CMS Launches New Audit Initiatives for Medicaid

The Centers for Medicare & Medicaid Services (CMS) is stepping up its game when it comes to Medicaid oversight—and that may mean more red tape and audits for home care providers.

CMS announced on Tuesday it plans to move forward with a series of wide-ranging transparency and accountability initiatives designed to improve Medicaid oversight and curb wasteful spending. Initiatives include stronger audit functions, tighter regulation of state contracts with private insurance companies, increased beneficiary eligibility oversight and, more broadly, stricter enforcement of compliance with federal rules, according to CMS.

“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,” CMS Administrator Seema Verma said in an announcement. “With historic growth in Medicaid comes an urgent federal responsibility to ensure sound fiscal stewardship and oversight of the program.”


Overall Medicaid spending has risen in recent years from $456 billion in 2013 to an estimated $576 billion in 2016. During that period, federal spending in the program increased from $263 billion to an estimated $363 billion.

The CMS initiatives come less than three weeks after an OIG report found New York’s Medicaid agency claimed nearly $75 million in reimbursements for certain in-home care services not in accordance with Medicaid requirements.

To help rein in spending, the newly announced initiatives will emphasize program integrity in audits of state claims for federal match funds and medical loss ratios (MLRs), according to CMS. Specifically, CMS plans to begin auditing some states based on the amount spent on clinical services and quality improvement versus administration and profit. MLR audits will include reviewing states’ rate setting as well.


CMS will also begin auditing state beneficiary eligibility determinations as part of the new initiatives, specifically targeting states that have been previously found to be high risk by the Office of Inspector General (OIG). Eligibility 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 issuing possible disallowances to states based on Payment Error Rate Measurement (PERM) program findings in 2022.

“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,” Verma said. “Beneficiaries depend on Medicaid and CMS is accountable for the program’s long-term viability.”

In addition to beefing up its Medicaid auditing, CMS also plans on “validating the quality and completeness” of claims and provider data states send to the federal agency in coming months.

Written by Robert Holly

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