U.S. GOVERNMENT PUBLISHING OFFICE

34–316 PDF WASHINGTON : 2019

S. Hrg. 115–543 

MEDICAID FRAUD AND OVERPAYMENTS: 

PROBLEMS AND SOLUTIONS 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

JUNE 27, 2018 

Available via the World Wide Web: http://www.govinfo.gov 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

JOHN HOEVEN, North Dakota 

STEVE DAINES, Montana 

CLAIRE MCCASKILL, Missouri 

THOMAS R. CARPER, Delaware 

HEIDI HEITKAMP, North Dakota 

GARY C. PETERS, Michigan 

MAGGIE HASSAN, New Hampshire 

KAMALA D. HARRIS, California 

DOUG JONES, Alabama 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

DAVID N. BREWER, Chief Investigative Counsel 

JEROME F. MARKON, Senior Policy Advisor 

MARGARET E. DAUM, Minority Staff Director 

STACIA M. CARDILLE, Minority Chief Counsel 

COURTNEY C. CARDIN, Minority Counsel 

LAURA W. KILBRIDE, Chief Clerk 

BONNI E. DINERSTEIN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator McCaskill ............................................................................................ 3 

Senator Carper ................................................................................................. 5 

Senator Hassan ................................................................................................. 12 

Senator Heitkamp ............................................................................................ 15 

Senator Jones .................................................................................................... 19 

Senator Daines ................................................................................................. 21 

Prepared statements: 

Senator Johnson ............................................................................................... 33 

Senator McCaskill ............................................................................................ 35 

WITNESSES 

WEDNESDAY, JUNE 27, 2018 

Hon. Eugene L. Dodaro, Comptroller General of the United States, U.S. 

Government Accountability Office ...................................................................... 6 

Brian P. Ritchie, Assistant Inspector General for Audit Services, Office of 

Inspector General, U.S. Department of Health and Human Services ............. 8 

ALPHABETICAL LIST OF WITNESSES

Dodaro, Hon. Eugene L.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 39 

Ritchie Brian P.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 73 

APPENDIX 

Health Care Who Pays Chart (percentage) ........................................................... 85 

Health Care Who Pays Chart (dollars) .................................................................. 86 

Health Spending Chart ........................................................................................... 87 

Medicaid Spending Chart ........................................................................................ 88 

Improper Payment Chart ........................................................................................ 89 

Majority Staff Report on Medicaid Fraud .............................................................. 90 

Minority Staff Memo ............................................................................................... 114 

CMS Press Release .................................................................................................. 121 

CMS Fact Sheet ....................................................................................................... 123 

Humana Underwriting Guide ................................................................................. 127 

Information submitted by Mr. Dodaro ................................................................... 170 

Responses to post-hearing questions for the Record: 

Mr. Dodaro ........................................................................................................ 181 

Mr. Ritchie ........................................................................................................ 198 

Attachments to QFRs .............................................................................................. 202 

(1) 

1The chart referenced by Senator Johnson appears in the Appendix on page 85. 

MEDICAID FRAUD AND OVERPAYMENTS: 

PROBLEMS AND SOLUTIONS 

WEDNESDAY, JUNE 27, 2018 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:30 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Daines, McCaskill, Carper, 

Heitkamp, Hassan, Harris, and Jones. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This hearing will come to 

order. 

I want to thank Gene Dodaro and our witness from the Inspector 

General (IGs) office, Mr. Brian Ritchie, for taking the time and for 

preparing your testimony. I am looking forward to your answering 

our questions. 

This hearing is on ‘‘Medicaid Fraud and Overpayments: Problems 

and Solutions.’’ I am really looking for—solutions would be nice. 

Last week, in anticipation of this hearing, where we delayed it a 

week for a number of reasons, we did issue our staff report, primarily based on the Government Accountability Office (GAO) and 

IG findings, just kind of summarized all the good work you have 

done. And what I would like to do is I have a series of charts. 

Members have paper copies at their desks. I just want to quick 

show why this is such an important issue. 

The first chart1 just shows who pays for health care as a percentage of total health care spending. You can see the trend since 1940 

where patients were paying more than 80 cents out of every dollar. 

Today it is around 11 cents out of every dollar. And government 

has gone from not quite 20 percent to almost 50 percent. Insurance 

is the remaining 40 percent. 

So what we have seen is a huge shift from patients being connected to the payment of the product to that disconnect. And when 

patients do not pay for products, they do not even know what they 

cost, and so there is not that discipline of a free market really disciplining the cost increase in health care. And from my standpoint, 

that is the root cause of our broken health care financing system, 

which is why health care costs have really risen dramatically. 
2 

1The chart referenced by Senator Johnson appears in the Appendix on page 86. 

2The chart referenced by Senator Johnson appears in the Appendix on page 87. 

3The chart referenced by Senator Johnson appears in the Appendix on page 88. 

The next chart1 is who pays just in dollar terms. A little bit different-looking chart, but it basically makes the same point. We do 

have investment at the very bottom. But you can see what 

Americans spend totally pretty much has been the same dollarwise—these are inflation-adjusted dollars—but government’s role 

has dramatically increased and, again, the third-party payer in 

terms of insurance has also increased dramatically. 

The result of all this is the next chart,2 health care spending as 

a percent of GDP. When you remove the discipline of the free market system in terms of ensuring the highest possible quality, lowest 

possible cost, best possible level of customer service, you see costs 

rise dramatically. 

Now, we also can do far more—and this is a good thing—in 

terms of our medical system. We have so many miracles. So that 

also drives costs. But I have to believe the fact that consumers 

really do not care—they do not know what things cost, and they 

really do not care, other than their insurance. They really care 

about how much they pay for insurance, but the individual health 

care items, they really do not care. And so as a result, we have 

gone from in the 20s, 3.1 percent of grodd domestic product (GDP) 

being spent on health care, to in 2016 17 percent, and there is really no relief from that in sight. 

Now, what I would say, truthfully, if Americans are spending 

their own money and in freedom were deciding to spend 17 percent 

of their disposable income on improving their health, I would not 

have a problem with that. But because they are not spending their 

own money directly for this, I think this is a real distortion of the 

marketplace. 

The next chart3 is total Medicaid spending, which is really the 

subject of the hearing today in terms of why we have to be very 

careful with taxpayer dollars. You can see going back to 1965—and, 

again, these are just nominal dollars. They are not inflation-adjusted. But I did a chart inflation-adjusted, and it looks the exact 

same. Medicaid was not even mentioned by Lyndon Johnson when 

he unveiled Medicare, but you can see the dramatic increase in 

Medicaid spending. Just in the last 10 years, it has more than doubled, from right around $200 billion to $430 billion. That is just 

Federal Government spending. 

Now, in our report we show that total taxpayer spending on Medicaid in 2017 was $554 billion. I think it is 2017, correct? Which, 

when you take a look at what the Federal Medicaid percentages 

should be, somewhere between 58 and 60 percent, we are only seeing $124 billion spent by the States versus $430 billion spent by 

the Federal Government. That is a 22/78 percent split. So I am 

going to dig more into those numbers. What happens—and it drives 

me nuts being an accountant—numbers come from different 

sources, and it is very difficult to reconcile. That is something, as 

I am preparing for the hearing, that just jumped off the page for 

me. Why is that such a disconnect from, let us say, the 60 percent 

Federal match to this thing shows almost 78 percent? Maybe, General Dodaro can comment on that. 
3 

1The chart referenced by Senator Johnson appears in the Appendix on page 89. 

2The prepared statement of Senator McCaskill appears in the Appendix on page 35. 

Our final chart1 is, again, really the highlight of what GAO and 

the IG have uncovered in terms of improper payments. You can see 

in 2013 improper payments in Medicaid was $14.4 billion. In 2017 

it was $37 billion, the largest percentage of any agency, any program in the Federal Government in terms of improper payments. 

Coming into this role, I always thought the term ‘‘improper payment’’ was a little odd because it covered both underpayment and 

overpayment. In this case, only 0.8 percent of the improper payment is underpayment, which means 99.2 percent is overpayment. 

So this is payments that should not be made, whether they are to 

ineligible recipients, what percent of that is fraud. It is kind of 

hard to understand all that, which is another problem as well. 

So we will be talking about a letter we got from Administrator 

Verma yesterday announcing increased action on this, audits, those 

types of things. I will probably ask General Dodaro to kind of speak 

to his comments on that when he makes his opening remarks. But, 

anyway, this is an important issue. We are spending hundreds of 

billions of dollars. We want this money spent well. We certainly 

want to support individuals, help them gain access to quality care, 

those that cannot afford it. And when we have $37 billion of improper payments in a program that large, it is something that we 

need to pay attention to and we need to provide oversight of. 

So, with that, I will turn it over to Ranking Member McCaskill. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. I have a formal statement that I would ask 

be made part of the record.2 I want to make a couple of comments. 

First of all, the Chairman and I agree totally that we need to go 

after improper payments, and so does Senator Carper, who has 

been working on this for many years. All of us think we can find 

efficiencies in these programs, and we should find the fraudsters 

up front so we are not chasing payment. We should be more efficient with the technology, which we have struggled with in terms 

of improper payments. But there are a couple of things that I think 

need to be pointed out. 

I certainly agree with the Chairman that transparency on costs 

would help a great deal. Americans are great shoppers. You give 

me a coupon off on a cheeseburger, and I can go online and figure 

out where the very best cheeseburger is and compare the coupons 

available, and I can do that in 2 or 3 minutes within a 1-mile radius of anywhere I am in this country. But me getting my knee replaced, as a U.S. Senator, I could not get a straight answer on 

what it cost. So we cannot be good shoppers if we do not know 

what things cost, and that is all hidden behind the curtain. Anybody who says we have a free market in health care is deluding 

themselves. It is not a free market. All you have to look at is the 

pharmaceutical costs and what is happening in this country. 

We did an investigation and determined that the 20 most prescribed drugs in the Medicare Part D program have gone up consistently 10 times the rate of inflation 5 years running. That is because most of them do not have competition. That is because the 
4 

system is rigged with a bogus patent system and with a barrier to 

entry for generics and, frankly, the fact that we are refusing to use 

free market principles by negotiating for volume discounts or allowing reimportation of drugs. It is ridiculous that we are handcuffing 

Americans with higher costs because we are protecting profits of 

the pharmaceutical industry, to say nothing of what has happened 

with the insurance industry. 

And I do not believe, frankly, Mr. Chairman, that the out-ofpocket costs for the American citizen has not gone up in the last 

several years. I believe the out-of-pocket costs for insurance have 

gone up and for health care have gone up. I do not believe it is any 

longer on a downward trajectory. And the government spending, I 

think it is really important that the government number on this 

chart shows 49 percent. The majority of that is Medicare. So are 

we going to suggest that we privatize Medicare? I am absolutely 

opposed to privatizing Medicare. 

I think there are a lot of things we can do to put incentives in 

the right places in the system. I think we have done a little of that 

in the Affordable Care Act (ACA) where we punished hospitals for 

readmission. So now when you get out of the hospital, I mean, you 

have to sit and listen to—I know because when my husband had 

to check out of the hospital, it took us three times, four different 

people coming in, and telling us all the after-care and setting up 

the next appointment. That did not used to happen. But these hospitals know now if they are not paying attention to after-care and 

this patient comes back in, they are going to get financially dinged. 

It is working. Readmission is down, and that is a very expensive 

part of our health care delivery system. 

So if we can change where the incentives are, rewarding quality 

not quantity, this fee-for-service (FFS) thing has gotten our system 

all out of whack. A Medicare doctor cannot even bill for taking time 

with patients to explain end-of-life care so that someone has the 

opportunity to say to their loved ones, ‘‘Do not keep me on a ventilator. I do not want to be on a ventilator.’’ And most of these costs 

are in the last 6 months of someone’s life. 

So there are a whole lot of things we can do to bring down these 

costs, and I am all in on improper payments. But this notion that 

we are going to go after the Medicaid or Medicare programs or that 

somehow the private sector is a shining example of good free market behavior in this country, we have set up all kinds of ways to 

make sure they have guaranteed profits. That is not the way the 

free market is supposed to work. 

So I just wanted to make those points, and I do want to spend 

some time today talking about the issues, especially the enrollment 

of providers and how badly that is going, and the digital systems 

and how badly that is going in terms of cutting down on improper 

payments. But I also want to spend some time today talking about 

a previous report you did, Mr. Dodaro, on preexisting conditions 

and the behavior of insurance companies before we had the protections for people with preexisting conditions. 

Thank you, Mr. Chairman. I appreciate the hearing. 

Chairman JOHNSON. Let me just qualify that the chart showing 

what consumers were paying, patients, that is just directly paid to 

the provider. We pay the bill, whether it is our taxes to fund the 
5 

1The prepared statement of Senator Johnson appears in the Appendix on page 33. 

2The letter referenced by Senator Johnson appears in the Appendix on page 121. 

government funding or whether it is insurance premiums to fund 

the insurance portion. All I am saying is direct payment by the patient to the provider, which that is where you know what things 

cost in general. And even that is generally done as co-pays, and you 

still do not even know what you are really buying. We have a broken health care financing system, and that drives up all these 

costs. 

So, again, I do not think we really disagree on a lot of these 

things. There are a lot of details. This $37 billion of Medicaid improper payments is just one small little chunk but one that I think 

we need to take a look at. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Mr. Chairman, I do not have a statement. I 

would like to say something. These are interesting charts. I am 

glad you provided them. One of the things I am just sitting here 

thinking, it would be interesting to know what is going on in terms 

of the amount of money that is being spent in uncompensated care 

by hospitals. As the government has spent more, has uncompensated care come down? It would be interesting to know that. 

Thank you. 

Chairman JOHNSON. We did issue a larger report with a lot more 

charts and graphs to try to answer that. One thing I did 

find—again, I always find it really aggravating—it is hard to get 

the information. It really is. How much do we really spend on 

drugs? What is the profitability of the entire health care system? 

It is far less than I think people imagine. So I would love to get 

more and more accurate information across the board on these 

things because in order to solve a problem, you need to start with 

information, problem definition, acknowledging we have the problem. 

So, anyway, I do want to ask consent to have my written 

atatement entered into the record1 and the letter I received from 

Seema Verma as well entered into the record.2

With that, it is the tradition of this Committee to swear in witnesses, so if you will both stand and raise your right hand. Do you 

swear that the testimony you will give before this Committee will 

be the truth, the whole truth, and nothing but the truth, so help 

you, God? 

Mr. DODARO. I do. 

Mr. RITCHIE. I do. 

Chairman JOHNSON. Please be seated. 

Our first witness absolutely deserves but does not really need an 

introduction, not before this Committee, but we have the Honorable 

Gene Dodaro, the Comptroller General of the United States and 

head of the U.S. Government Accountability Office. General 

Dodaro. 
6 

1The prepared statement of Mr. Dodaro appears in the Appendix on page 39. 

TESTIMONY OF THE HONORABLE EUGENE L. DODARO,1 COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. DODARO. Thank you very much, Mr. Chairman. Good morning to you, Ranking Member McCaskill, and Senator Carper. I am 

very pleased to be here today to talk about this important topic. 

The Medicaid program, serving over 73 million Americans, is a 

very critical part of our health care system as currently configured. 

But I have been very concerned about the payment integrity in this 

program for a number of years, for three main reasons: number 

one, as both of you have mentioned, Senator Johnson and Senator 

McCaskill, in your opening statements, improper payments are an 

issue. There were over $36 billion in overpayments for the Medicaid program for 2017. And this does not represent what I believe 

to be the full risk of the program. 

There are three components of the improper payment rate. One 

is fee-for-service, and right now that is over a 12 percent rate and 

is a problem. But there are two other components. One is managed 

care. That are measured by the Centers for Medicare and Medicaid 

Services (CMS) is 0.3 percent. About half of total Medicaid spending now is in managed care. So the efforts to estimate the improper 

payment rate do not fully represent the risk in the managed care 

portion of Medicaid, which is growing every year. 

Also, the beneficiary eligibility component of the improper payment rate has been frozen at 3.1 percent since 2014, so they have 

not really gone back in since the Affordable Care Act and checked 

on States’ determination of beneficiary eligibility. 

While $36 billion of overpayments is an issue in and of itself and 

that component has been growing in fee-for-service, there really is 

not a full measure of the payment issues and payment integrity in 

the Medicaid program, number one. 

Number two are supplemental payments. These are payments 

made for uncompensated care or high concentrated rates of Medicaid recipients. They have been growing as well. In 2017 it was 

up to $48 billion. There are two types. One type is capped by statute. The other has not been capped and is discretionary. That has 

almost doubled over the years. There is no transparency over supplemental payments, and CMS does not have accurate reporting. 

Also it is not clear to payments are efficient and economical, which 

is one of the requirements. And they are potentially shifting, with 

the lack of transparency, shifting some of the costs from the States 

to the Federal Government without CMS even knowing that it is 

occurring. So that is problem number two. 

