US GAO sees Medicaid claims oversight weakness

WASHINGTON (Reuters) - The federal agency responsible for overseeing Medicaid has failed to address some weaknesses in preventing reimbursement claims abuse, the General Accountability office said in a new study released on Monday.

The study found that the Centers for Medicare and Medicaid Services (CMS) had improved its ability to identify billions of dollars in questionable state claims for reimbursements in the health care program for the poor, but it had failed to incorporate a key statistical database and other tools in its analysis capabilities.

Medicaid, which is jointly funded by the federal government and states, is expected to reach $320 billion in total spending for fiscal 2006, according to the National Governors Association. It cost $295 billion in fiscal 2004, according to the GAO study.

The governors have projected a 4.5 percent increase in total Medicaid spending in fiscal 2007, to about $334 billion, with the state share rising faster than the federal portion.

With the help of $46 million in additional federal funds in the past three years to shore up its ability to identify inappropriate claims, CMS, a part of the Department of Health and Human Services, created 100 temporary positions for funding specialists who review state Medicaid financing practices.

However, these funding specialists, which cost $12 million over three years, are not permanent and are subject to new appropriations from the federal Health Care Fraud and Abuse Control program.

The report urged CMS to create permanent funding specialist positions and to determine what technology it needs to further enhance its ability to analyze data.

It also said CMS still lacks processes to adjust oversight activities for changes in risk, and has not followed through on the GAO's 2002 recommendation that it incorporate the Medicaid Statistical Information System database into its oversight of state claims and its analysis capabilities.

Sen. Charles Grassley, chairman of the Senate Finance Committee, said in a statement that the study underscores the need for improvements to prevent waste in the Medicaid program, the third largest federal social spending program. "We can't let these dollars be squandered and lost to fraud, waste and abuse," he said.

"The new GAO report underscores the need for the federal agency that runs Medicaid to do its part," Grassley added. "CMS needs to take the GAO's recommendations to heart and implement them to help ensure the stability of Medicaid."

In comments attached to the study, CMS Administrator Mark McClellan said he was pleased with the GAO's recommendation to create permanent funding specialist positions.

The 100 temporary specialists help CMS communicate with state Medicaid administrators and address claims problems "before they develop into potentially adversarial deferral or disallowance actions."

He said CMS was implementing an Internet-based solution to incorporate Medicaid Statistical Information System data to provide reviews of broad payment patterns and trends.