effort has saved a considerable amount of money in a very short time."
Ms. Steckel expects that Health Information Technology (HIT) will help the Medicaid program's utilization review efforts. One reason is that it will give more complete information about recipients. "This not only sets the stage to improve the quality of care provided to our recipients. It hopefully will also expand our capabilities to identify patients and providers who abuse or misuse the system," she says.
The Recipient Review unit, which investigates recipients who appear to have abused or misused Medicaid benefits, conducted 2,487 reviews in FY 2008. This resulted in 635 recipients being restricted or "locked-in" to one doctor and one drug store, with a cost-avoidance benefit to the agency of $344,459.
The quality control unit reviews eligibility determinations for accuracy to ensure that only eligible individuals qualify for Medicaid. "Alabama's Quality Control rate is consistently below the national rate of 3%, most recently 0.5101 for the October 2007 to March 2008 period," reports Ms. Steckel. Here are other utilization review measures that have had good results for Alabama Medicaid:
New applications of durable medical equipment providers are reviewed prior to enrollment, to ensure they have a legitimate office and office staff;
All provider applications are reviewed that indicate any kind of disclosure information before giving approval for enrollment;
The list of sanctioned individuals is reviewed to ensure they are not working in any capacity for an entity that receives payments from Medicaid or Medicare;
There is a requirement that any recipient who has eligibility reinstated after being suspended from the Medicaid program for drug-related fraud, abuse, or misuse of benefits is placed in the restriction program. Their utilization of benefits is monitored for one year.
In addition to the efforts of the Program Integrity Division, numerous system edits and program oversight measures are in place to ensure that prescribing providers hold a valid license, and providers who are deceased or who have moved from the state are removed.
"Edits are also placed in the system for providers who have been suspended from Medicare or Medicaid to ensure that any claim does not go through," says Ms. Steckel. "Provider representatives from HP Enterprise Services, the agency's fiscal agent, are available to train providers on correct billing methods."
Feds must be reimbursed
Steve Bellomy , head of Idaho's Health and Welfare's Bureau of Audits and Investigations, says that the state's $1.5 billion Medicaid program is facing new challenges with its utilization management approaches. This is mainly due to increasing enrollment and shrinking revenues.
"Our top challenges include the troubled economy, finding and defining our mission, and improving our efficiency and effectiveness," says Mr. Bellomy. "But for a small state on a tight budget, Idaho has a great deal happening to improve program integrity in Medicaid."
Last year, Idaho Medicaid identified $3.2 million in overpayments and $2.5 million in cost savings. One new challenge going forward, however, is the rule under the American Recovery and Reinvestment Act (ARRA) requiring states to reimburse the full federal share within 60 days of identifying an overpayment. In Idaho's case, this is nearly 80%. "This poses a threat to the budget and places the integrity activity at odds with state funding," says Mr. Bellomy. "Pursuing repayment more vigorously jeopardizes the financial viability of many providers and could further dissuade some providers from participating in Medicaid at all. So, this has changed the way we do business. We must now analyze each case to determine how best to resolve issues, so we don't harm the state."
As Idaho is a rural state, ranking 13th in size and 40th in population, the cooperation of the medical community is necessary for these efforts to succeed. Previously, techniques such as statistical sampling were used to maximize the overpayments that were identified.
"Now, we must focus on ways to maximize the recoupment of overpayments and still remain a deterrent," says Mr. Bellomy. "This is not an easy task. Many providers are perched on the edge of solvency, and some may be wary to accept Medicaid patients. However, since our only means to obtain relief from uncollectable overpayment is bankruptcy through aggressive civil action, it is a deterrent."
Currently, Idaho Medicaid is making its utilization review efforts more effective with the help of new technology. "All of the Medicaid integrity partners are learning to do a better job of coordinating efforts so that we are sharing the road with one another, since we each focus on a necessary mission," says Mr. Bellomy. "Providers don't know the difference between the MFCU, MPIU, the state Medicaid credentialing unit, or the MIG and MIC. So, it's our job to make the partnership transparent to the providers."
The Medicaid Program Integrity Unit always has had a good relationship with other Medicaid program units, such as credentialing, but it is learning to better coordinate efforts when it comes to dealing with providers.
"It is common for the credentialing unit to be working with a provider at the same time that the program integrity unit is conducting its own investigation," Mr. Bellomy explains. "Even though we understand the difference between credentialing and retrospective claims reviews, the provider sees us as one agency and can easily become confused [as to] why they are being visited by two separate groups. Coordination is important among all integrity activity."
Here are some of the ways Idaho Medicaid will use technology to improve its utilization review:
Idaho Medicaid's new Medicaid Management Information System (MMIS) will be implemented next summer, with federal funds paying for 90% of the $50 million cost.
"The new MMIS will greatly improve Idaho's ability to manage Medicaid," says Mr. Bellomy. "The first line of defense against waste, fraud, and abuse is a strong Medicaid program. The new system should help manage and reduce risks better. It will also provide a massive amount of data from which to identify abuses."
Idaho implemented a new statewide eligibility system in late 2009, replacing one that had been in use for 22 years.
The system was partially funded by Medicaid and other Federal Public Assistance Programs. "It, too, should help improve the timeliness, accuracy, and quality of applications for Medicaid benefits," says Mr. Bellomy.
Idaho is now participating in the Public Assistance Reporting Information System.
"Though Idaho was an early member state, two misstarts and the implementation of the new eligibility system delayed actual participation," says Mr. Bellomy. "Idaho fully expects to take advantage of the potential cost savings in Medicaid and identify citizens who are eligible under other veterans' benefits and services."
Case tracking software is being used to better automate processes and reduce paperwork.
"The case data is available in a data warehouse that makes it easy to create reports and share them with our partners, such as the collections unit, attorneys, and other Medicaid quality control units," says Mr. Bellomy.
Idaho began working with the Federal Medicaid Integrity Group in September 2009.
"Idaho views this as an opportunity that we might otherwise miss," says Mr. Bellomy. The state underwent a Medicaid program integrity review that was finalized in July 2009. The State's Bureau of Audits and Investigations is reallocating staff resources to reduce administrative support and increase analytical support, through data analysis.
Even though the Medicaid program is receiving a greater federal match rate through ARRA, and enrollment is increasing, Idaho has little flexibility to shift the budget to Medicaid Integrity. This is because every program in the state is coping with budget holdbacks.
"In fact, we count ourselves lucky to have avoided layoffs to this point," says Mr. Bellomy. "Most programs in Idaho are digging deep, including a reduction in staff, to meet the budget shortfalls. The Medicaid Integrity program has to balance our actions against the interests of the state and the federal program."
Mr. Bellomy says for Idaho, "this means that we have to look beyond the simple mission of identifying overpayments. We need to make sure that every action will stop abusive practices, but not harm the state's financial position or harm the Medicaid program."
To handle the increasing caseload, Idaho will utilize technology and better coordination with its key partners. "When resources become scarce, there is only one course of action. Do things better, faster, and cheaper. Doing less is not an option," says Mr. Bellomy. "Idaho is shifting gears and changing strategy to maximize the return on program integrity efforts."