Problem number three is demonstrations where the law allows 

CMS to permit States to experiment with different approaches in 

Medicaid. Three-quarters of the States have approved demonstrations. Right now demonstration spending accounts for one-third of 

the total Medicaid costs. What we have found, though contrary to 

CMS policy, the approved demonstrations are not budget neutral. 

They are actually costing more money because they have been very 

liberal in how they have allowed States to set spending limits. 
7 

And the evaluations of the demonstrations have serious limitations that have prevented anyone from learning what is happening 

with the demonstrations that could be used by others. 

Now, CMS recently took action on one aspect of this based on our 

recommendations, which is to limit the amount of excess spending 

capacity that could be carried over from one year to the next year. 

They put some limits on that. So from 2016 to 2018, that one 

change that was based on our recommendations will save Medicaid 

costs of over $100 billion, and the Federal share will be $62.9 billion that would be saved. But that still does not fully respond to 

all our recommendations. 

Mr. Chairman, you mentioned the plan that CMS released yesterday. That addresses some but not all of the recommendations we 

have made. We have 83 recommendations we have made over the 

years. Only 25 have been fully implemented. We think the plan is 

a step in the right direction, and I can elaborate more on what we 

see as some of the limitations in the plan. But I would say, in order 

to stay within my limits here in the opening statement, that much 

more urgent and aggressive action is needed by CMS in this area, 

because the CMS Actuary estimates that Medicaid spending will be 

growing at 5.7 percent annually. And as you pointed out in your 

chart, the Federal share, the total estimated spending for Medicaid 

by 2025 is estimated to be $958 billion. So it will be knocking on 

the door of $1 trillion a year. 

So based upon that expected growth, known problems of the current system, I think it calls for a much more aggressive action plan 

on the part of CMS in order to deal effectively with payment integrity issues in the program. 

Thank you very much. I look forward to responding to questions 

at the appropriate time. 

Chairman JOHNSON. You said $1 trillion in 2028, correct? 

Mr. DODARO. 2025. 

Chairman JOHNSON. 2025? 

Mr. DODARO. Yes. 2025. 

Chairman JOHNSON. OK. In 2008 we were about $200 billion. It 

has gone from $200 billion in not even 20 years. That is rather 

shocking. 

Mr. DODARO. This is one of the fastest-growing parts of the Federal Government budget. Interest is becoming a problem, too, on 

our debt, but that is a different hearing. 

Chairman JOHNSON. Yes, a large subject in and of itself. 

Our next witness is Brian Ritchie. Mr. Ritchie is the Assistant 

Inspector General for Audit Services in the Office of Inspector General (OIG) of the Department of Health and Human Services 

(HHS). Mr. Ritchie oversees audits of Medicare, Medicaid, and the 

Children’s Health Insurance Program (CHIP) Mr. Ritchie. 
8 

1The prepared statement of Mr. Ritchie appears in the Appendix on page 73. 

TESTIMONY OF BRIAN P. RITCHIE,1 ASSISTANT INSPECTOR 

GENERAL FOR AUDIT SERVICES, OFFICE OF INSPECTOR 

GENERAL, U.S. DEPARTMENT OF HEALTH AND HUMAN 

SERVICES 

Mr. RITCHIE. Good morning, Chairman Johnson, Ranking Member McCaskill, and distinguished Members of the Committee. 

Thank you for inviting me here today, and thank you for your longstanding commitment to ensuring that the Medicaid program’s 67 

million beneficiaries are well served and the taxpayers’ more than 

half trillion dollar investment is well spent. I appreciate the opportunity to discuss the Office of Inspector General’s work and what 

more can be done to ensure that this important program operates 

as intended. 

OIG shares your commitment to protecting Medicaid from fraud, 

waste, and abuse and has an extensive body of work in this area. 

Our oversight work has identified high improper payment rates, inadequate program integrity safeguards, and beneficiary health and 

safety concerns. 

I will use my time today to focus on three critical areas: first, the 

need for accurate beneficiary eligibility determinations; second, curtailing inappropriate State financing mechanisms; and, third, improving national Medicaid data. My written testimony also notes 

the importance of provider screening, fiscal controls, quality of 

care, and our valuable partnerships. 

A strong program integrity strategy starts with prevention. Correctly determining beneficiary eligibility prevents Medicaid from 

making improper payments for people that are not eligible for the 

program. However, recent OIG audits in three States estimated 

that more than $1.2 billion in Federal payments were made on behalf of beneficiaries that were not eligible or may not have been eligible for Medicaid. These three States did not comply with requirements to verify applicants’ income, citizenship, identity, and other 

eligibility criteria. 

The second area that I want to discuss is the need to curtail inappropriate State financing mechanisms. Over the years OIG has 

identified a number of State policies that may have improperly 

shifted costs by inflating the Federal share of Medicaid expenditures. States have misused provider taxes, intergovernmental 

transfers, supplemental payments, and inflated payment rates to 

increase the Federal funding that States receive. While CMS has 

tried to limit the inappropriate financing mechanisms, more needs 

to be done. CMS should closely review State Medicaid plans and 

amendments to identify any potentially inappropriate cost shifting. 

And, finally, I want to discuss a consistent impediment to effective prevention, detection, and enforcement within the Medicaid 

program. The lack of complete, accurate, and timely national Medicaid data hampers the ability for CMS, States, managed care entities, providers, OIG and GAO, and others to quickly identify and 

address problems in the program. Enhanced national Medicaid 

data would also promote value and improve quality of care by allowing OIG and others to leverage advanced data analytics to identify vulnerabilities to avoid and best practices to replicate. Con-
9 

gress has recognized the value of enhanced Medicaid data, but 

more needs to be done to achieve this goal. CMS must ensure that 

States consistently report and uniformly interpret the same data 

elements. In addition, with a large part of the Medicaid population 

receiving part or all of their services through managed care, CMS 

needs to ensure that States report encounter data for all managed 

care entities. 

So, in conclusion, OIG will continue prioritizing Medicaid oversight to prevent and detect fraud, waste, and abuse and take appropriate action when it occurs. We are committed to ensuring that 

Medicaid pays the right amount for the right provider, for the right 

service, on behalf of the right beneficiary. 

Thank you for your ongoing leadership and for affording me the 

opportunity to testify on this important topic. 

Chairman JOHNSON. Thank you, Mr. Ritchie. 

I do want to quick correct the record. The numbers I was using, 

the reason I was confused, is we got the 2016 actuarial report in 

2017, but it was on 2015 spending, the 554, versus the Congressional Budget Office (CBO) 2017. So I was conflating both the 

2017—but one—so never mind on the one. But, again, it is just 

part of the problem here. You just do not have a consistent set of 

numbers and trying to get to the bottom of these things is like pulling teeth. 

But, again, I appreciate our other colleagues here showing up for 

the hearing, so I will defer my questions to the end and be respectful of their time. Senator McCaskill. 

Senator MCCASKILL. I am happy to defer also to my colleagues. 

Chairman JOHNSON. Senator Carper. 

Senator CARPER. Thanks so much. It is great to see both of you. 

Thank you for your long-time service and for being here. I said to 

some of the staff sitting behind me, Gene, I said if we had to pay 

you by the visit, we would be broke, because you come a lot and 

we are grateful here for your appearances. 

My colleagues have heard me saying and you have probably 

heard me say before that we talk about Matthew 25, the least of 

these, we have a moral imperative to those who are hungry, 

thirsty, naked, people who are sick and in prison, we have a moral 

imperative to those who are strangers in our land. And while we 

have a moral imperative to the least of these, there is also a fiscal 

imperative that is involved. Matthew 25 does not say anything 

about when they did not have any health care. My only access to 

health care was showing up at the emergency room of a hospital. 

They had to give me some kind of care. But there is a fiscal imperative to finding a way to meet those moral imperatives in a fiscally 

responsible way. 

One of the things that I learned a long time ago when I was new 

on this Committee was that this Committee, as hard as we might 

work, we can only do so much in terms of oversight over the Federal Government. But if we could somehow work with GAO, if we 

could work with the Inspectors General, if we could work with the 

Office of Management and Budget (OMB) and other watchdog organizations, we can actually make some progress. 

One of my first questions would be: Where do you think is the 

basis agreement between the two? Where do you see some areas of 
10 

just really strong agreement that you both embrace and think we 

should? 

Mr. DODARO. Well, I think in listening to Brian’s statement, we 

are in almost total agreement on all issues. I think on the improper 

payment issue, there is strong agreement that the current approach does not fully account for program risk. The supplemental 

payments that Brian mentioned have not gotten enough oversight. 

There is not enough accurate reporting, and as a result it is not 

clear where costs may be inappropriately being shifted from the 

States to the Federal Government and not really based upon actual 

Medicaid spending in those areas. And then the demonstration 

projects I am not sure where we agree or disagree on that area because I did not hear him mention that. But the last comment he 

made was on the need for more and better, accurate, and timely 

data. 

One of the problems that has hindered us all in the past in the 

oversight community has been the fact that Medicaid data has 

been 2 and 3 years old, and that has been very problematic. So 

they have a big effort underway to addresss this issue, but it has 

to be done properly. 

So I do not see too much disagreement between the two of us on 

the analysis of the problems, and I will let Brian speak for himself. 

Senator CARPER. OK. Thank you. Mr. Ritchie. 

Mr. RITCHIE. Yes, I agree. I cannot recall ever picking up a GAO 

report and disagreeing. And I think we coordinate up front because 

we are both watchdogs over the program, and with the health care 

side of GAO, we coordinate on the Medicare and Medicaid work. 

We did not mention the demonstrations, but we have certainly had 

the body of work ongoing, and in the past on different waiver programs where we have seen issues. I think we just try not to duplicate each other’s efforts but yet complement it, because the dollars 

are so valuable and rare that we do not want to be doing the same 

thing. 

I know with Mr. Dodaro’s staff, with Carolyn Yocom and others, 

we will coordinate, and we will have our staff coordinating to make 

sure, but I do think the data is the key to a lot of this, and national 

data especially would really be helpful. Quality oversight comes at 

a cost, and you do need that data, and both the age of the data and 

then just the consistency of it. 

Some of the things we have found—I think two examples really 

drive it home—are investigators going out on the opioid crisis. 

They had a lead of a provider prescribing drugs, and they went and 

they checked one State. They knew the prescriber was abusing 

drugs in one State. They checked another State. They looked at the 

national provider identifier, and they did not find any hits in the 

claims data and thought, OK, they are not prescribing drugs in 

that State. Later they found out this cannot possibly be, and they 

looked and they found out they were using the Drug Enforcement 

Administrator number. So they were interpreting it differently and 

it did not work. And then on the beneficiary health and abuse side, 

we have a series of group home audits where we are looking at potential abuse and neglect in group homes. And to do that, we are 

starting at the emergency room, and we are looking at diagnosis 

codes that indicate potential abuse and neglect and backing up. 
11 

And in one of the States, when we looked, the primary diagnosis 

code was not there. So we had to take steps to get around it, but 

it is not there to allow us to quickly do the job. So I think it would 

help all of us, including CMS, States, and the entities themselves. 

Senator CARPER. Going back to the charts that the Chairman 

shared with us earlier today, they show an increasing commitment 

by the Federal Government, up to now 49 percent of the costs of 

health care are paid by the Federal Government or by some government. The charts do not show the number of people who are uncovered now, and I think it would probably look a good deal different, because back in 1940, 1950, and 1960, we had a whole lot 

of people who did not have coverage, any kind of coverage. What 

we have tried to do is to reduce that, and reducing that uncompensated care for providers. 

One of the questions I oftentimes ask when we have oversight 

hearings is: What would you do if you were in our shoes? And time 

and again over the last 17 years the witnesses have said, ‘‘I would 

do more oversight.’’ At almost every hearing, they say, ‘‘Do more 

oversight. Keep us honest,’’ that sort of thing. 

If you were in our shoes, given what we are facing here in terms 

of continued growing costs in Medicaid, what would you do if you 

were in our shoes? Give us three things that you would be doing 

if you were on this side of the dais. 

Mr. DODARO. Well, I do not want to break the string of saying 

you need more oversight, but I believe that to be the case here. I 

think CMS needs to take much more aggressive and assertive action in these areas. 

We have some recommendations to the Congress where we have 

had disagreements with CMS in the past, and I think Congress 

could pass legislation. For example, on the budget neutrality issue, 

they have had a policy that when they approve demonstrations, it 

should be budget neutral. And we have repeatedly found that that 

is not the case. They approve demonstrations, and they end up 

costing the Federal Government more. And then when we looked 

at whether we are learning anything from the demonstrations, it 

is not clear. 

I think we have called for Congress to pass a law to require CMS 

to make sure that there are clear criteria for approving demonstrations that are budget neutral so it does not add to the costs of the 

Federal Government without any measurable benefits. 

In addition, on supplemental payments, the criteria for the use 

of approving these and how they distribute the supplemental payments is a problem, particularly in what is called the ‘‘non-disproportionate share.’’ The disproportionate share is mandated by 

Congress. That is, for uncompensated care for hospitals or where 

they have high concentrations of Medicaid payments. These are 

payments over and above reimbursing them for the services. But 

there are also a lot of these non-disproportionate share payments. 

They have doubled over the past several years, and what we have 

seen is that—and Brian mentioned this in his comment—they can 

meet the State share by having provider taxes and other intergovernmental transfers so that the local governments and provider 

provide more money. That requires the Federal Government to 

then match, and it does not increase the State share at all in that 
12 

process. And it is not clear that the money is going to the people 

who were giving the greatest service or the people who have given 

more in provider taxes and payments up front. So there are questions of equity. We have some matters for Congress there. 

So there is oversight and legislative fixes that you could do. 

Senator CARPER. Thank you. My time has expired. Could we get 

just maybe two quick points from Mr. Ritchie, just really quick? 

Same question. Give us two. If you were us, what would you be 

doing to follow on what Gene said? Very briefly. 

Mr. RITCHIE. I think that is the answer, more oversight. Our 

focus is very much focused on prevent, detect, and enforce. I think 

specifically for Congress, I noticed in the report that was issued 

last week, touching on Mr. Dodaro’s last point, you mentioned 

maybe limiting the safe harbor on the financing mechanisms. I 

think that is something in Congress’ wheelhouse that could be 

done. That is something that States, we have seen where they have 

manipulated it and just shifted. I think any financing mechanism 

that is considered or in place now, I just think you need to ask: Are 

these dollars being well spent, and are they providing additional 

quality care for beneficiaries? And in these cases, when we are 

looking at it, it often seems like the intent is really to sort of shift 

the burden, not to provide additional care. And another one, again, 

prevent, detect, and enforce. On the enforcement side we partner 

with the Medicaid Fraud Control Units (MFCUs) a lot, and I 

know—I am not a MFCU expert, so I will throw that out there, but 

I know with our office they work closely with our investigators, and 

MFCUs enforce fraud and then they enforce the beneficiary abuse 

and neglect. And they have a limitation on that side where they 

can only do it in facilities. So on the home and community-based 

services side, they do not have the authority to go after those cases. 

So I think pursuing that, especially as the population moves more 

there. In some of the group home work I mentioned before, we have 

certainly seen a lot of potential abuse and neglect. To protect these 

beneficiaries, the MFCUs could play a part to enforce that and ensure the safety, and that is something the Congress could help 

with. 

Senator CARPER. Thank you. 

Mr. Chairman, it always comes back to the MFCUs. 

Chairman JOHNSON. Apparently. Senator Hassan. 

OPENING STATEMENT OF SENATOR HASSAN 

Senator HASSAN. Thank you, Mr. Chair and Ranking Member 

McCaskill, and thank you, Mr. Dodaro and Mr. Ritchie, for being 

here today. 

Thousands of Granite Staters rely on Medicaid for really critical 

care. They use it to stay healthy, and they also use it to access substance use disorder services. As you know, New Hampshire has 

been particularly hard-hit by the opioid epidemic, and Medicaid 

has been a true lifeline for those suffering from addiction, which 

is why Granite Staters were so adamant last year in their opposition to Republican attempts to dismantle the Medicaid program. 

Last year Granite Staters and people from all across America 

raised their voices and spoke out against Republican attempts to 

cut and cap Medicaid. They recognized the importance of the Med-
13 

icaid program for kids, for families, for older adults. I will note that 

after we expanded Medicaid in New Hampshire, the number of 

cases in which people got health care and then could return to 

work, having been sidelined by chronic illness, were substantial. So 

protecting Medicaid’s integrity is critical to protecting the Medicaid 

program for vulnerable populations. 

I agree with your findings that CMS should be doing more to ensure that States are doing all they can to ensure the integrity of 

the Medicaid program because millions of Americans rely on Medicaid for care. From the reports that form the basis of your testimony, it appears that improving provider screening and analyzing 

claims data for patterns of fraud would go a long way toward reducing improper payments because most improper payments stem 

from the conduct of providers rather than from Medicaid beneficiaries. 

Do both of you agree with that assessment? I will start with you, 

Mr. Dodaro. 

