CMS proposes tightening Medicaid improper payment program

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The program that measures Medicaid improper payments and eligibility could be getting tougher in the future under new a new rule proposed by the Centers for Medicare & Medicaid Services on Monday.

The measure would implement provisions of the Affordable Care Act in the Payment Error Rate Measurement program, which creates improper payment rates based on reviews of the fee-for-service, managed care and eligibility aspects of Medicaid.

One part of the proposal calls for citing payments as improper if the federal share amount is incorrect, even if the total computable amount is correct. Currently, improper payments are only cited if the total amount — the federal and the state shares — is incorrect.

The review timeframe change as well, from the current federal fiscal year of October through September, to July through June of a given year. The responsibility of conducting PERM eligibility reviews also would shift, to a state-supported federal contractor, as opposed to the current stipulation requiring states to conduct their own eligibility reviews and report findings to CMS.

States whose improper payment rates exceed 3% could face stricter Corrective Action Plans and possible payment reductions or disallowances under the proposed rule.

Monday's proposal also would change the Medicaid Eligibility Quality Control program, a separate eligibility review program that requires states to report the ratio of their improper payments for medical assistance compared to their total expenditures for medical assistance.

The goal is to “restructure” the program so it can help states lower their eligibility improper payment rates, and more effectively complement PERM.

The major proposed change would retool MEQC into a pilot program that states conduct during their off-years from the PERM program, to “ensure continuous oversight of both Medicaid and [Children's Health Insurance Program] state eligibility determinations,” CMS said.

The agency accepting comments on the proposed rule through August 22. Click here to read the full proposal in the Federal Register.