fix it first why medicaid reform is needed

FIX IT FIRST:

Why Medicaid

Reform Is NeededPREPARED AND DISTRIBUTED BY THE OFFICE OF REP. LIZ VAZQUEZ

[email protected]

(907) 465-3892

Current Medicaid Program

LACKS PROGRAM INTEGRITY

Our current Medicaid program fails at the basic

components of program integrity

Without effective program integrity controls, our

program is at risk of:

Prepared and distributed by the office of Rep. Liz Vazquez

2

Fraud Waste

Abuse Endangering our

clientsMisuse

What Is Program Integrity?

According to the National Association of Medicaid Directors:

“Effective program integrity will ensure:

Accurate eligibility determination;

Prospective and current providers meet state and federal participation requirements;

Services provided to beneficiaries are medically necessary and appropriate;

Medicaid remains the payer of last resort when other insurers or programs are responsible for an enrollee’s care; and

Provider payments are made in the correct amount and only for covered services.”


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Core Function Failures

Consider: Medicaid is a program that makes

payments to certified providers for services

provided to eligible clients.

Current system is NOT ADEQUATE for:

Ensuring client eligibility

Making and tracking accurate payments

Properly certifying providers


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Client Eligibility System

Not Ready

Rollout of new enrollment/eligibility system ARIES

Was supposed to go live in October 2013 – implementation

delayed by a year

Then missed new completion date of October 2014

As of February 2015, DHSS still “experiencing problems” with

converting to ARIES

15 months behind initial schedule

Experiencing enrollment backlogs

- Sources: House Finance Committee minutes, Jan. 26, 2015; Senate Health & Social

Services Committee minutes, Feb. 25, 2015


5

Payment System Is Broken

Enterprise (formerly named MMIS) - payment system –

BROKEN

The system processed approximately $1.1 billion in GF

expenditures

451 unresolved defects remained at end of August 2014

“Because of the defects, [Enterprise] was not a fully

operational or federally certified Medicaid system during

FY 14.”

“… the issues … represent a material weakness in internal

control and could result in a material misstatement to the

financial statements.”


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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-021


Examples of issues identified by Legislative Audit Division:

Suspended Claims Backlog:

“As of the end of August 2014, the AHE [Enterprise] system had a

significant backlog of 98,736 suspended claims totaling $184 million.”

Interface Issues – Risks:

“As a result of these issues, risks exists that eligible members are

not receiving services and ineligible members are

inappropriately receiving services; pharmacy claims are being

processed incorrectly; providers without licenses are receiving

payments; and private insurance reimbursements are not being

collected.”


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Examples of issues identified by Legislative Audit

Division, continued:

Payment Issues:

The Enterprise system has:

“…numerous payment related deficiencies, including

paying providers for duplicate claims, over and

underpaying providers due to miscalculation of claim

eligibility and pricing.”


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Examples of issues identified by Legislative Audit

Division, continued further:

“Providers were paid for duplicate claims and were over

and/or underpaid due to the inaccurate claim eligibility and

pricing.”

“Claims were assigned incorrect funding codes.”

“Providers received incorrect and untimely reimbursement

for services.”


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Examples of issues identified by Legislative Audit Division, continued even further:

“Program errors … caused incorrect payments to the federal agency including payments for ineligible recipients.”

“The surveillance and utilization review program was ineffective due to unreliable system data and inadequate staffing.”

“Program integrity staff was unable to complete investigations and pursue collections of potential overpayments from providers due to unreliable system data.”


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Overall:

“The extensive system defects and known

noncompliance increase the risk that Medicaid

and CHIP1 expenditures were incorrect,

ineligible, incomplete, and reported

inaccurately. Additionally, lack of controls

increases the risk for fraud, waste, and abuse.”


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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-0191 Children’s Health Insurance Program

State Reimbursement From

Federal Government:

Broken Too

Funding Source Issues:

“[Enterprise] system defects caused to be assigned

incorrect codes which resulted in inaccurate federal

reimbursement.”

Over $3.6 million in revenue shortfalls due to

“weaknesses in internal controls, untimely

revenue billings, ineffective year-end financial processes …”



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Providers Not Being Properly

Certified

Health care providers must be certified to

avoid putting patients at risk

Ensures a provider:

Is actually qualified to provide Medicaid-covered

services

Has not been decertified in other states

Has not been convicted of fraud or other crime in other

states

Is charging appropriate rates for covered services


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Certified

Over half of tested Medicaid provider

certification files found to be incomplete

“The health and welfare of service recipients are at risk

when DSDS2 certification files cannot provide

assurance that providers and their employers were

properly screened and adequately trained prior to

certification.”


2 Senior and Disabilities Services, a division of DHSS


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Certified

Nearly two-thirds of tested provider files

lacked evidence of rate verification

“Lack of proper verification and

documentation supporting RPTC3 rates

increases the risk for overpayments.”

- Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-014

3 Residential psychiatric treatment centers


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Certified

Half of tested Medicaid provider certification files lacked complete employee criminal background checks

From 15 tested provider files, Legislative Audit found:

12 employees with NO background clearances

6 employees in “provisional status”

8 employees who are barred from working with clients

“DSDS4 staff does not follow up on noted discrepancies until the provider’s next site review – if one is required. A site review may not happen for a year or two following identification of a discrepancy…”


4 Senior and Disabilities Services, a division of DHSS


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Certified

Employee criminal background checks, continued:

This is not merely a good governance issue – it is a health and safety issue

“Failure to adequately screen providers and their employees puts the health and welfare of service recipients at risk.”



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Federal Feedback:

Our Program AT RISK

Does the federal government think our current program is working?

NO

According to the latest federal review:

“the state’s Medicaid program is at risk because it has a number of vulnerabilities in its program integrity activities.”


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– Source: US DHHS Centers for Medicare and Medicaid Services, Medicaid Integrity Program

Alaska Comprehensive Program Integrity Review Final Report, January 2014

Federal Feedback:

Our Program AT RISK

Among the vulnerabilities noted:

“Inadequate attention to program integrity controls by failing to suspend payments or document a good cause exception not to suspend in cases with a credible allegation of fraud.”

“Ineffective provider enrollment practices and reporting”, including failing to:

“properly search for excluded providers”

“properly capture necessary information for enrollment”

“properly implement new provider enrollment and screening regulations”

“properly handle the reporting and notification requirements for adverse actions taken against providers…”


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Federal Feedback:

Our Program AT RISK

“CMS is concerned that several of the issues … were

also identified in CMS’s 2010 review and are still uncorrected.”

The report concluded:

“The identification of significant areas of risk and numerous

instances of non-compliance with federal regulation is of

great concern and should be addressed immediately. CMS

is also particularly concerned about uncorrected, repeat

problems that remain from the time of the agency’s last

comprehensive program integrity review.”


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FIX IT FIRST!

Alaska’s Medicaid program needs serious

reforms first.

Without effective program integrity, the state cannot

effectively detect and combat:

Until the reforms take place, Alaska’s Medicaid

program is NOT READY FOR EXPANSION.


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Fraud Waste

Abuse Endangering our

clients Misuse

fix it first why medicaid reform is needed

Healthcare