Mr. DODARO. I think so far the data indicates that, but that is 

because most of the focus has been on the providers. They really 

have not focused on the beneficiary eligibility area. That rate has 

been frozen since 2014. They are planning now to start looking at 

that in 2019 through 2022, so that we would learn more about the 

beneficiary area. So I think both need to be attended to. 

Senator HASSAN. OK. Thank you. Mr. Ritchie. 

Mr. RITCHIE. I am sorry. Could you repeat the question? 

Senator HASSAN. So the reports that form the basis of the testimony that you provided, it appears that it is critical to improve 

provider screening and analyzing claims data for patterns of fraud, 

because most improper payments stem from the conduct of providers rather than Medicaid beneficiaries. 

Mr. RITCHIE. Yes, I do not know that we really have work specifically targeting that, but I would say our beneficiary eligibility concerns are—our three recent eligibility reports that I referred to in 

our testimony, those were cases where the State systems did not 

work, and beneficiaries that did not meet the criteria were enrolled. So it was not a case of intentional fraud or anything like 

that, but they were improper payments that were made to beneficiaries who—— 

Senator HASSAN. But I also just do not want to take the eye off 

the ball that there are providers who are engaged in—— 

Mr. RITCHIE. Oh, absolutely. 

Senator HASSAN [continuing]. Fraud and abuse, and I do not 

want to be scapegoating beneficiaries who may think they are eligible, even if they are not. 

Mr. RITCHIE. I totally agree. And when I mentioned before our 

prevent, detect, and enforce, I mean, prevention to us is by far the 

key. If you can up front get an enrollment system, get an eligibility 

system that keeps bad actors out, that does a thorough job of knowing who you are doing business with, we have seen cases where 

States are not collecting the correct ownership information, cases 

where someone gets terminated in one State and another State 

does not have the data to tell so they can enroll there. So just a 

consistent—again, back to the data theme, sorry, but to know that 

these people are not there and keep the bad players out, it can pre-
14 

vent a lot of improper payments up front so you are not paying and 

chasing them down. 

Senator HASSAN. Well, thank you. 

I do want to change to a different topic, Mr. Ritchie, because of 

recent events. Like my colleagues who have spoken already about 

this, I am outraged at the humanitarian crisis that President 

Trump has created on our Southern Border. Pediatricians, psychologists, and health professionals have been raising the alarm 

about the irreparable harm, including brain development and longterm behavioral health issues, that forcibly separating children 

from their parents can cause. We must strengthen border security, 

but we have to do that in a way remaining true to our American 

values. And I think we all agree here that this is not about politics. 

It is about our moral obligation to stand up and act in the face of 

clear and absolute injustice. 

The President created this crisis, and, unfortunately, his Executive Order (EO) seems to have created even more confusion at HHS 

and other agencies scrambling to implement it. And then, frankly, 

Secretary Azar yesterday further confused things by testifying that 

in order for children to be reunited with parents who have asylum 

claims, the parents have to give up the asylum claims, which is a 

violation of so many fundamental American values that it is just 

hard to grasp. 

So, Mr. Ritchie, I am participating in formal requests to your office to review the Office of Refugee Resettlement’s (ORR) response 

to the Administration’s practice of separating children and parents. 

I know this is not your specific area, but as a representative of 

your office, do you know whether you plan to investigate the response to this issue of family separation? 

Mr. RITCHIE. Yes, so you are correct, it is not my area. But I do 

know a bit about this. I know it is a high priority within our office, 

and I did—knowing, obviously, that this is such a high priority 

there and that I was coming here today, I asked the people that 

were doing it a little bit about it, so I can tell you what I do know. 

We obviously have some past work on the ORR. Since 2006, OIG 

has provided oversight of the unaccompanied alien children (UAC) 

program operated by the Office of Refugee Resettlement. And what 

we have ongoing right now and planned, we are planning nationwide work that is going to focus on the health and safety of the 

children in the facilities. It is underway so the plan is in place. In 

fact, we had sort of boots-on-the-ground investigators and auditors 

last week at four facilities, and they are back now in the office 

planning the work. We could certainly set up a briefing for you or 

anyone else that is interested as soon as that work is ready, because we are concerned and want to have the oversight of that and 

see how things are going. 

We also are wrapping up some work at 11 facilities and looking 

at the health and safety controls that were in place. That actually 

is prior to 2018, but it is going to serve as the launching point for 

new work but the data is prior to 2018, so it may not reflect the 

current condition, but it will reflect some of the current work that 

we will be doing. 

Senator HASSAN. Well, thank you for the response, and thank 

you for thinking ahead to this hearing and anticipating that we 
15 

may be interested in it and asking about it. What I would ask is 

that you bring a message back to Mr. Levinson and the rest of the 

IG’s office. This issue, what is happening to these children today, 

now, every minute, every hour, every day, every week, month that 

they are separated from their parents is doing them irreparable 

harm, and I would hope and expect that the Department 

reprioritize as necessary to get not only boots on the ground to find 

out what is happening, but also to develop a policy that is consistent and reflects the urgency and the priority that the American 

people place on reuniting these children. 

Certainly the government of the United States of America can reunite 2,000 children—and it is a little bit over 2,000 children if 

Secretary Azar’s testimony yesterday was correct. Certainly the 

U.S. Government can find a way to reunite these children, even if 

it means reorganizing and reprioritizing resources. So I hope you 

will take that message back. I thank you for your testimony today. 

Thank you, Mr. Chair. 

Chairman JOHNSON. Senator Heitkamp. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Mr. Chairman. And I apologize 

I was not here during your testimony, but I can only imagine it did 

not escape your notice that CMS, who is not here today even 

though they have been invited, actually issued a couple press releases yesterday with some ideas on how they could better facilitate stopping fraud, waste, and abuse. It is really unfortunate that 

they are not here to have that conversation. 

Chairman JOHNSON. Senator Heitkamp, let me just clarify. I did 

speak with Administrator Verma, and she is happy to come in, 

whenever we do a follow up hearing on this. So she is more than 

willing to testify. So I just want to put that on the record. She offered to do that, and we will certainly—— 

Senator HEITKAMP. Well, is there a reason why she is not here 

today? 

Chairman JOHNSON. I just do not think she was prepared. 

Senator HEITKAMP. That is even more frightening than she is not 

here today. 

Chairman JOHNSON. From my standpoint, I was happy to first 

hear the testimony from GAO and the IG, and then we will follow 

up on it. Again, it was a press release. I said it was a letter. It was 

a press release and there is a fact sheet, and this is going to be 

ongoing oversight. 

Senator HEITKAMP. Well, time is wasting. — 

Senator MCCASKILL. I think we need to be clear. She was invited 

and declined to come and, instead of coming, issued a press release. 

I think that is fair, and that is what the facts are, and I think it 

is important to put those facts out there. 

Chairman JOHNSON. I understand, but also the fact is she is willing to come and testify in the future, and it will be the reasonably 

near future. 

Senator HEITKAMP. I get it, and I voted for her, and I think that 

she is competent. But the bottom line is if she was not prepared 

to testify in front of us, she should not have been prepared to send 

out a press release. 
16 

And so if I can just ask, have you had a chance, Mr. Dodaro or 

Mr. Ritchie, to review her statements? 

Mr. DODARO. My staff has, and they briefed me on it. 

Senator HEITKAMP. And do you believe that this is a good start, 

a finished product, or needs some work and collaboration to try and 

create a network and a consistent amount of accountability for trillions of Federal dollars and State dollars that are being spent so 

that we can avoid fraud, waste, and abuse no matter who is committing it? 

Mr. DODARO. Yes, we think it is a step in the right direction, but 

much more neededs to be done. There are details that are not in 

there that I would have expected to be included, some milestones. 

There are some areas not covered, like supplemental payments and 

demonstrations that I would have expected to be covered. We have, 

as I mentioned, 83 recommendations that we have made to them. 

They have implemented 25 so far. And the plan does not address 

all of our recommendations. 

So much more needs to be done. I think there needs to be more 

aggressive and urgent oversight. 

Senator HEITKAMP. I think that my point that I am getting at 

is that when we look at this, we need a structure because if we just 

deal with taking care of the waste, fraud, and abuse of today, there 

are going to be other opportunities for waste, fraud, and abuse, and 

we need to know who is accountable and how we are going to hold 

people accountable for making payments that are inappropriate, 

putting people on Medicaid rolls or Medicare rolls that is not appropriate. We have to get a handle on this. 

I do not disagree with the looming problem, and the low-hanging 

fruit in taking care of our health care costs on the Federal Government is stopping waste, fraud, and abuse. And, I can tell you, when 

I was the Attorney General (AG), there was this collaborative process with State Attorneys General. Where did that go? What do we 

know about a structure that is in place, working with the State, 

auditors with the State Inspectors General, to try and get an overall plan so that we can have meaningful accountability? 

The frustration that I have is that we come here and we are 

picking around the edges and getting distracted without really 

thinking about the overall structure of oversight. And, it is not acceptable that the recommendations from GAO have not been responded to. This is a big-ticket item, behind national defense and 

is probably going to loom bigger than national defense. We have to 

get ahead of this. And to me, the frustration that the American 

people have is that they are willing to give people some help. They 

are willing to recognize that providers needs to pay the bills. But 

they do not want this money wasted. 

And so, when you look at structure, Mr. Dodaro, and you think, 

OK, we have these State agencies, they have responsibility as well. 

Fifty percent in North Dakota of this money that is spent on Medicaid is State-based money. Where have been historically the gaps? 

Who have you seen on the State side do an excellent job in holding 

people accountable? And has the Federal Government learned from 

State audit programs on what we could do more effectively? 

Mr. DODARO. Yes, well, one of the biggest gaps has been that the 

State auditors have not been involved on a regular basis. This is 
17 

1The information submitted by Mr. Dodaro appears in the Appendix on page 170. 

one of the points that I have made. In fact, I have brokered meetings between State auditors and CMS in order to make sure that 

they are brought into the program. A lot has been focused on the 

Attorneys General and the fraud units in the States, but not the 

State auditors. The State auditors need to be involved much more 

in this program. They are willing to do it, but they need to be 

brought into the structure. They need to be compensated. They can 

have a big effect on this issue. 

Senator HEITKAMP. And another place where we share revenue 

in Minerals Management Service, we have an audit program that 

is pretty robust to try and make sure that people are paying the 

appropriate royalty, there is a great example of Federal-State collaboration where you know who has the lines of authority and who 

has oversight over those lines of authority. So it is not like we are 

without examples on how we could do this better. 

Mr. DODARO. Right. 

Senator HEITKAMP. The problem that you have with AGs is that 

assumes automatically all fraud, waste, and abuse is criminal or 

that you are going to take it criminal. 

Mr. DODARO. Right. 

Senator HEITKAMP. Do you think there is appropriate civil penalties for fraud, waste, and abuse to provide a substantial deterrent? 

Mr. DODARO. I do not know offhand to be able to answer that 

right now. I could provide something for the record.1

Senator HEITKAMP. Maybe, Mr. Ritchie, you know if instead of 

just having to go the very aggressive action of filing an indictment 

and prosecuting people versus, no, do not do that, repay the money, 

is there an effective system of civil penalties? 

Mr. RITCHIE. That is not my area of expertise. I do know our office works with the MFCUs who can pursue cases, and I know our 

office has civil remedies, civil monetary penalties and exclusions 

and things like that available. So I believe they can do some of 

that, but I could get you a better answer and consult with my colleagues and get back to you. 

Senator HEITKAMP. I think it is important that we not ignore 

some additional legislative tools, whether it is additional incentives 

to work with the States, additional incentives, and then putting together with the recommendations at HHS a robust and very clear 

line of authority on audit responsibility so that we are not picking 

around the edges here, that we are actually creating a program 

that will solidify the frustration that the American public has and 

the frustration that we have, that we are not getting at waste, 

fraud, and abuse as effectively as what we should. 

Mr. DODARO. I agree. I think the other biggest gap in this whole 

area—and I mentioned this in my opening statement—is the managed care portion of Medicaid. The managed care contractors have 

not been audited on a regular basis. There is rule out to start auditing them, but that is half of Medicaid spending. So the known 

overpayments right now are mostly in the fee-for-service area, and 

the beneficiary eligibility audits have been frozen since 2014. So 

there are huge gaps in knowledge about the extent of the program 
18 

integrity issues in the Medicaid program, and much more needs to 

be done. 

I agree with you, they need an overall plan, and they need to be 

held accountable for it. And there are more resources that need to 

be available, including the State auditors. 

Senator HEITKAMP. And if I can just make one final comment, 

when you do not do those audits, you do not see the patterns in 

behavior that either could be deterred or they could be, in fact, 

prosecuted and deterred. And so that is why it is really important 

that these audits be current, that these audits see trend lines, and 

that we actually take the appropriate action to do prevention, 

whether it is on the benefit side, whether it is on the provider side. 

This is incredibly frustrating to me because it should be the most 

robust audit program in the Congress and in the Administration, 

and it seems to me it is not. 

Mr. DODARO. Well, that is why it has been on our High-Risk List 

since 2003. It is also why I am here today instead of sending another GAO witness because I am personally concerned about the 

program integrity issues of Medicaid and its expected continued 

growth of 5.7 percent a year. As I mentioned earlier, by 2025 the 

estimated total government spending, Federal and State, on this is 

knocking on the door of $1 trillion a year. And it is a very important program. I agree it is a critical service that needs to be delivered. But we need to get a better handle on the integrity of the program to make sure that we are not wasting money that could be 

better used to provide legitimate health care services. 

Senator HEITKAMP. I appreciate so much what the IGs do and 

what you do, Mr. Dodaro. You guys are doing work. We hope you 

are just not hollering into the empty well, that someone is actually 

listening to you and taking your advice, and that is why we are 

here. 

Chairman JOHNSON. Let me clarify because I do not want to be 

putting words into Administrator Verma’s mouth. She was not 

available. OK? About a month ago, she had to go to her child’s 

graduation. My assumption is that when I say ‘‘not prepared,’’ not 

far enough along in the process to really have the testimony be all 

that particularly valuable at this point. 

Now, trust me, I wish years ago, whoever the CMS Director or 

Administrator was further along in the process. So from my standpoint, this is progress. She has agreed to testify in the future. We 

are holding this hearing to define the problem, to put pressure on 

CMS to come up with—OK, we got the fact sheet. We have a little 

bit of a game plan. We are going to want to see more meat on the 

bones of that fact sheet. 

So this is why we do this. We do put hopefully cooperative pressure on the agency to finally start doing this, and it has not been 

done since 2003. 

Senator HEITKAMP. Mr. Chairman, if I can just say, I would be 

more sympathetic if she had not conveniently released a press release yesterday. I would be more sympathetic. I would say, ‘‘Fine, 

she is taking this seriously. She wants to come up with a robust 

plan.’’ Instead, it seems to me that what happened here was, ‘‘Oh, 

this is going to get talked about, so I need to have some talking 

points about this,’’ instead of actually sitting down with us. She in-
19 

herited this mess. I get that. But this has to be a priority. I talked 

to her about this as a priority. And so my frustration is then do 

not issue a press release. 

Chairman JOHNSON. Again, I appreciate the heat you are putting 

on CMS. I am putting on the same heat, OK? And so this is good. 

This is exactly what we should be doing. We are providing oversight, and it will be interesting when she does come to testify, and 

it will be a matter of do we want it in a month, do we want it in 

2 months. We will work together with you on that. 

Senator HEITKAMP. I want a plan. 

Chairman JOHNSON. So do I. 

Senator HEITKAMP. And I want it sooner rather than later. 

Chairman JOHNSON. Right. I want a lot of meat on the bones of 

that plan. I think our witnesses do as well. Senator Jones. 

OPENING STATEMENT OF SENATOR JONES 

Senator JONES. Thank you, Mr. Chairman. And thank you to 

both the witnesses for being here. I apologize for having to attend 

another hearing on health care costs in the Health, Education 

Labor and Pension (HELP) Committee. 

I want to just follow up a couple of things. One, I want to echo 

what Senator Hassan said about what is going on at the border 

and families. I do not need to repeat all of that. I share every concern that she expressed. I really appreciate that she did that. And, 

Mr. Ritchie, I appreciate, as she said, your anticipating some of 

these questions. 

My one quick question to you on that is: Will any of your follow 

up work on that issue with what is going on down there, will that 

also be looking to see whether or not the Administration is complying with the injunction that was issued yesterday concerning 

the time limits given to bring these families back together? 

Mr. RITCHIE. That I am not sure because, again, they were just 

out last week looking, and they are developing the plan now. They 

are probably meeting back in the office as we speak. So, again, they 

can provide a briefing in the very near future, as they do it, but 

the plan is being developed, so we can certainly take that into consideration as they go. I know they want to do as thorough of an 

approach as they can. It is a plan in development, because the 

work that they have completed is based on prior to 2018. And the 

other thing that I did not mention before is we do have reports that 

come in from ORR—we have been getting them since 2014—of serious incidents of abuse and neglect that occur, and we meet with 

ORR leadership on an as-needed basis on those. But, some of that 

could factor into it, too. 

