What CMS Can Do to be of Additional Help with Fraud, Waste and Abuse

What CMS Can Do to be of Additional Help with Fraud, Waste and Abuse

CMS has helpfully signaled an agency-wide commitment to addressing Fraud, Waste and Abuse (FWA). Over and above the auditing processes that are currently being prioritized, CMS has additional opportunities to be of help to state and territory Medicaid programs in addressing each component of FWA.

Strategies to Help States Reduce Fraud

States and territories have well-defined accountabilities in stewarding use of federal and state Medicaid funds. As noted above, for years they have shouldered the primary responsibility of establishing and cueing providers to utilization management standards, using a range of strategies including pre- and post-payment audits, and collaborating with offices of attorneys general and law enforcement to investigate and prosecute fraud. Given the increasing sophistication and brazenness of bad actors and the scope and severity of their fraud schemes, however, CMS and other federal agencies remain essential partners in preventing and addressing provider fraud.

Additional ways in which CMS can be of assistance to states and territories include:

• cueing states and territories to federal FWA best practice materials (e.g. a provider enrollment self-assessment and process recommendations previously published by the CMS Center for Program Integrity, CPI)
• creating routine, rapid means of sharing fraud findings and provider disqualifications made by other public payers (e.g. Medicare and the VA) with Medicaid programs;
• accelerating the time frames in which CMS is responding to reports of fraud raised by state attorneys general and MFCUs;
• retaining and strengthening the procedural pathways through which states and territories can surface findings of FWA and work collaboratively with CMS on mutually negotiated CAPs that encourage open sharing of data, additional research and investigation, and a holistic orientation that ensures adherence to required provider qualifications and performance standards but also continued access to vital services by eligible Medicaid members – an excellent example is CMS’ approach with a large-scale fraud scheme identified by the state of Arizona;
• resourcing a Medicaid analytics-specific component of the CPI and using T-MSIS data to engage in predictive analytics and flag patterns of potential fraud on a national basis;
• as will be required under OBBBA, strengthening the technical capacity and timeliness of federal hubs and matching functions, including PARIS and the various existing sources of provider data; and
• providing access for both state/territory program integrity staff and also their policy counterparts to technical assistance sessions and materials produced by the Medicaid Integrity Institute.

Strategies to Help States Reduce Abuse

Over the past decade, states have expanded Medicaid coverage for services such as ABA for people with ASD and supportive housing interventions for people with MH and SUD largely in response to advocacy by families and providers, CMS guidance, coverage mandates enacted by state legislatures, and evolving interpretations of the Early and Periodic Screening and Treatment (EPSDT) requirement as well as federal mental health parity law. Implementing these new services was well intended as a means of addressing unmet needs, but as utilization has rapidly increased, programs are now examining experience and outcomes as well as assessing the standards under which these services are being provided to safeguard against overuse or outright fraud by unscrupulous providers. CMS could helpfully partner with states to develop national toolkits for both service types that articulate:

• best practice standards for assessment of needs, as well as template assessment tools;
• standard service definitions, not just for the services that quickly became the exclusive focus for coverage but also other, potentially lower cost, services that could benefit these populations;
• provider credentials and scopes of work;
• utilization management standards (e.g. tiering of service according to the acuity and complexity of an individual’s needs; circumstances under which the service can be delivered remotely, if at all); and
• guidance on interplay with and avoidance of duplication with related services; e.g.:
  • in the case of ABA services, guidelines for how Medicaid coverage relates to school-based coverage under Individual Education Plans (IEPs); and
  • in the case of supportive housing services, guidelines for how Medicaid coverage relates to traditional housing-based supports such as resident services coordinators.

Strategies to Help States Reduce Waste of Medicaid Funds

Systems spending. Another key opportunity for reduction of waste in Medicaid is public spending on Medicaid eligibility and claims processing systems. Under federal law, the federal government contributes 90% of the costs of procuring, designing and implementing those systems, and 75% of the costs of maintaining them ongoing. Notwithstanding this significant equity interest, and federal policy direction around reuse of solutions, the most typical scenario for Medicaid systems is a bespoke, state-by-state, first dollar approach that is rarely amenable to scaling to other states/territories or even adaptation. Further, the vendors that are responsible for designing these systems typically remain engaged over time to modify the systems through costly change orders, necessitating a dependence that does not ultimately drive toward state self-management.

