Private insurers improperly costing Medicaid funds: GAO

Efforts to stop improper Medicaid payouts for people with private insurance need to be intensified or the program could lose millions of dollars as it continues to expand, the Government Accountability Office warns in a recent report to Congress.

Nearly 7.6 million Medicaid beneficiaries also were enrolled in private insurance in 2012, and that number is expected to increase as a result of Medicaid expansion under the Affordable Care Act, the GAO stated.

State efforts in recent years have yielded nearly $14 billion in savings by identifying payable claims under private insurance. But GAO investigators found that much more could be done to ensure private insurers are held liable for their share and Medicaid remains the payer of last resort. Medicaid is far and away the top single payer of long-term care in the United States.

“States are required to take certain steps to identify sources of third-party coverage that Medicaid enrollees may have, and to ensure that these sources pay to the extent of their liability,” the GAO told Rep. Joseph Pitts (R-PA), chairman of the House Subcommittee on Health Committee on Energy and Commerce, in its January 28 report.

However, so-called third-party liability (TPL) compliance efforts have been stymied in recent years because TPL insurers aren't operating fairly, according to the GAO report. More than 90% of states where GAO auditors interviewed, for example, said many private insurers are withholding coverage information on Medicaid enrollees and denying claims on “procedural” grounds.

GAO recommends that CMS routinely monitor and share information regarding key TPL efforts. It also also calls for CMS to challenge every state and provide guidance on state oversight of TPL efforts conducted by Medicaid managed care plans.