But, again, I am sorry, not my area. I am not part of the planning, and so I am not well informed enough to answer that. But 

the plan is being developed as we speak. 

Senator JONES. All right. Mr. Dodaro? 

Mr. DODARO. Yes, Senator Jones, Senator Hassan, we have been 

asked at GAO as well to look at the process for tracking these children in custody. We got the request this week. We immediately are 

starting the work in that area. So we will be happy as that work 

proceeds to follow up with you as well. 
20 

Senator JONES. All right. Great. I appreciate that from both of 

you and urge you to do that. I think that that is one of the top priorities that we ought to have as a country, and the Administration 

and Congress ought to both have there. 

I want to then just briefly follow up from Senator Heitkamp’s 

speeches, because I share those same concerns. I am a former prosecutor in Alabama. I have also had to defend cases of fraud and 

abuse. And so the whole issue of fraud and abuse is an important 

one. 

Mr. Dodaro, you said, in response to the letter that CMS issued 

yesterday, that you would have liked to have seen more details, 

that you would have expected to see more detail. You also mentioned something about aggressive oversight, and I would like for 

you, if you could, for the record today just expand on that a little 

bit, of what you would have expected to see in that letter, the details, and I know you have a lot of recommendations, you cannot 

go through them all. And then also kind of expand on your comments about aggressive oversight. 

Mr. DODARO. Yes. First, there is a section in the plan that talks 

about improving the quality of information—accuracy and completeness of information. I would expect to see more on how they 

are planning to make sure that it is comparable across the States, 

how they are going to use it for oversight and some milestones for 

when these things will occur over a period of time. As I mentioned 

earlier, and Brian has mentioned several times, the lack of complete and accurate information is an impediment to oversight. So 

it is important that it be done on an aggressive schedule going forward. 

I would have expected to see more in the plan about the supplemental payments which are payments, made for uncompensated 

care and other things, to respond to our recommendations about 

making sure they are economical and efficient payments based on 

good data from the States. And, that the money is actually going 

to the right people as it is demonstrated within the area. 

I would have expected to see more on the demonstration projects 

that we have said have not been budget neutral, and the evaluations have not been thorough. We are not learning a lot from the 

demonstrations, even though they are costing more Federal money 

than they were supposed to in those areas. 

I would have expected to see more on use of State auditors. I 

have had this discussion. They have had some discussions with the 

State auditors, but there is no plan to use the State auditors. In 

some of the States, as I am sure you are well aware of, Medicaid 

is over a third of the total spending for the States. The State auditors should be involved on a robust basis, and it is in the Federal 

Government’s interest to encourage them to do that and provide 

some resources for them. I think it will be a great return on investment. 

One other thing is beneficiary eligibility determinations, which 

they have had on hold. By the time they start it, it will be 5 years 

since they have really done any audits of beneficiary eligibility determinations. They are planning to do it over a 3-year cycle. There 

is no reason that this cannot be done on a faster basis if they apply 

additional resources. I think waiting until 2021 to finish all the 
21 

States is too long, given the fact that Medicaid spending during 

that period of time is going to grow 15, 20 percent, and still be on 

the rise. 

So these are the things that I mean about being more aggressive, 

and with the actions that they have said, including other actions 

and moving faster. 

Senator JONES. OK. Well, thank you very much for that. My time 

is winding down. Mr. Chairman, I may have some other questions 

for the record. I would like to just make two points. 

One—and I continue to do this every time I get a chance—my 

State did not expand Medicaid. We left a lot of money on the table, 

and I have people in my State—we have a very poor State. We 

have a very unhealthy State. We have a lot of people in my State, 

200,000 or so by every estimate, that could have benefited from the 

expansion of Medicaid, not to mention the economic value that 

would have been brought by bringing those dollars in and expanding those health care deliveries in the areas of my State that need 

it so badly. We are losing health care providers in my rural Alabama left and right. 

The last thing—and, Mr. Chairman, I appreciate the charts here. 

Those are always very helpful. You are very good at that, by the 

way. I would note an interesting comment from the hearing that 

is going on in the HELP 

Committee on the same issue about driving down health care, 

that these charts and all at the end of the day on who pays, it is 

the American taxpayer. That is why it is so important. That is why 

Senator Heitkamp was so animated about the fraud and abuse and 

the way we do this and why we should be involved, because at the 

end of the day, whether it is government, whether it is insurance 

or out-of-pocket, it is our constituents who are paying for the 

health care and everything we are doing. 

So, with that, I will yield the remaining 27 seconds. Actually, I 

am over. 

Chairman JOHNSON. Trust me, I understand we all pay it. It is 

just the form of payment. That first chart was really talking about 

what you pay directly to the provider. 

By the way, I actually should have brought our more extensive 

report on just health care spending where we have a lot more 

charts. So we will make sure you have that in your office. Senator 

Daines. 

OPENING STATEMENT OF SENATOR DAINES 

Senator DAINES. Chairman Johnson, thank you, and Ranking 

Member McCaskill for having this hearing and compiling this very 

important report. I am very appreciative of the dedication of the 

Committee to uncover these areas for improvement in the Administration of Medicaid, which, as we know, is experiencing skyrocketing costs. 

Mr. Chairman, this chart here, this reminds me of a steep ski 

jump in Montana, looking at not only where we are at but where 

we are going to be in the next 10 years. 

Chairman JOHNSON. One I would not want to go down. 

Senator DAINES. This would be one that my boys would be excited about in a terrain park. I can tell you that. 
22 

Taken by itself, the waste and fraud of the Medicaid program 

nearly exceeds the entire budgets of the Department of Agriculture 

(USDA), the Department of Commerce, and the Department of Interior (DOI) combined. I think about how we battle here for, for example, the full funding of Land and Water Conservation Fund 

(LWCF) with some $37 billion of overpayments. So the interest on 

that alone could fund LWCF fully. I hope we could make some 

progress on addressing Medicaid’s soaring expenses so that we can 

protect taxpayers and safeguard the program, this important safety 

net for those who truly need it the most. 

Mr. Ritchie, Homeland Security and Governmental Affairs Committee (HSGAC’s) oversight report pointed to structural incentives 

in Obamacare and Medicaid expansion for States to enroll as many 

people on the program as possible. The report cites the ACA State 

reimbursement formula, which is driven by the number of enrollees, and Medicaid’s 100 percent cost coverage in the first 3 years. 

Do you agree with the report’s assessment that these financial 

incentives may result in States adding people to Medicaid who do 

not truly meet eligibility requirements? 

Mr. RITCHIE. We have not done anything looking at the incentive, but I would say we have done the recent eligibility reports 

that we mentioned in our testimony and that I mentioned earlier, 

and with those eligibility reports, we found that people were certainly enrolled that were not eligible. So there is a concern there. 

Also, with the increased 100 percent Federal Medical Assistance 

Percentages (FMAP), or Federal matching funds we have done, this 

is not the first time that Medicaid has been set up where they have 

paid at one level for a service versus another level, and we have 

a history of work where we have looked to see if the payments have 

been appropriate. We have seen where they have offered those increased payments, there have been inappropriate payments where 

things have been submitted at the higher level versus the other 

level. So certainly the past has shown work where an increased 

Federal participation has led to improper payments. So from our 

perspective, we follow a risk assessment. We see that there is certainly risk there. And from an eligibility perspective, regardless of 

the policy decision of whether it is 100 percent of Federal poverty 

level or 138 percent, we think the rules need to be followed, that 

the right beneficiaries need to be enrolled, and that is clearly not 

happening right now. 

Senator DAINES. Well, I mean, just look at it. If you are a State 

and you are held accountable, like most States are for balancing 

their budget, which we are not held accountable for here, I just testified in front of the Select Committee on Budget Reform that 

needs to be done. It just continues to baffle me that Washington, 

DC., is not held accountable for a balanced budget but the States 

are. And because the States are, if you give an incentive to the 

State where they can offload for that FMAP, in Montana, 67 percent FMAP, take either that number covered by the Federal Government or move to 100 percent, what is the incentive? Do you 

think that could maybe factor into a State’s decision to move more 

folks in Medicaid expansion because it is not costing the State any 

money for a period of time, at least for 3 years? And then it is 90 

percent after that. 
23 

Mr. RITCHIE. Right. But, again, I mean, we do not look at the political decision of doing that, but we do look at the criteria, and—— 

Senator DAINES. And I am not saying it is a political decision. It 

is just, if you are looking at the math—— 

Mr. RITCHIE. Right, but there is different criteria for each category, so people that—like when we did our eligibility determination reviews, we found cases where people would have qualified for 

the standard Medicaid, but they were determined to be in the higher Medicaid, so that was an issue. We did not find it was outright 

fraud. We found it was system and human data entry errors that 

led to it. But our audit also was not designed to do that. But if they 

meet that 138 percent and they qualify for one category, the 100 

percent, they meet the other category. 

Senator DAINES. Mr. Ritchie, for fiscal year (FY) 2017 GAO found 

that Medicaid overpayments were $36.4 billion. If Medicaid grows 

at its current expected pace to $900 billion by 2025, overpayments, 

kind of using the rough percentages there, it could be as high as 

$55 billion. I applaud CMS for yesterday announcing initiatives designed to improve the Medicaid program integrity by taking a more 

active role in auditing the program. 

As Administrator Verma’s Medicaid Integrity Initiative begins, 

Mr. Ritchie, what do you believe are the keys to its success? 

Mr. RITCHIE. Well, I agree with GAO that I think it is a step in 

a positive direction. I have not had a lot of time to sort of go 

through, and it did not have a lot of the details there, but I know 

in working with CMS it is reflecting some of the work that we have 

done and that we have recommended. I think they are taking positive steps there. I think a lot more needs to happen and more details need to be there. But, again, our key issues and the key 

things they need to do, the most important is prevent, is up front 

making sure that the fraudulent providers, providers that should 

not be in the program are prevented from getting in, and then you 

have prevented improper payments up front, making sure along 

the lines of the prior question that eligible beneficiaries are in and 

the dollars are being spent on the people that need to and deserve 

to be in the program. And then data has been a big theme of our 

discussion today and what I brought up, having improved data is 

it allows everyone that is providing program oversight to actually 

identify and detect the issues of fraud, waste, and abuse quickly; 

and then once you find them, enforce it, deal with it quickly, recover the money, and put added safeguards in place to prevent additional future payments. 

Senator DAINES. Thank you. 

I want to ask a question of Mr. Dodaro here before I run out of 

time. In fiscal year 2013, Federal and State Medicaid cost taxpayers about $287 billion, just a little less than that. But the program double its expenses to $596 billion. 

Are you concerned that there has been an increased overpayment 

and fraud following the States’ expansion of Medicaid? 

Mr. DODARO. I am concerned that the full extent of program 

risks in the Medicaid program have not been adequately determined, and by that I mean that part of the growth has been in the 

managed care portion of the program, and there have been no audits of the managed care providers except a few that the State 
24 

auditors have done and some other ones, and the IG. The beneficiary eligibility determination rate, improper payment rate, has 

been frozen at 3.1 percent since 2004. So there is no real good information about whether or not the beneficiaries’ determinations 

have been done properly under the expansion program, because 

that program has been suspended. So I am concerned about this. 

That is why I am here today urging greater attention to this very 

important issue. And the growth in Medicaid is expected, by the 

CMS Actuary, to be 5.7 percent a year. And as you mentioned and 

we have in our report, by 2025 it will be knocking, total costs, on 

the door of about $1 trillion. 

So there must be greater attention to this program to ensure the 

integrity of it and its sustainability over a long period of time. 

Senator DAINES. Thank you, Mr. Dodaro, and thank you for remaining concerned, and I ask that you continue to remain concerned. I appreciate it. 

Mr. DODARO. Thank you. 

Chairman JOHNSON. I want to pick up on two lines of Senator 

Daines’ questioning, first of all, the beneficiary eligibility. I think, 

General Dodaro, you said something, we have really not looked at 

it. Isn’t it basically true one of the reasons we have not really dug 

into the eligibility is because that match with the States, we pretty 

well relied on the States having the incentive to police that themselves because they are spending money as well. Is that kind of one 

of the dynamics? And then, of course, when you expand Medicaid 

and it is a 100 percent match, now you literally have given them 

a great incentive to sign up people that necessarily are not eligible, 

which is why in the IG report and we have highlighted in our report, for example, in California, about $1 billion worth of Medicaid 

funds for 445,000 ineligible—isn’t that kind of dynamic going on 

here? In the past we just really relied on the States spending 

money. They are not going to want to spend money on ineligible 

individuals because they are having to pick up about 40 percent of 

the tab. But now with Medicaid expansion, they have every incentive to sign as many people up as possible. Do you want to comment on that? 

Mr. DODARO. Yes. The Affordable Care Act required greater 

screening of both providers and there were new eligibility determinations for beneficiaries as well. 

Now, from my perspective, when you introduce new requirements, there is every reason to believe that there needs to be a 

greater oversight during that period, not less. CMS took the approach that basically the States need time to adjust to these new 

requirements over time, so CMS was not going to go in and take 

a look until States have had time to adjust. I do not agree with 

that. I do not think that was the right approach. When you make 

changes, you should be looking more at the internal controls that 

are in place to make sure that those new changes are implemented 

properly so you can take timely action. But that is water under the 

bridge at this point. And so this is why I am saying that when they 

startin 2019 they are going to take one-third of the States over a 

3-year period until they cover all the States. 
25 

My belief is we should do more, have a more aggressive strategy. 

During that 3-year or 4-year period, by the time everything is done 

costs are going to increase over the period of time. 

So that is the reason that we are where we are at this point, 

from what I understand. 

Chairman JOHNSON. When I talked to Administrator Verma, I 

had asked her who is going to be doing the auditing, and my bias 

would be engage private sector auditors. There are plenty of them 

there in every State and in every community. So she said they 

were going to do that. Let us hope so. And if they are doing that, 

they can cover all 50 States immediately. 

Mr. DODARO. They should use the State auditors. I mean, you 

are sitting next to a former State auditor over here, and—— 

Senator MCCASKILL. And it would not be that hard to put into 

the single audit protocol. 

Mr. DODARO. Right. They are already auditing it and the State 

auditors know this program better than anybody. 

Senator MCCASKILL. Yes. 

Mr. DODARO. And I have dealt with the State auditors for 

Louisian, Mississippi, and Massachusetts. They have started on 

their own, because I have been encouraging them to get more involved. But if they are given proper support and resources, you 

could help prevent a lot of these program integrity problems. And 

I would encourage the Congress to—— 

Chairman JOHNSON. But the bottom line, there is no reason to 

do a third, a third, a third. There is really no reason to wait. Let 

us do now and do all 50 States. 

Mr. DODARO. Yes, well, they are doing it based upon their own 

resources, not figuring how you could deploy resources and expertise that is already there resident in each State. And each State’s 

program is different. 

Chairman JOHNSON. So clarify the managed care point. You are 

saying we are frozen. Describe what you are talking about. What 

is frozen at 3.1 percent? 

Mr. DODARO. The beneficiary eligibility determination is frozen; 

there are three components of the improper payment rate. There 

is a fee-for-service component, and I think the latest is about 12.9 

percent error rate. And that is where most of the $36 billion in 

overpayments come from. 

Chairman JOHNSON. That is what you can measure? 

Mr. DODARO. Yes. The second part has been in place for a number of years. 

The second component is managed care. The managed care component of this is set at 0.3 percent, which is what they figure, because nobody is really auditing the managed care providers on how 

they are providing services. They just have been looking at whether 

or not the States are providing the money to the managed care providers, the organizations, but not the actual provision—delivery of 

services, whether the services were medically necessary, whether 

they are following all the right rules or procedures. So no one 

knows. 

Chairman JOHNSON. So, again, what set—I mean, describe what 

is the set point. What does that that do? 
26 

Mr. DODARO. The set point is in the beneficiary eligibility at 3.1 

percent. The managed care rate they do every year, but they are 

not measuring everything that needs to be measured. That is the 

difference between the two. They froze the beneficiary eligibility determination at 3.1, which is what it was in 2013, I believe, or 2014. 

For the medicare managed care portion, they do an estimate every 

year, but it does not measure everything that needs to be measured 

for half of the program expenditures. 

Chairman JOHNSON. So another thing I wanted to clarify—and I 

am going to dig into that further. You talked about demonstration 

spending, not budget neutral. It is about a third of spending. From 

2016 to 2018, you said there was a carryover of $100 billion. Just 

again make me understand that. 

Mr. DODARO. Yes, because they are not going to allow them to 

carry over the expenditures. When they approve a demonstration, 

they agree in a State of what the spending limit could be. So if the 

State, let us say, just for theoretical purposes, sets the limit at $20 

billion, but they really only spend $18 billion, they get to carry over 

the $2 billion into the next year. Now they are not going to allow 

them to accumulate all that and you cannot carry over all of it, and 

so they are limiting it. As we said that that it is raising the costs 

of the program to the Federal Government without a good basis. 

