The federal government paid out $14.4 billion in fraudulent reimbursements through Medicaid last year, according to the Government Accountability Office (GAO).
Sen. Orrin Hatch (R., Utah) highlighted a recent GAO report on the lack of oversight within Medicaid’s managed care organizations (MCOs) delivery system, which accounts for roughly $4 billion in waste each year.
"Today’s report is particularly troubling given Obamacare expands this broken program without substantial reforms to protect patients and taxpayers," Hatch said in a statement Wednesday. "CMS is responsible for safeguarding the billions of dollars it receives from hard-working American taxpayers, and I strongly urge [CMS] Administrator [Marilyn] Tavenner to implement the changes recommended by GAO to improve CMS oversight of MCO payments."
"This report underscores the need for Medicaid reform in order to ensure that scarce tax dollars are used properly," he said.
Managed care organizations, in which Medicaid beneficiaries get the majority of their care through an organization under contract with their state, are especially vulnerable to fraud since neither federal nor state governments are "well positioned to identify improper payments," the GAO said.
"The size and diversity of the Medicaid program make it particularly vulnerable to improper payments—including payments made for treatments or services that were not covered by program rules, that were not medically necessary, or that were billed for but never provided," the report said.
Nearly 50 million people currently receive benefits through MCOs. While MCO payments are still overshadowed by fee-for-service payments (FFS)—the traditional method where health care providers are paid for each service—individuals receiving their care through MCOs are "growing at a faster rate."
State officials told the GAO that they have "not begun to closely examine program integrity in Medicaid managed care." While the Centers for Medicaid and Medicare Services (CMS) requires states to audit their payments according to their MCO contracts, states are not required to audit the "appropriateness of these payments."
The GAO warned that the problem would worsen under Obamacare, which has expanded Medicaid programs in many states.
"Improving federal and state efforts to strengthen Medicaid managed care program integrity takes on greater urgency as states that choose to expand their Medicaid programs under the Patient Protection and Affordable Care Act are likely to do so with managed care arrangements, and will receive a 100 percent federal match for newly eligible individuals from 2014 through 2016," the report said.
"Unless CMS takes a larger role in holding states accountable, and provides guidance and support to states to ensure adequate program integrity efforts in Medicaid managed care, the gap between state and federal efforts to monitor managed care program integrity will leave a growing portion of federal Medicaid dollars vulnerable to improper payments," it said.
Overall, Medicaid covered 71.7 million Americans in fiscal year 2013, totaling $431.1 billion, an estimated $14.4 billion of which were improper payments.