Ways in which CMS could be of further support with this include:

• partnering with states on alternatives to the traditional multi-year, multi-component Advance Planning Document (APD) process, including means of supporting agile procurement and implementation models;
• producing model business requirements for federal policy-related systems changes that states and territories could elect to adopt; and
• addressing systems-related implementation challenges associated with OBBBA, notably:
  • resolving outstanding questions related to policy interpretation (e.g. around exemptions from work and community engagement requirements) that will equip states to move ahead with systems work and avoid expensive re-work in the future;
  • building on CMS’ recent work in achieving cost concessions and signals around procuring support from new IT vendors through the federal GSA Schedule;
  • working with the federal Food and Nutrition Service (FNS) to align how like SNAP and Medicaid policy requirements are operationalized – an applied example is how household size is counted;
  • integrating additional data sources (e.g. Veteran’s Administration data) into the Federal Data Hub to help routinize adjudication of exemptions;
  • use of the federal government’s purchasing power and influence to reduce the per transaction cost of using the Federal Data Hub and other related sources; and
  • identifying and scaling information technology solutions that can either layer on existing systems or be implemented as modules (e.g. for verification of various features of CE requirements for which we currently lack current interoperability between Medicaid systems and other data sources).

Pharmacy spending. As noted above, despite significant work by states to control the rate of Medicaid cost growth, pharmacy spending remains a significant cost driver for the Medicaid program. Per KFF, between FY 2017 and FY 2023, Medicaid spending net of rebates on prescription drugs grew by 72% and in FY 2023, prescription drugs accounted for approximately 6% of total Medicaid spending.

Simply put, states do not have sufficient leverage to intercept the overall cost trend, much less accommodate emerging extraordinary costs for such interventions as anti-obesity medications and cell and gene therapies. Historically, the federal government has relied on the longstanding structure of the Medicaid Drug Rebate Program and otherwise delegated responsibility for Medicaid cost controls (e.g. purchasing compacts, utilization management strategies) to the states. Given the above cost trends, but also the co-occurring interest in enabling access to promising but costly obesity treatments and cell and gene therapies, this is untenable ongoing.

State and territory programs are grateful for renewed federal interest in this area. The Cell and Gene Therapy Access Model, in which 32 states, the District of Columbia and Puerto Rico are participating, as well as the recently announced GENEROUS and BALANCE models, have promise in acting on the federal government’s influence and purchasing power to reduce costs through Most Favored Nation pricing and/or increased rebates. Other potential ideas to help states and territories with drug costs include:

• enhancing federal Medicaid match for a given class of drug/CGT;
• mandating additional rebates under the Medicaid Drug Rebate Program;
• developing risk corridors or reinsurance approaches;
• creating a stand-alone coverage group for people with specified conditions (e.g. sickle cell disease) that is associated with enhanced federal match; and/or
• developing a distinct program as Congress did for coverage of HIV/AIDS drugs under the Ryan White program.

“Rebalancing” long-term services and supports. Medicaid currently pays for 1 in 2 dollars spent in the US on long-term services and supports (LTSS). LTSS includes nursing home services as well as an array of home and community-based services on which 9.7 million (2023) Medicaid beneficiaries rely. The latest annual report on national spending that is prepared by Mathematica for CMS, Trends in Users and Expenditures for Home and Community-Based Services as a Share of Total Medicaid LTSS Users and Expenditures, 2023, indicates that:

• In 2023, national Medicaid LTSS expenditures totaled $228.6 billion, with HCBS accounting for $145.9 billion and institutional services accounting for $82.7 billion.
• The average LTSS expenditure per LTSS user in 2023 was $23,620, compared to $22,109 in 2022. People who received institutional services continued to have much higher average expenditures ($54,462 per user) than people who received HCBS ($17,298 per user).
• From 2022 to 2023, HCBS users as a percentage of total Medicaid LTSS users grew by 7.5% from 79.64 to 87.14 percent. Similarly, HCBS expenditures as a percentage of total Medicaid LTSS expenditures increased by 12.8% from 51.01 to 63.81 percent in that period.

Rebalancing has been defined by the Centers for Medicare and Medicaid Services (CMS) as, “achieving a balance between the share of spending and use of services and supports delivered in home and community-based settings relative to institutional care.” This is intended to give Medicaid members greater choice in where they live and from whom they receive LTSS. It is also a key means of optimizing state spending on LTSS and freeing up resources for other priorities.

While significant progress has been made in increasing the proportion of members who receive Medicaid LTSS in non-institutional settings, continuing to shift the share of expenditures in that direction requires additional attention and effort. An action that CMS could readily take is to expand and reissue the Long-Term Services and Supports Rebalancing Toolkit that was last updated in 2020. This provides a capsule of the history and trends of the rebalancing effort, outlines Medicaid authority pathways, and billboards case examples of state best practice, but could usefully be expanded to include current day strategies to better integrate services and supports for people who are eligible for Medicaid and Medicare (“duals”) as well as to articulate strategies for “right sizing” nursing home beds to account for lower demand.

Read part one in this three-part series, “State and Territory Medicaid Programs Share the Federal Government’s Interest and Urgency around Medicaid Program Integrity” and part two, “Why and How States and Territories are Addressing Fraud, Waste and Abuse.”