So they have stopped this practice. 

Chairman JOHNSON. So it really is use it or lose it, which creates 

its own incentives. But that is better than having this simply not 

being able to spend the money and then just banking it in the future. 

Mr. DODARO. Yes, particularly if the spending limit that they set 

was based in some cases on hypothetical services and hypothetical 

costs that was not the actual costs that they had before. 

Chairman JOHNSON. OK. I do want to get into State gimmicks 

before we close out this hearing, but I will turn it over to Senator 

McCaskill. 

Senator MCCASKILL. I would like to first briefly talk about the 

fact that we are not doing screening and enrollments, even though 

we passed a law requiring it. It began to be a requirement in 2011, 

and the States are supposed to be screening and looking at enrollment requirements for the providers. 

Comptroller, your colleagues previously testified in the House 

that the requirement for screening and enrollment for Medicaid 

providers prevents improper payment and reduces fraud. Your colleague Ms. Yocom stated, ‘‘If you can screen and enroll and ensure 

your providers act in good faith, you have managed most of the 

fraud. A beneficiary alone trying to commit fraud needs a complicit 

provider. So focusing attention on ensuring good screening and enrollment process is critical.’’ 

Do you agree with her statement? And what we can be doing, 

what can CMS be doing to require these States to do a better job 

on screening and enrollment of various providers that are looking 

to be able to collect Medicaid dollars? 

Mr. DODARO. Yes, first of all, I agree with Ms. Yocom. She is sitting right behind me. 

Senator MCCASKILL. Thank you, Ms. Yocom. 
27 

1The information submitted by Mr. Dodaro appears in the Appendix on page 171. 

Mr. DODARO. She is my best adviser on this issue and is very 

knowledgeable of the program. She is absolutely right. We have 

made many recommendations to CMS to make more databases 

available to the States. 

Now, one novel thing that is in the plan CMS—or the press release from yesterday is the offer for them to do some screening for 

the States on the providers as well, and I think that could be helpful if implemented properly as well, because they can access more 

databases. So we have been trying to make sure that they give 

more databases to the States for screening purposes. 

For example, on Medicare, there are some of the same providers 

in both programs, and you can use the experience with the Medicare screening to help Medicaid as well. So that has been one of 

our recommendations: to improve the accuracy of the databases. 

We have been trying for a while to get better, more accurate Death 

Master File (DMF) information to the States as well. And it is particularly important that CMS help because beneficiaries may move 

from State to States. 

Senator MCCASKILL. Correct. 

Mr. DODARO. So those are some of our recommendations. I can 

provide a detailed list for the record.1

Senator MCCASKILL. That would be terrific. 

And since you spoke of Medicare, it is my understanding that the 

improper payment percentage is higher in the Medicare program 

than it is in the Medicaid program. 

Mr. DODARO. That is because they have better measurement 

techniques. I think the Medicare program has good methodologies. 

They do regular reviews. They check on whether or not the service 

was medically necessary and take samples. They take national 

samples every year. So they have a much more robust program 

than the Medicaid program, and it is a little easier because it is 

a national program as opposed to each State having its own different design for the Medicaid program. 

So to be fair, it is more complicated to do it in Medicaid, but 

Medicare has a very good program. In fact, what we did, we looked 

at the TRICARE program at the Department of Defense (DOD) and 

compared what they were doing to measure their improper payment rate to Medicare and found that DOD was not doing anywhere close to what Medicare is doing, so we recommended they 

improve their methodology. 

Senator MCCASKILL. Well, the fact that the States all have different programs and that we have the high improper payment 

number that we have and it is growing, it certainly would be one 

point that you would want to make if we were going to be blockgranting the money, because if we block-grant the money, then we 

lose all controls, not just dealing with perhaps different scenarios 

or provider taxes based on the State but, rather, a situation where 

we would just send the money out and trust them. 

Mr. DODARO. Yes, it depends on how you design it. If you capped 

it and said, OK, this is all the money that you are going to get, 

then there is an incentive—part of the issue here has been an incentive issue because of the Federal match. 
28 

1The information submitted by Mr. Dodaro appears in the Appendix on page 179. 

2The Humana document referenced by Senator McCaskill appears in the Appendix on page 

127. 

Senator MCCASKILL. Right. 

Mr. DODARO. Senator Daines pointed this out, and he is exactly 

right. 

Senator MCCASKILL. Right. 

Mr. DODARO. The incentives have not all been aligned properly, 

and I think a lot of the State attention to this has increased, particularly in the expansion States, as they see it is rapidly growing, 

being a bigger portion of the budget, the Federal match is going to 

start tapering off from 100 percent—— 

Senator MCCASKILL. To 90, though. It never goes below 90. 

Mr. DODARO. Right. 

Senator MCCASKILL. Assuming the law does not change. 

Mr. DODARO. Right, but they still see that they need to do more 

in this area. That is why the State auditors are beginning to step 

up. 

Senator MCCASKILL. That would be great. 

I want to turn to a report you did back in 2011, and what you 

did at the GAO in 2011 is you looked at application and coverage 

denials in the individual health and insurance market. And I have 

gone back and looked at that because we now have this Administration going to court along with the Attorney General of my State 

asking the courts to do away with the preexisting condition protection along with many of the others—capped payments and the ability to charge women more for insurance just because they are 

women. There is a variety of protections that we have in there for 

consumers that this Administration is now actively, along with 

these Attorneys General, trying to get rid of and make sure that 

they completely go away. 

I would like you to talk about the sources of information you 

used for your 2011 report, if you could give us that. What data did 

you use to determine the level of coverage denial in the years before, immediately before we put the ACA protections in? 

Mr. DODARO. As I recall, and I will provide the details for the 

record,1 but we used data that HHS had been collecting. We also 

went to a few States to see if they had better information since 

they have delegated responsibility for a lot of insurance issues. And 

then we also had information from the American health insurance 

industry as well. So we had those three sort of data sources. 

Senator MCCASKILL. And your review found there were two 

kinds of denials. There is an application denial. 

Mr. DODARO. Right. 

Senator MCCASKILL. And I put into the record and I would ask 

it be put into the record in this hearing also Humana’s document2

that listed 400 diseases that required application denial, along with 

a number of occupations, including air traffic controller, steelworker. 

So there is an application denial and then there is a policy they 

were writing that allowed them to do a coverage denial. So if you 

had, for example, a heart condition, they might insure you, but you 

would have to pay out of your own pocket for anything having to 
29 

1The information submitted by Mr. Dodaro appears in the Appendix on page 180. 

2The Humana report appears in the Appendix on page 127. 

do with your heart condition—in other words, completely incomplete insurance, and that was called ‘‘coverage denial.’’ 

So on the application denial, do you recall what the denial rate 

was on average for people who were trying to get insurance? 

Mr. DODARO. Yes, the national figure we had was 19 percent, but 

it varied among insurers. 

Senator MCCASKILL. OK. So some insurers it was higher, 

some—— 

Mr. DODARO. Some of it was up to 40 percent or more. Others 

were 0 to 15 percent. So there was a lot of variation, but the overall national average I believe was 19 percent denial. 

Senator MCCASKILL. So one in five people that tried to get insurance were denied the opportunity to get insurance because they 

had been sick before. Is that an accurate finding of your report 

prior to the ACA protections? 

Mr. DODARO. Yes, that is, with certain limitations. I mean, we 

do not know whether or not they applied somewhere else and got 

coverage or whether they actually ended up getting coverage but 

had a higher premium rate. So there was not a lot of good data 

available. We had what was available, and it is appropriately 

caveated in the report. But that is what we said. 

Senator MCCASKILL. And what about the denial of coverage? 

What did you find as it related to the denial of coverage? 

Mr. DODARO. That was very detailed, very specific. I do not have 

a good answer for that at an aggregate level as well. But what I 

recall on the application denial side, the 19 percent, it was not really clear why they denied it. So the only other data that was available at that point was from the America’s Health Insurance Plans 

and what they said was that the denial rate was much higher for 

medical reasons than non-medical reasons, for example, you were 

not in the right geographic area. So that was abouyt 1 percent. 

About 13 percent of the denials were because of medical conditions 

and their underwriting status. 

I can give you for the record the coverage denial detail from that 

report.1

Senator MCCASKILL. I just wanted to bring it out because I think 

people forget—I mean, there was not an effort to pass the ACA because all of us were trying to make people’s lives miserable. The 

effort was to try to give consumers some protections from some 

gross abuses that had grown up in the industry, and people were 

really searching for coverage and could not find it, could not get it. 

So I think it is important that we remember that in context and 

that we not throw out the preexisting condition protection unless 

and until we can come up with something that will replace it with 

the same level of protection. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. And we will enter that Humana report in 

the record.2

Senator MCCASKILL. Yes. 

Chairman JOHNSON. Not a problem. 
30 

I have only really got one more line of questioning here. It really 

does have to do with what sometimes is referred to as ‘‘State gimmicks.’’ We refer to it in our report. I am talking about, for example—perfectly legal but it ends up costing the Federal Government 

more money and certainly increased the percentage of the Federal 

Government’s match to the States. I am talking about, for example, 

State sales taxes or loans the State makes to cities that they 

claim—they get reimbursement at their match rate, and then they 

pay the loan back to the State. 

Do you have a sense of how much those and other, I would call 

them, ‘‘gimmicks’’ really cost in terms of additional Federal spending? 

Mr. DODARO. We have had some examples that we did in reports 

over the years, but no one really knows because CMS does not really collect the type of information necessary to make those determinations. That is part of our recommendations, is to have more 

information about what the sources of those funds are every year. 

There are supposed to be limits on how much they need to raise 

from local governments. For example, the State share is supposed 

to only gather up to 60 percent of their fair share from local providers or other sources, and no one knows whether that limit is 

really met on a regular basis. And that is one of our recommendations. 

I know Brian has done some work in that area, too. I am sure 

he has something to add. 

Mr. RITCHIE. Again, we do not have it quantified either, I think 

for the same reasons. We have reports out on a few States. Recently we have some ongoing work looking at the safe harbor and 

it is mentioned in your report. But I think the same issues, that 

it is just not being tracked, that we see this, and that the safe harbor may be met, but then that still allows the general process of 

the shifting of funds. And back to a point I made earlier, I think 

just for us the general intent is the dollars are spent. We just 

think—asked the question: Is this leading to better care for beneficiaries or is this leading to a shift in resources? And it is hard 

as an IG because it is not necessarily violating rules. The rule in 

place right now is it is up to the 6 percent. But if you look at it 

we are able to track it from an audit standpoint look and see a provider paid taxes, then the Federal share came in, and when the additional resources were sent, the supplemental payments went 

back; and the net effect is the Federal Government paid and the 

State really did not sort of come out any worse. It was sort of a 

net zero effect. 

Mr. DODARO. Yes, the other thing—— 

Chairman JOHNSON. The States actually come out quite a bit better. 

Mr. DODARO. Oh, yes. 

Chairman JOHNSON. Yes. So is it measurable? 

Mr. DODARO. If you have the data, you could measure it. And 

they should have the information to check. 

Chairman JOHNSON. So is that something if I wrote either one 

of your gentlemen or both of you a letter, would you commit to 

doing a study on that to try and quantify it? 

Mr. DODARO. We could see—— 
31 

Chairman JOHNSON. Who wants to volunteer? 

Mr. DODARO. Yes, we could see if it is feasible to do. 

Chairman JOHNSON. OK. 

Mr. DODARO. We can go back in and look at a sample of States, 

for example, and try to measure it that way. But it will take a 

while to do it because the data is not readily available, and you 

would have to go in and take a look at it. But I think we could do 

a study, but we have also got open recommendations that you could 

support, have CMS collect this information, because unless they 

collect it and do something with it, our study is really not going 

to change the outcome of this situation. 

Chairman JOHNSON. I was struck in your answer on other audits 

in comparison to—again, CMS runs both Medicare and Medicaid, 

correct? 

Mr. DODARO. Right. 

Chairman JOHNSON. And I am really giving them praise in terms 

of how they are managing Medicare and doing the audits, that type 

of thing. The fact they are not dog it on Medicaid, with some caveats, do you almost get the sense that it is willful ignorance? 

Mr. DODARO. Well, there has always been a deference to States, 

and that can go too far in terms of balancing the Federal interest 

versus States’ flexibility. That has been an issue historically in our 

intergovernmental system. You see it in many different programs 

over time. Temporary Assistance for Needy Families (TANF) is another example. But, this program, as it started out, according to 

your chart really did not have much in expenditures, and letting 

the States have flexibility made sense. But now the stakes are 

higher, and the costs are not sustainable over the long term, and 

CMS need to change their paradigm. And they have been slow to 

do that. 

Chairman JOHNSON. But, also, when both parties have skin in 

the game, there literally is an incentive to try and keep down the 

cost. But as one partner has more skin and the other partner does 

not—and that is exactly what Medicaid expansion does—it is what 

these State gimmicks do. It reduces the amount of skin in the game 

the States have, and it now starts shifting the incentive to, for example, sign up people that are ineligible because you get more Federal money. 

The bottom line is oversight is critical, auditing this is critical. 

Designing the program so you actually have the incentives—and I 

would say the block grant would give every incentive to the State 

for efficient spending because they are going to have—according to 

Graham-Cassidy-Heller-Johnson, it would be money block-granted 

on the basic number of people in your State, the poverty rates, 

those types of things. That is not incentivizing you to sign more 

people up. You are going to get a set amount, and you better spend 

that as efficiently and as flexible as possible and do the best for 

your citizens. So to me that completely puts the incentive back 

where it belongs, at the State level where it will be a little more 

efficient, a little more effective, hopefully more accountable versus 

this one-size-fits-all model, which a $37 billion improper payment 

amount shows it is not being done very efficiently and effectively. 
32 

Anyway, so you will expect that letter just in terms of the feasibility of that study. I think we might be shocked at how much 

money that actually costs us. 

Again, I want to thank both the witnesses for your great testimony and for taking the time. General Dodaro, you realize we are 

never going to let you retire. [Laughter.] 

Mr. DODARO. Well, I have 71⁄2 years left on my term, and then 

we can negotiate. 

Chairman JOHNSON. I am amazed at—we are talking about— 

Senator McCaskill was asking about a study from 2011, and you 

have that at the tip of your fingers. I am always amazed at your 

ability to recall these things and provide detailed testimony off the 

top of your head. 

And, Mr. Ritchie, again, thank you for all of your work. This 

Committee depends on the good work of Inspectors General and the 

Government Accountability Office. So thank you both for your testimony. 

The hearing record will remain open for 15 days until July 12th 

at 5 p.m. for the submission of statements and questions for the 

record. 

This hearing is adjourned. 

[Whereupon, at 12:07 p.m., the Committee was adjourned.] 
(33) 

A P P E N D I X 
34 

Last week, I also released a staff report that finds that CMS has failed to adequately police 

Medicaid fraud and overpayments. We look forward to having CMS Administrator Verma testify 

in the near future about the report's conclusions and the steps CMS is taking to tackle Medicaid 

fraud and overpayments. I thank our witnesses for their service, and I look forward to your 

testimony. 
35 

U.S. Senate Homeland Security and Governmental Affairs Committee 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

June 27, 2018 

Ranking Member Claire McCaskill 

Opening Statement 

Thank you, Mr. Chairman. Mr. Chairman, I am happy to be here today with 

you, Mr. Dodaro, and Mr. Ritchie to discuss efforts to reduce improper payments 

in the Medicaid program. 

Medicaid provides health care coverage to more than 70 million Americans, 

regardless of pre-existing conditions. In 2016, Medicaid spending totaled $565.5 

billion and accounted for a full 17% of national health expenditures that year. 

Medicaid is a very important program, and it is this Committee's responsibility to 

ensure that the Medicaid program-and all government programs-are spending 

taxpayer dollars appropriately and efficiently. 

According to CMS, Medicaid improper payments reached an estimated $3 7 

billion in 2017. That is a full 10 percent of the total federal spending on Medicaid! 

That number is outrageous and CMS needs to find a way to bring that number way 

down. That is one of the reasons why just last week, we passed bipartisan 

legislation out of committee to cut down on improper payments made by the 

federal government. If enacted, our bill will require CMS and other agencies to 
36 

undertake additional efforts and develop plans to prevent improper payments 

before they happen. These measures have the potential to save the government 

billions of dollars. Our bill is an important step to eradicate government waste and 

make important programs work for all Americans. 

In addition to enacting the Stopping Improper Payments to Deceased People 

Act, there is no shortage of recommendations and concrete steps CMS can put into 

place today to enhance oversight efforts and prevent future improper payments. 

But let's be clear: Medicaid is an important program for Americans. And 

Medicaid expansion has been incredibly important as well, ensuring 12 million 

additional Americans were able to receive health care coverage under Medicaid for 

the first time. We need to make the program more efficient, but fixing its problems 

should not be confused with calling for an end to an important health program that 

millions of Americans rely upon for their medical care. 

If a lawsuit against the Affordable Care Act brought by Republican 

Attorneys General is successful, insurance companies will once again be permitted 

to refuse health care coverage to vulnerable Americans with pre-existing health 

conditions. Workers will be locked in jobs just because it offers them insurance. 

And, once again, insurance companies will discriminate against millions of 

Americans based on their health status. 

2 
37 

Mr. Chairman, I think we may need a reminder of what the world looked 

like before the passage of the Affordable Care Act. I seek unanimous consent to 

enter a document into the record. This memo was issued by the House Energy and 

Commerce Committee in 2010 following enactment of the ACA and the 

committee's investigation found the four largest for-profit health insurance 

companies denied over 600,000 individuals coverage because of pre-existing 

conditions in the three years before passage of health reform. The committee's 

investigation found that for certain medical conditions, companies routinely denied 

health insurance coverage without any further review. According to one internal 

memorandum created in 2006, one insurance company created a list of certain 

medical conditions that would result in an automatic denial of coverage. No 

further conversation necessary. No insurance for you. The categories included: 

• "Any applicant who is a surgical candidate." 

• "Any female applicant currently pregnant." 

• Any applicant with a BMI [body mass index] of 39.0 or greater." 

GAO also did important work documenting the rate at which insurance 

companies discriminated against people with pre-existing conditions. In a 2011 

report, GAO found a quarter of insurers had denial rates of 40 percent or higher. 

3 
38 

look forward to speaking to Mr. Dodaro about his findings on pre-existing 

conditions in more detail during my questions. 

There are up to 130 million adults under the age of 65 with pre-existing 

conditions in the U.S. We cannot go back to a time when people were 

automatically denied health care coverage due solely to their health status. 

Thank you, Mr. Chairman. 

4 
39 

For Release on Delivery 

Expected at 10:00 a.m. ET 

Wednesday, June 27, 2018 

GA0-18-598T 

United States Government Accountability Office 

Testimony 

Before the Committee on Homeland 

Security and Governmental Affairs, 

U.S. Senate 

MEDICAID 

Actions Needed to Mitigate 

Billions in Improper 

Payments and Program 

Integrity Risks 

Statement of Gene L. Dodaro 

Comptroller General of the United States 
40 

ltttmfjW.HII: 

MEDICAID 

Actions Needed to Mitigate Billions in Improper 

Payments and Program Integrity Risks 

What GAO Found 

GAO's work has identified three broad areas of risk in Medicaid that also 

contribute to overall growth in program spending, projected to exceed $900 

billion in fiscal year 2025. 

1) Improper payments, including payments made for services not actually 

provided. Regarding managed care payments, which were nearly half (or 

$280 billion) of Medicaid spending in fiscal year 2017, GAO has found that the 

full extent of program risk due to overpayments and unallowable costs is 

unknown. 

2) Supplemental payments, which are payments made to providers-such as 

local government hospitals-that are in addition to regular, claims-based 

payments made to providers for specific services. These payments totaled 

more than $48 billion in fiscal year 2016 and in some cases have shifted 

expenditures from the states to the federal government. 

3) Demonstrations, which allow states to test new approaches to coverage. 

Comprising about one-third of total Medicaid expenditures in fiscal year 2015, 

GAO has found that demonstrations have increased federal costs without 

providing results that can be used to inform policy decisions. 

Actual and Projected Growth Trends in Total Medicaid Spending 

EKpendltures (dollarsm billtons} 

1,000 

'" 900 

TOO 

'" 

400 '" 

300 

200 

100 

0 

ll#lltfli(flilliiilll 

Fiscal year 

Source 2.01(1 Actuarial Report on the FmallCoal Outlook lor MWbCald l GA0·18·59BT 

GAO's work has recommended numerous actions to strengthen oversight and 

manage program risks. 

• Improve data. The Centers for Medicare & Medicaid Services (CMS), which 

oversees Medicaid, needs to make sustained efforts to ensure Medicaid data 

are timely, complete, and comparable from all states, and useful for program 

oversight. Data are also needed for oversight of supplemental payments and 

ensuring that demonstrations are meeting their stated goals. 

• Target fraud. CMS needs to conduct a fraud risk assessment for Medicaid, 

and design and implement a risk-based antifraud strategy for the program. 

• Collaborate. There is a need for a collaborative approach to Medicaid 

oversight. State auditors have conducted evaluations that identified significant 

improper payments and outlined deficiencies in Medicaid processes that 

require resolution. 

-------------United States Government Accountability Office 
41 

Chairman Johnson, Ranking Member McCaskill, and Members of the 

Committee: 

I appreciate the opportunity to be here today to discuss areas of risk to 

the Medicaid program and oversight efforts that can help prevent 

improper payments and ensure the program's fiscal integrity. 1 The 

federal-state Medicaid program is one of the nation's largest sources of 

funding for medical and health-related services. In fiscal year 2017, the 

program covered acute health care, long-term care, and other services for 

over 73 million low income and medically needy individuals. In that same 

year, estimated federal and state Medicaid expenditures were $596 

billion. 

Medicaid has been on our high-risk list since 2003, in part, because of 

concerns about the adequacy of fiscal oversight and the program's 

improper payments-including payments made for people not eligible for 

Medicaid or services not actually provided. 2 The Medicaid program 

accounted for 26.1 percent of the fiscal year 2017 government-wide 

improper payment estimate. 3 While efforts to reduce improper payments 

have been made by the Centers for Medicare & Medicaid Services 

(CMS), the agency within the Department of Health and Human Services 

(HHS) that oversees Medicaid, overall improper payments continue to 

increase. In fiscal year 2017, improper payments accounted for $36.7 

billion of Medicaid spending, up from $29.1 billion in fiscal year 2015. Of 

the $36.7 billion in improper payments, $36.4 billion were overpayments 

and $283 million were underpayments. 

The size, complexity, and diversity of Medicaid make the program 

particularly challenging to oversee at the federal leveL Medicaid allows 

1

An improper payment is any payment that should not have been made or that was made 

in an incorrect amount (including overpayments and underpayments) under statutory, 

contractual, administrative, or other legally applicable requirements. It includes any 

payment to an ineligible recipient, any payment for an ineligible service, any duplicate 

payment, payment for services not received (except where authorized by law), and any 

payment that does not account for credit for applicable discounts. See 31 U.S.C. § 3321 

note. Office of Management and Budget guidance also instructs agencies to report as 

improper payments any payments for which insufficient or no documentation is found, 

2See GAO, High-Risk Sen'es: Progress on Many High-Risk Areas, While Substantial 

Efforts Needed on Others. GA0-17-317 (Washington, D.C.: Feb. 15, 2017). 

3

See GAO, Improper Payments: Actions and Guidance Could Help Address Issues and 

Inconsistencies in Estimation Processes. GA0-18-377 (Washington, D.C.: May 31, 2018). 

Page 1 GA0-18-598T 
42 

Background 

significant flexibility for states to design and implement program 

innovations based on their unique needs; however, our prior work has 

found that these innovations have grown considerably over time, lack 

complete and accurate reporting, and do not always ensure the efficient 

use of federal dollars. It is critical that CMS and states take appropriate 

measures to reduce improper payments and ensure the fiscal integrity of 

Medicaid; as dollars wasted detract from the program's ability to ensure 

that the individuals who rely on Medicaid-including low-income children 

and individuals who are elderly or disabled-are provided adequate care. 

My testimony today will focus on 

1. major risks to the integrity of the Medicaid program, and 

2. actions needed to manage these risks. 

My remarks are based on our large body of work examining the Medicaid 

program, particularly reports issued and recommendations made from 

November 2012 to May 2018; these reports provide further details on our 

scope and methodology. (A list of related reports is included at the end of 

this statement.) For further context, my remarks also reference 

information reported by state auditors and the HHS Office of Inspector 

General (HHS-OIG), including information from two meetings with state 

auditors and Inspectors General we hosted in March and May 2018. We 

conducted all of the work on which this statement is based in accordance 

with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on 

our audit objectives. 

Among health care programs, Medicaid is the largest as measured by 

enrollment (over 73 million in fiscal year 2017) and the second largest as 

measured by expenditures ($596 billion in fiscal year 2017), second only 

to Medicare. The CMS Office of the Actuary projected that Medicaid 

spending would grow at an average rate of 5.7 percent per year, from 

fiscal years 2016 to 2025, with projected Medicaid expenditures reaching 

Page2 GA0-18·S98T 
43 

$958 billion by fiscal year 20254 This projected growth in expenditures 

reflects both expected increases in expenditures per enrollee and in 

levels of Medicaid enrollment. Beneficiaries with disabilities and those 

who are elderly constitute the highest per enrollee expenditures, which 

are projected to increase by almost 50 percent from fiscal year 2016 to 

2025. Medicaid enrollment is also expected to grow by as many as 13.2 

million newly eligible adults by 2025-as additional states may expand 

their Medicaid programs to cover certain low-income adults under the 

Patient Protection and Affordable Care Act {PPACA). 5 {See fig. 1 .) 

4Data are from the most recently issued CMS actuarial report. See Centers for Medicare & 

Medicaid Services, Office of the Actuary, 2015 Actuarial Report on the Financial Outlook 

for Medicaid (Washington, D.C.: 2016). 

5

The Patient Protection and Affordable Care Act, enacted on March 23, 2010, permits 

states to expand their Medicaid programs to cover none!derly, nonpregnant adults who 

are not eligible for Medicare, and whose income does not exceed 133 percent of the 

federal poverty level. Because of the way the limit is calculated, using what is known as an 

~income disregard," the level is effectively 138 percent of the federal poverty leveL Pub. L. 

No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education 

Reconciliation Act of 2010 (HCERA), Pub. L No. 111-152, 124 Stat 1029 (2010). 

Pagel GA0-18-598T 
44 

Figure 1: Growth Trends in Total Medicaid Spending by Eligibility Group 

Expenditures (dollars in blllions) 

1,000 

900 

BOO 

700 

600 

500 

400 

300 

200 

100 

llilllifflllfl!liflll 

Fiscal year 

-Aged 

-Disabled 

-Children 

L2JAdults 

U NewlyEI!gibleAdults 

Source· GAO analy$15 of2016 Actuanal RepO<t on the Finar.eial out1ook for Msdk;aii:L f GA0-18-5\iST 

Note: Data after fiscal year 2012 are projected expenditures. 

The partnership between the federal government and states is a central 

tenet of the Medicaid program. CMS provides oversight and technical 

assistance for the program, and states are responsible for administering 

their respective Medicaid programs' day-to-day operations-including 

determining eligibility, enrolling individuals and providers, and 

adjudicating claims-within broad federal requirements. Federal oversight 

includes ensuring that the design and operation of state programs meet 

federal requirements and that Medicaid payments are made 

appropriately. (See fig. 2 for a diagram of the federal-state Medicaid 

partnership framework.) Joint financing of Medicaid is also a fixture of the 

federal-state partnership, with the federal government matching most 

state Medicaid expenditures using a statutory formula based, in part, on 

Page4 GA0-18-598T 
45 

each state's per capita income in relation to the national average per 

capita income. 

Figure 2: Federal-State Medicaid Partnership Framework 

Federal responsibility 

... ... CMS responsible for 

...... overseemg that states' 0'0 des1gn and operation of 

Med1ca1d meets federal 

requtrements as set forth m statute, 

regulation, and gutdance 

II~ CMS revtews and approves 

~ state Med1ca1d plans 

~ CMS rev1ews and 

approves estimated 

expenses, wh1ch 

authonzes states to draw down 

federal matchmg funds to make 

Medtca1d payments durmg the 

upcommg quarter 

d: CMS reconciles actual 

~ expenditures w1th states' 

...... esbmates 

Som.:".e GAO f GA0-18-SSeT 

Note: If a state wishes to make amendments to its state Medicaid plan, it must seek approval from the 

Centers for Medicare & Medicaid SeNices (CMS). Similarly, a state that desires to change its 

Medicaid program in ways that deviate from certain federal requirements may seek to do so through a 

Medicaid demonstration waiver approved under section 1115 of the Social Security Act, which is 

outside of its state Medicaid plan. States must submit an application describing the proposed section 

1115 demonstration to CMS for review. CMS will specify the special terms and conditions that 

encompass the requirements for an approved demonstration. 

States have flexibility in determining how their Medicaid benefits are 

delivered. For example, states may (1) contract with managed care 

organizations to provide a specific set of Medicaid-covered services to 

beneficiaries and pay the organizations a set amount, generally on a per 

Page 5 GA0-18-598T 
46 

beneficiary per month basis; (2) pay health care providers for each 

service they provide on a fee-for-service basis; or (3) rely on a 

combination of both delivery systems. 6 Managed care continues to be a 

growing component of the Medicaid program. In fiscal year 2017, 

expenditures for managed care were $280 billion, representing almost 

half of total program expenditures, compared with 42 percent in fiscal 

year 2015. (See fig. 3.) 

6

CMS has also been developing and testing a variety of value~based payment models, 

under which physicians and other providers are paid and responsible for the care of a 

beneficiary for a long period and accountable for the quality and efficiency of the care 

provided. Examples of these models include accountable care organizations-groups of 

physicians and other health care providers wno voluntarily work together to provide 

coordinated care-and bundled payment models, which provide a "bundled" payment 

intended to cover the multiple services beneficiaries receive during an episode of care for 

certain health conditions, such as hip replacements, congestive heart failure, and 

pregnancy. 

Pages GA0-18~598T 
47 

Figure 3: Growth in Comprehensive RiskwBased Managed Care as a Share of Total 

Medicaid Expenditures, Fiscal Years 2005 through 2017 

Expenditures (dol1a11> in billions) 

600 

Fiscal year 

- Comprehensive Risk-Based Managed Care Expenditures 

c::=JJ AU Otner Medicaid Expenditures 

Source· GAO analysis of Centers fCll Medocare & Modw..aid SeNoces expenditures da!a 1 GA0·18-598T 

Note: States may have different types of managed care arrangements in Medicaid; managed care 

expenditures in this figure include expenditures for comprehensive, risk-based managed care-the 

most common type of managed care arrangement 

States also have the flexibility to innovate outside of many of Medicaid's 

otherwise applicable requirements through Medicaid demonstrations 

approved under section 1115 of the Social Security Act. 7 These 

7Under section 1115 of the Social Security Act, the Secretary of Health and Human 

Services may waive certain Medicaid requirements and approve new types of 

expenditures that would not otherwise be eligible for federal Medicaid matching funds for 

experimental, pilot, or demonstration projects that, in the Secretary's judgment, are likely 

to promote Medicaid objectives. See 42 U.S.C. § 1315(a). The Secretary has delegated 

the approval and administration of Medicaid section 1115 demonstrations to CMS, which 

requires that such demonstrations be budget neutral to the federal government; that is, the 

federal government should spend no more for Medicaid under a state's demonstration 

than it would have spent without the demonstration. There are other types of waivers that 

states can apply for and use, including those approved under section 1915(c) of the Social 

Security Act, which authorizes the Secretary of Health and Human Services to waive 

requirements that states providing home and community based services would otherwise 

need to meet in the absence of the waiver. 

Page7 GA0-1S-59ST 
48 

demonstrations allow states to test new approaches to coverage and to 

improve quality and access, or generate savings or efficiencies. For 

example, under demonstrations, states have 

extended coverage to certain populations, 

provided services not otherwise eligible for federal matching funds, 

and 

made incentive payments to providers for delivery system 

improvements. 

As of November 2016, nearty three-quarters of states have eMSapproved demonstrations. In fiscal year 2015, total spending under 

demonstrations represented a third of all Medicaid spending nationwide. 

(See fig. 4.) 

Figure 4: Total Expenditures under Medicaid Section 1115 Demonstrations, Fiscal 

Years 2005,2010, and 2015 

Expenditures {dollars m bi!hons) 

180 

180 

140 

100 

" 

40 

20 

2005 2010 2015 

Fiscal year 

Demor~strations as a sham of total Medicaid 

spending (percentage) 

35 

32 

" 

25 

20 

10 

2005 2010 2015 

Source: GAO anatvsfS of Centers lor Medicare & Medicaid Se!Vlces demD'flStraMo expenditures data J GA0-18-5.%1 

In addition to other types of improper payments, Medicaid presents 

opportunities for fraud, because of the size, expenditures, and 

complexities of the program-including the variation in states' design and 

implementation. Medicaid Fraud Control Units (MFCU)-state entities 

PageS 
49 

Three Broad Areas of 

Risk Threaten the 

Fiscal Integrity of 

Medicaid 

Estimated Improper 

Payments Exceed 10 

Percent, and Do Not Fully 

Account for All Program 

Risks 

responsible for investigating and prosecuting Medicaid fraud-have 

reported on Medicaid fraud convictions and recovered monies, in their 

annual reports' For example, over the past 5 years, MFCUs have 

reported an average of 1,072 yearly Medicaid fraud convictions. They 

also reported about $680 million in recoveries related to fraud in fiscal 

year 2017-almost double the recoveries from fiscal year 2016.' 

Our prior work has identified three broad areas of risk to the fiscal 

integrity of Medicaid: improper payment rates, state use of supplemental 

payments, and oversight of demonstration programs. 

CMS annually computes the national Medicaid improper payment 

estimate as a weighted average of states' improper payment estimates 

for three component parts-fee-for-service, beneficiary eligibility 

determinations, and managed care. The improper payment estimate for 

each component is developed under its own methodology. 10 The national 

rate in fiscal year 2017 was 10.1 percent, or $36.7 billion. Since 2016, 

Medicaid has exceeded the 10 percent criterion set in statute. As such, 

the program was not fully compliant with the Improper Payments 

Elimination and Recovery Act of 201 O-" 

In May 2018, we reported that the Medicaid managed care component of 

the improper payment estimate does not fully account for all program 

8

Nearly all states have MFCUs responsible for investigating and prosecuting Medicaid 

fraud. MFCUs are funded jointly by the federal government and the states, and HHS-OlG 

provides oversight. 

9

See Department of Health and Human Services, Office of Inspector General, Medicaid 

Fraud Control Units Fiscal Year 2017 Annual Report, OEI-09-18-00180 (Washington, 

D.C.: March 2018). 

1

°CMS has not calculated the beneficiary eligibility determinations component estimate 

since 2014 and has held constant this component of the national rate at 3_ 1 percent 

Beginning in the 2019 reporting year, the agency plans to resume improper payment 

estimates for eligibility determinations. 

11When an agency is determined to not be in compliance with one or more of the Improper 

Payments Elimination and Recovery Act criteria by its Inspector General, it must submit a 

plan to Congress describing the actions it will take to come into compliance. 

Page-9 GA0~18-598T 
50 

risks in managed care. 12 We identified 10 federal and state audits and 

investigations (out of 27 focused on Medicaid managed care) that cited 

about $68 miiJion in overpayments and unallowable managed care 

organization costs that were not accounted for by the managed care 

improper payment estimate. Another of these investigations resulted in a 

$137.5 million settlement to resolve allegations of false claims. 13 We 

further noted that the full extent of overpayments and unallowable costs is 

unknown, because the 27 audits and investigations we reviewed were 

conducted over more than 5 years and involved a small fraction of the 

more than 270 managed care organizations operating nationwide as of 

September 2017. 

Some examples of the state audits that identified overpayments and 

unallowable costs include the following: 

The Washington Slate Auditor's Office found that two managed care 

organizations made $17.5 million in overpayments to providers in 

2010, which may have increased the state's 2013 capitation rates-" 

The Texas State Auditor's Office found that one managed care 

organization reported $3.8 million in unallowable costs for advertising, 

company events, gifts, and stock options, along with $34 million in 

other questionable costs in 2015. 15 

12States may have different types of managed care arrangements in Medicaid; our 

findings apply to comprehensive, risk-based managed care, the most common type of 

managed care arrangement See GAO, Medicaid: CMS Should Take Steps to Mitigate 

Program Risks in Managed Care, GA0-18-291 (Washington, D.C.: May 7, 2018). 

13see GA0-18-291. 

1

"washington State Auditor, Performance Audit: Health Care Authority's Oversight of the 

Medicaid Managed Care Program, Audit No. 1011450 (April14, 2014). 

15Texas State Auditor, An Audit Report on HealthSpring Lffe and Health Insurance 

Company, Inc., a Medicaid STAR+PLUS Managed Care Organization, Report No. 17-025 

(Austin, Tex.: February 2017). 

Page 10 
51 

The New York State Comptroller found that two managed care 

organizations paid over $6.6 million to excluded and deceased 

providers from 2011 through 2014. 16 

To the extent that such overpayments and unallowable costs are 

unidentified and not removed from the cost data used to set managed 

care payment rates, they may allow infiated future payments and 

minimize the appearance of program risks in Medicaid managed care. 

This potential understatement of the program risks in managed care also 

may curtail investigations into the appropriateness of managed care 

spending. The continued growth of Medicaid managed care makes 

ensuring the accuracy of managed care improper payment estimates 

increasingly important. 

In May 2018, we acknowledged that although CMS has increased its 

focus on and worked with states to improve oversight of Medicaid 

managed care; its efforts-for example, updated regulations and audits of 

managed care providers-did not ensure the identification and reporting 

of overpayments and unallowable costs. 17 In May 2016, CMS updated its 

regulations for managed care programs, including that states arrange an 

independent audit of the data submitted by MCOs, at least once every 3 

years. We found that although this requirement has the potential to 

enhance state oversight of managed care; CMS was reviewing the rule 

for possible revision of its requirements. 18 We also noted that another 

effort to address program risks in managed care-the use of CMS 

program integrity contractors to audit providers that are paid by managed 

care organizations-has been limited. To address the program risks that 

are not measured as a part of CMS's methodology to estimate improper 

payments, in May 2018 we recommended that CMS take steps to 

mitigate such risks, which could include revising its methodology or 

16New York State Office of the State Comptroller, Medicaid Managed Care Organization 

Fraud and Abuse Detection, Report 2014-S-51 (Albany, NY.: July 15, 2016). HHS-OIG 

has the authority to exclude providers from federal health care programs, and maintains a 

list of all currently excluded providers called the List of Excluded Individuals/Entities. No 

payment may be made from any federal health care program for any items or services 

furnished, ordered, or prescribed by an excluded provider. 

17GA0-18-291. 

18CMS indicated it will issue a Notice of Proposed Ru!emaking in 2018 to streamline 

Medicaid managed care regulations and reduce burden. See Department of Health and 

Human Services, Medicaid and CHIP Managed Care, Spring 2018 Unified Agenda of 

Federal Regulatory and Deregulatory Actions, (CMS-2460-P), RIN 0936-AT40, accessed 

in May 14, 2016, http://www.reginto.gov. 

Page 11 GA0-18-598T 
52 

focusing additional audit resources on managed care. HHS concurred 

with this recommendation." 

Our prior work on Medicaid has also identified other program risks 

associated with provider enrollment and beneficiary eligibility that may 

contribute to improper payments. In table 1 below, we identify some 

examples of the previous recommendations we have made to address 

these types of program risks, and what, if any, steps CMS has taken in 

response to our recommendations. 

Table 1: Examples of GAO Recommendations to Address Medicaid Program Risks Associated with Managed Care, Provider 

Enrollment, and Beneficiary Eligibility Determinations 

Program risks 

Addressing key risks, such as the 

extent of overpayments and 

unallowable costs, that are not 

measured in the managed care 

component of the Centers for 

Medicare & Medicaid Services' 

GAO recommendations 

One recommendation aimed at 

mitigating identified risks, such as 

revising the methodology to calculate 

the managed care component or 

focusing additional audit resources on 

managed care. 8 

Recommendation status 

CMS concurred with our recommendation, and 

indicated that it wl!l review regulatory authority and 

audit resources to determine the best way to account 

for Medicaid program risks that are not accounted for 

in the managed care component. 

(CMS) improper payment estima_t•---,,-------,--,----,--,-:------co=cc---,.,---,.,--

Ensuring that only eligible Four recommendations aimed at CMS has addressed two of the four recommendations. 

providers are enrolled in Medicaid assessing the databases used to screen To implement one remaining recommendation, CMS 

Ensuring that only eligible 

beneficiaries are enrolled in 

Medicaid 

Source GAOjGA0-1B-59BT 

providers, improve collaboration and will need to determine whether the remaining 

coordination with other federal agencies databases {used by states and health plans to screen 

on sharing databases and establishing a providers) that it has studied should be added to the 

common identifier across databases, agency's list of the databases used for screening 

and providing guidance to state purposes. For the other remaining recommendation, 

Medicaid agencies. b CMS needs to explore the use of a common identifier 

for screening providers across databases. 

Two recommendations that CMS review CMS established a more rigorous approach for 

federal determinations of Medicaid verifying financial and nonfinancial information needed 

eligibility for accuracy, and take steps to to determine Medicaid beneficiaries' eligibility. The 

increase assurance that expenditures for agency stated that it would include reviews of federal 

the different eligibility groups are eligibility determinations in states that have delegated 

correctly reported and appropr~ately that authority as a part of its review of states' eligibility 

matched. c determinations. The results of this effort will be 

reported in 2019. 

3

See GAO, Medicaid: CMS Should Tako Steps to Mitigate Program Risks in Managed Care, 

GA0~18-291 {Washington, D.C.: May 7, 2018). 

~>see GAO, Medicaid Program Integrity: Improved Guidance Needed to Better Support Efforts to 

Screen Managed Care Providers, GA0-16~402 (Washington, D.C.: April 22, 2016). 

csee GAO, Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately 

Matched with Federal Funds, GA0-16-53 (Washington, D.C.: Oct 16, 2015). Under the Patient 

Protection and Affordable Care Act, state Medicaid expenditures for certain Medicaid enrollees are 

subject to higher federal matching percentages. 

19GA0-18-291. 

Page 12 GA0-18-598T 
53 

Lack of Transparency and 

Federal Oversight of 

States' Use of 

Supplemental Payments 

Increase Program Risk 

Supplemental payments are payments made to providers-such as local 

government hospitals and other providers-that are in addition to the 

regular, claims-based payments made to providers for services they 

provided. 20 Like all Medicaid payments, supplemental payments are 

required to be economical and efficient. 21 

Supplemental payments have been growing and totaled more than $48 

billion in 2016. Our prior work has identified several concerns related to 

supplemental payments, including the need for more complete and 

accurate reporting, criteria for economical and efficient payments, and 

written guidance on the distribution of payments. 22 

Complete and accurate reporting. Our prior work has identified 

increased use of provider taxes and transfers from local government 

providers to finance the states' share of supplemental payments, which, 

although allowed under federal law, effectively shift Medicaid costs from 

the states to the federal government. In particular, we previously reported 

in July 2014 that states' share of Medicaid supplemental payments 

financed with funds from providers and local governments increased the 

federal share from 57 percent in state fiscal year 2008 to 70 percent in 

state fiscal year 2012." The full extent of this shift in states' financing 

structure was unknown, because CMS had not ensured that states report 

complete and accurate data on the sources of funds they use to finance 

their share of Medicaid payments, and CMS's efforts had fallen short of 

2

D-rwo types of supplemental payments exist in Medicaid: (1) disproportionate share 

hospital {DSH) payments, which states are required to make to hospitals serving low~ 

income and Medicaid patients to offset those providers' uncompensated care costs; and 

(2) non-DSH supplemental payments that states may, but are not required, to make to 

hospitals and other providers that, for example, serve high-cost Medicaid beneficiaries. 

Unless otherwise noted, our findings apply to both types of supplemental payments. 

21Payments must also be suffictent to assure quality of care and to enlist enough 

providers so that care and services are available to Medicaid beneficiaries at !east to the 

extent available to the general population in the geograpi'Jic area. 42 U.S. C.§ 

1396a(a)(30)(A). 

22See, for example, GAO, Medicaid: Federal Guidance Needed to Address Concerns 

About Distribution of Supplemental Payments, GA0-16-108 (Washington, D.C.: Feb. 5, 

2016); and Medicaid.· CMS Oversight of Provider Payments Is Hampered by Limited Data 

and Unclear Policy, GA0-15-322 (Washington, D.C.: April10, 2015). 

23See GAO, Medicaid Financing: States' Increased ReHance on Funds from Health Care 

Providers and Local Governments Warrants Improved CMS Data Collection [Reissued on 

March 13, 2015], GA0-14-627 (Washington, D.C.: July 29, 2014). 

Page 13 
54 

obtaining complete data. 24 (See table 2 below for our recommendation 

and actions CMS has taken.) For example, in July 2014, we reported that 

in one state, a $220 million payment increase for nursing facilities 

resulted in an estimated $110 million increase in federal matching funds 

to the state, and a net payment increase to the facilities of $105 million." 

(See fig. 5.) 

Figure 5: Example of How One State's Use of Non..State Sources to Fund Medicaid 

Payments to Nursing Facilities Shifted Medicaid Costs to the Federal Government 

in State Fiscal Year 2015 

Nursingfac:Hities 

Nursing facUlties had 

$105 million net payment increase ($220 million 

payment increase 

minus $115 million paid 

ln provider taxes) 

Source GAO ! GA0-18-598T 

State Medicaid :tgency 

State contributed 

$5 million less In state 

general funds to the non· 

federal share of Medicaid 

nursing facility payments• 

Federal 

government 

Federal government 

contributed an estimated 

$110 million more towards 

the federal share of 

Medicaid nursing fac:ihty 

payments 

Criteria for economical and efficient payments. Our prior work has 

demonstrated that CMS lacks the criteria, data, and review processes to 

ensure that one type of supplemental payments-non-DSH supplemental 

payments-are economical and efficienl. 26 For example, in April2015, we 

law requires that no less than 40 percent of the state's share of Medicaid 

payments be state funds-which can include state general funds, health care provider 

taxes imposed by the state, and intra-agency funds from non-Medicaid state agenciesbut up to 60 percent may be financed by local governments and local government 

providers. We have reported that, absent complete and accurate data, CMS cannot 

ensure that states' use of local funding sources does not exceed the 60 percent. See 

GA0-14-627. 

25See GA0-14-627. 

26Non-DSH supplemental payments that states may, but are not required to, make to 

hospitals and other providers that, for example, serve high-cost Medicaid beneficiaries. 

Page 14 GA0-18-598T 
55 

identified public hospitals in one state that received such supplemental 

and regular Medicaid payments that, when combined, were hundreds of 

millions in excess of the hospitals' total Medicaid costs and tens of 

millions in excess of their total operating costs-unbeknownst to CMS. 27 

Accordingly, we concluded that CMS's criteria and review processes did 

not ensure that it can identify excessive payments and determine if 

supplemental payments are economical and efficient. (See table 2 below 

for our recommendations and actions CMS has taken.) 

Written guidance on the distribution of payments. According to CMS 

policy, Medicaid payments, including supplemental payments, should be 

linked to the provision of Medicaid services and not contingent on the 

provision of local funds. However, in February 2016 we reported that 

CMS did not have written guidance that clarifies this policy. In February 

2016, we found examples of hospitals with large uncompensated costs 

associated with serving the low-income and Medicaid population that 

received relatively little in supplemental payments, while other hospitals 

with relatively low uncompensated care costs-but that were able to 

contribute a large amount of funds for the state's Medicaid sharereceived large supplemental payments relative to those costs, raising 

questions as to whether CMS policies are being followed. 28 (See table 2 

for our recommendation and actions CMS has taken.) 

27See GA0-15-322. 

28See GA0-16-108. 

Page 15 GA0·1B·598T 
56 

Table 2: Examples of GAO Recommendations to Address Medicaid Program Risks Associated with Supplemental Payments 

Program risks 

Complete and accurate 

reporting 

Criteria for economical and 

efficient payments 

Written guidance on the 

distribution of payments 

Source: GAO) GA0-18--59ST 

GAO recommendations 

One recommendation aimed at the Centers 

for Medicare & Medicaid Services (CMS) 

taking steps to ensure states report accurate 

and complete information on aU sources of 

funds they use to finance their share of 

Medicaid spending. a 

Two recommendations called for CMS to (1) 

develop a policy that establishes criteria for 

defining when payments made to individual 

providers are economical and efficient, and 

(2) subsequently develop a process for 

identifying and reviewing payments to 

individual providers in order to determine 

whether they meet the criteria.b 

Recommendation status 

CMS did not concur with GAO's recommendation, 

although the agency stated that it will examine efforts to 

improve data collection for oversight. 

CMS told us in April2018 that it is developing a 

proposed rule on supplemental payment financing and 

oversight that may address these recommendations, 

although it does not have a time frame for its release. 

One recommendation aimed at CMS issuing CMS told us in April2018 that it is developing a 

written guidance for states clarifying its proposed rule on supplemental payment financing and 

policy of the distribution of supplemental oversight that may address this recommendation, 

payments.c although it does not have a time frame for its release. 

asee GAO, Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers 

and Local Governments Warrants Improved CMS Data Coflection, [Reissued on March 13, 2015], 

GA0-14-627 (Washington, D.C.: July 29, 2014). 

~>see GAO, Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and 

Unclear Policy, GA0-15-322 (Washington, D.C.; April1(1, 2015). 

cSee GAO, Medicaid: Federal Guidance Needed to Address Concerns About Oislribuh'on of 

Supplemental Payments, GA0-16-108 (Washington, D.C.: Feb. 5, 2016) 

Recognizing that Congress could help address some of the program risks 

associated with supplemental payments, in November 2012, we 

suggested that Congress consider requiring CMS to 

improve state reporting of supplemental payments, including requiring 

annual reporting of facility-specific payment amounts; 

clarify permissible methods for calculating these supplemental 

payments; and 

implement annual independent certified audits to verify state 

compliance with methods for calculating supplemental payments. 29 

29See GAO, Medicaid: More Transparency of and Accountability for Supplemental 

Payments are Needed, GA0-13-48 (Washington, D.C.: Nov. 26, 2012). 

Page 16 GA0·18-598T 
57 

Absent Better Oversight, 

Demonstrations May 

Increase Federal Fiscal 

Liability 

Subsequent to our work highlighting the need for complete and accurate 

reporting, in January 2017 a bill was introduced in the House of 

Representatives that, if enacted, would require annual state reporting of 

non-DSH supplemental payments made to individual facilities, require 

CMS to issue guidance to states that identifies permissible methods for 

calculating non-DSH supplemental payments to providers, and establish 

requirements for such annual independent audits. 30 Another bill was 

introduced in October 2017 that would require states to submit annual 

reports that identify the sources and amount of funds used to finance the 

state share of Medicaid payments. 31 As of May 2018, no action had been 

taken on either proposed bill. 

Demonstration programs, comprising about one-third of total Medicaid 

expenditures in fiscal year 2015, can be a powerful tool for states and 

CMS to test new approaches to providing coverage and delivering 

services that could reduce costs and improve outcomes. However, our 

prior work has identified several concerns related to demonstrations, 

including the need for ensuring that (1) demonstrations meet the policy 

requirements of budget neutrality-that is, they must not increase federal 

costs--and (2) evaluations are used to determine whether 

demonstrations are having their intended effects. 32 

Budget neutrality of Medicaid demonstrations. Demonstration 

spending limits, by HHS policy, should not exceed spending that would 

have occurred in the absence of a demonstration. In multiple reports 

examining more than a dozen demonstrations between 2002 and 2017, 

we have identified a number of questionable methods and assumptions 

that HHS has permitted states to use when estimating costs. We found 

that federal spending on Medicaid demonstrations could be reduced by 

billions of dollars if HHS were required to improve the process for 

Improving Oversight and Accountability in Medicaid Non-DSH Supplemental 

Payments Act was introduced on January 13, 2017 and referred to the House Committee 

on Energy and Commerce. See H.R. 541, 115'h Gong. § 2 (2017). 

31The Medicaid Requiring Expenditures for Public Objectives to be Reflective of Total 

Spending Act (Medicaid REPORTS Act) was introduced on October 12, 2017 and referred 

to in the House Energy and Commerce Committee Subcommittee on Health. See H.R. 

4054, 115• Gong.§ 2 (2017) 

32See, for example, GAO, Medicaid Demonstrations: Evaluations Yielded Limited Results, 

Underscoring Need for Changes to Federal Policies and Procedures, GA0-1 8-220 

(Washington, D.C.: Jan 19, 2018); and Medicaid Demonstrations: Federal Action Needed 

to Improve Oversight of Spending, GA0-17-312 (Washington, D.C.: ApMI3, 2017). 

Page 17 GA0-1 B-59BT 
58 

reviewing, approving, and making transparent the basis for spending 

limits approved for Medicaid demonstrations. 33 The following are some 

examples of what we have previously found: 

In August 2014, we reported that HHS had approved a spending limit 

for Arkansas's demonstration-to test whether providing premium 

assistance to purchase private coverage through the health insurance 

exchange would improve access for newly eligible Medicaid 

beneficiaries-that was based, in part, on hypothetical, not actual, 

costs. Specifically, the spending limit was based on significantly 

higher payment amounts the state assumed it would have to make to 

providers if it expanded coverage under the traditional Medicaid 

program, and HHS did not request any data to support the state's 

assumptions. We estimated that by allowing the state to use 

hypothetical costs, HHS approved a demonstration spending limit that 

was over $775 million more than what it would have been if the limit 

was based on the slate's actual payment rates for services under the 

traditional Medicaid program. 34 

We also reported in August 2014 that HHS officials told us it granted 

Arkansas and 11 other states additional flexibility in their 

demonstrations in order to increase spending limits if costs proved 

higher than expected. 35 We concluded that granting this flexibility to 

the states to adjust the spending limit increased the fiscal risk to the 

federal government. 

More recently, in April 2017, we reported that two states used unspent 

federal funds from their previous demonstrations to expand the scope 

of subsequent demonstrations by $8 billion and $600 million, 

respectively. We concluded that inflating the spending limits in this 

for example, GAOH 17-312 and GAO, Medicaid Demonstrations_· HHS's Approval 

Process for Arkansas's Medicaid Expansion Waiver Raises Cost Concerns, GA0-14-689R 

(Washington, D.C.: Aug. 8, 2014); Medicaid Demonstration Waivem: Approval Process 

Raises Cost Concerns and Lacks Transparency, GA0-13-384 (Washington, D.C.: June 

25, 2013); Medicaid Demonstration Waivem: Recent HHS Approvals Continue to Raise 

Cast and Oversight Concerns, GA0-08-87 (Washington, D.C.: Jan. 31, 2008); and 

Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver Projects Raise 

Concerns, GA0-02-817 (Washington, D.C.: July 12, 2002). 

34See GA0-14-689R. 

351n September 2014, the Chairman of the House Committee on Energy & Commerce and 

the Ranking Member of the Senate Committee on Finance sent a Jetter to CMS asking, 

among other things, how the agency planned to ensure that spending for those newly 

eligible under Arkansas's demonstration would not cost the federal government more than 

it v.tOuld have cost under traditional Medicaid, 

Page 18 GA0-18-596T 
59 

way inappropriately increased the federal government's fiscal liability 

for Medicaid." 

We have previously made recommendations to improve oversight of 

spending on demonstrations, and HHS recently took action that partially 

responds to one of these recommendations. (See table 3 for examples of 

the recommendations and actions HHS has taken.) Specifically, under a 

policy implemented in 2016, HHS restricted the amount of unspent funds 

states can accrue for each year of a demonstration, and has also reduced 

the amount of unspent funds that states can carry forward to new 

demonstrations. For 10 demonstrations it has recently approved, HHS 

estimated that the new policy has reduced total demonstration spending 

limits by $109 billion for 2016 through 2018, the federal share of which is 

$62.9 billion. These limits reduce the effect, but do not specifically 

address all, of the questionable methods and assumptions that we have 

identified regarding how HHS sets demonstration spending limits. 

Table 3: Examples of GAO Recommendations to Address Medicaid Program Risks Associated with Spending on Medicaid 

Demonstrations 

Program risks 

Methods for determining 

budget neutrality 

Lack of criteria for 

determining spending limits 

So"rce GAOjGAD-18-598T 

GAO recommendations 

One recommendation that the 

Department of Health and Human 

Services (HHS) better ensure that valid 

methods are used to demonstrate 

budget neutrality. 11 

One recommendation that HHS update 

its written budget neutrality policy to 

reflect the actual criteria and processes 

used to develop and approve 

demonstration spending limits_b 

Recommendation status 

HHS has taken some steps in recent years to improve 

allowable methods for ensuring budget neutrality, but still 

needs written guidance on methodologies for demonstrating 

budget neutrality_ 

HHS announced and began implementing policy changes in 

2016 that address some, but not all of our concerns, which it 

formalized in 2017. The agency expects to release additional 

guidance later in 2018. Once HHS provides additional written 

guidance on its criteria and processes, we will be in a 

position to consider closing this recommendation. 

asee GAO, Medicaid and SCHfP: Recent HHS Approvals of Demonstration Waiver Projects RaJse 

Concerns. GA0-02·817 (Washington, D.C.: July 12, 2002). 

0

See GAO, Medicaid Demonstration Waivers: Approval Process Raises Cost Concerns and Lacks 

Transparency, GA0-13-384 (Washington, D.C.: June 25, 2013) 

GA0-17-312. 

Page 19 GA0-18·!598T 
60 

Evaluation of Medicaid demonstrations. In a January 2018 report, we 

questioned the usefulness of both state-led and federal evaluations of 

section 1115 demonstrations, particularly with regard to how these 

evaluation results may inform policy decisions. 37 

State-led evaluations. We identified significant limitations among 

selected state-led demonstration evaluations, including gaps in 

reported evaluation results for important parts of the demonstrations. 

(See table 4.) These gaps resulted, in part, from CMS requiring final, 

comprehensive evaluation reports after the expiration of the 

demonstrations rather than at the end of each 3- to 5-year 

demonstration cycle. In October 2017, CMS officials stated that the 

agency planned to require final reports at the end of each 

demonstration cycle for all demonstrations, although it had not 

established written procedures for implementing this new policy. We 

concluded in January 2018 that without written procedures for 

implementing such requirements, gaps in oversight could continue. 38 

Table 4: Examples of Gaps in States' Evaluations of Medicaid Section 1115 Demonstrations GAO Identified 

State 

Arizona 

Arkansas 

Massachusetts 

Source GAO I GA0-18-591'rT 

Example of gaps in evaluations 

The state was required to evaluate whether providing !ong~term services and supports under a managed care 

delivery model improved access and quality of care. The evaluation report lacked information on important 

measures of access and quality. 

The state was required to evaluate the effects of using Medicaid funds to purchase private insurance for more 

than 200,000 beneficiaries. The evaluation did not address a key hypothesis that using private insurance 

would improve continuity of coverage for these beneficiaries, who were expected to have frequent changes in 

income that could lead to coverage gaps. 

The state was required to evaluate the effectiveness of its approach of providing up to $690 million in incentive 

payments to seven hospitals to improve quality of care and reduce per capita costs. Evaluation reports 

submitted after 5 years provided no condusions on the impact of the payments in these areas. 

Federal evaluations. Evaluations of federal demonstrations led by 

CMS have also been limited due to data challenges and a lack of 

transparent reporting. For example, delays obtaining data directly 

from states, among other things, led CMS to considerably reduce the 

scope of a large, multi-state evaluation, which was initiated in 2014 to 

37 See GA0-18-220 

36CMS also planned to allow states to conduct less rigorous evaluations for certain types 

of demonstrations, but had not established criteria defining under what conditions these 

limited evaluations would be allowed, when we issued our January 2018 report. 

Page 20 GA0·18-598T 
61 

Fundamental Actions 

Needed to Strengthen 

Oversight and 

Manage Program 

Risks 

More Complete, Timely, 

Reliable Data for 

Oversight 

examine the impact of state demonstrations in four policy areas 

deemed to be federal priorities. 39 In our January 2018 report, we 

found that although CMS had made progress in obtaining needed 

data, CMS had no policy for making the results public. By not making 

these results public in a timely manner, we concluded that CMS was 

missing an opportunity to inform important federal and state policy 

discussions. 

In light of our concerns about state-led and federal demonstration 

evaluations, in January 2018, we recommended that CMS (1) establish 

wrnten procedures for requiring final evaluation reports at the end of each 

demonstration cycle, (2) issue crijeria for when it will allow limited 

evaluations of demonstrations, and (3) establish a policy for publicly 

releasing findings from federal evaluations of demonstrations. HHS 

concurred with these recommendations. 40 

Across our body of work, we have made 83 recommendations to CMS 

and HHS and suggested 4 matters for congressional consideration to 

address a variety of concerns about the Medicaid program. The agencies 

generally agreed with our recommendations and have implemented 25 of 

these recommendations to date, and CMS still needs to take fundamental 

actions in three areas-having more timely, complete, and reliable data; 

conducting fraud risk assessments; and strengthening federal-state 

collaboration-to strengthen Medicaid oversight and better manage 

program risks. 

An overarching challenge for CMS oversight of the Medicaid program is 

the lack of accurate, complete, and timely data. Our work has 

demonstrated how insufficient data have affected CMS's ability to ensure 

proper payments, assess beneficiaries' access to services, and oversee 

states' financing strategies. 

policy areas are (1) delivery system reform incentive payment programs, which 

provide incentive payments to providers that engage in various improvement projects that 

align with state delivery system reform objectives; (2) premium assistance to purchase 

insurance coverage in the exchange under PPACA; (3} beneficiary engagement policies, 

such as requiring monthly contributions; and (4) use of managed care to deliver Medicaid 

long-term supports and services. 

40See GA0-18-220. 

Page 21 GAD-18-598T 
62 

As part of its efforts to address longstanding data concerns, CMS has 

taken some steps toward developing a reliable national repository for 

Medicaid data, most notably the Transformed Medicaid Statistical 

Information System (T-MSIS). Through T-MSIS, CMS will collect detailed 

information on Medicaid beneficiaries-such as their citizenship, 

immigration, and disability status-as well as any expanded diagnosis 

and procedure codes associated with their treatments. States are to 

report data more frequently-and in a timelier manner-than they have 

previously, and T-MSIS includes approximately 2,800 automated quality 

checks 41 The T-MSIS initiative has the potential to improve CMS's ability 

to identify improper payments, help ensure beneficiaries' access to 

services, and improve program transparency, among other benefits. 

As we reported in December 2017, implementing the T-MSIS initiative 

has been-and will continue to be--a multi-year effort. CMS has worked 

closely with states and has reached a point where nearly all states are 

reporting T-MSIS data. While recognizing the progress made, we noted 

that more work needs to be done before CMS or states can use these 

data for program oversight: 

All states need to report complete T-MSIS data. For our December 

2017 report, we reviewed a sample of six states and found that none 

were reporting complete data. 42 

T-MSIS data should be formatted in a manner that allows for state 

data to be compared nationally. In December 2017, we reported that 

state officials had expressed concerns that states did not convert their 

data to the T-MSIS format in the same ways, which could limit crossstate comparisons." 

In our December 2017 report, we recommended that CMS take steps to 

expedite the use of T-MSIS data, including efforts to (1) obtain complete 

information from all states; (2) identify and share information across 

41 1n particular, we found that the usefulness of CMS data on Medicaid is limited because 

of issues with completeness, accuracy, and timeliness. With regard to timeliness, we 

found that available data were reported up to 3 years late and were previously submitted 

on a quarterly basis. Under T~MSIS, data are to be reported monthly. 

42The six selected states were not reporting complete data as of August 2017. See GAO, 

Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight, 

GA0-18-70 (Washington, D.C.: Dec. 8, 2017). 

43See GA0-18-70. 

Page 22 GA0-18-598T 
63 

states to improve data comparability; and (3) implement mechanisms by 

which states can collaborate on an ongoing basis to improve the 

completeness, comparability, and utility ofT -MSIS data. We also 

recommended that CMS articulate a specific plan and associated time 

frames for using T-MSIS data foroversight. 44 The agency concurred with 

our recommendations, but has not yet implemented them. 

Our prior work has also noted areas where other data improvements are 

critical to program oversight: 

In July 2014, we found that there was a need for data on 

supplemental payments that states make to individual hospitals and 

other providers. In particular, our findings and related 

recommendation from July 2014 indicate that CMS should develop a 

data collection strategy that ensures that states report accurate and 

complete data on all sources of funds used to finance the states' 

share of Medicaid payments 45 

In January 2017, we found limitations in the data CMS collects to 

monitor the provision of, and spending on, personal care servicesservices that are at a high risk for improper payments, including 

fraud. 46 In particular, data on the provision of personal care services 

were often not timely, complete, or consistent. Data on states' 

spending on these services were also not accurate or complete. In 

January 2017, we recommended that CMS improve personal care 

services data by (1) establishing standard reporting guidance for key 

data, (2) ensuring linkage between data on the provision of services 

and reported expenditures, (3) ensuring state compliance with 

reporting requirements, and (4) developing plans to use data for 

oversight47 The agency concurred with two recommendations and 

concluded that absent a specific plan and time frames, CMS's ability to use these 

data to oversee the program, including ensuring proper payments, was limited. See 

GA0-18-70. 

45Better data on supplemental payments could also help ensure that states comply with 

federal requirements regarding how much local governments may contribute to the state's 

share of Medicaid payments. See GA0~14~627. 

46Personal care services are key components of long~term, in~home care, providing 

assistance with basic activities, such as bathing, dressing, and toileting, to millions of 

individuals seeking to retain their independence and to age in place. 

47See GAO, Medicaid: CMS Needs Better Data to Mom1or the Provision of and Spending 

on Personal Care Services, GA0~17~169 (Washington, D.C.: Jan. 12, 2017). 

Page 23 GA0-18-598T 
64 

More Complete Fraud 

Risk Assessment and 

Better Fraud Targeting 

neither agreed nor disagreed with the other two recommendations, 

and has not yet implemented any. 

In December 2017, we examined CMS's efforts managing fraud risks in 

Medicaid and compared it with our Fraud Risk Framework, which 

provides a comprehensive set of key components and leading practices 

that serve as a guide for agency managers to use when developing 

efforts to combat fraud in a strategic, risk-based way. 48 This framework 

describes leading practices in four components: commit, assess, design 

and implement, and evaluate and adapt (See fig. 6.) The Fraud 

Reduction and Data Analytics Act of 2015, enacted in June 2016, 

requires the Office of Management and Budget (OMB) to establish 

guidelines incorporating the leading practices from our Fraud Risk 

Framework for federal agencies to create controls to identify and assess 

fraud risks, and design and implement antifraud control activities•• In July 

2016, OMB published guidance, and among other things, this guidance 

affirms that managers should adhere to the leading practices identified in 

our Fraud Risk Framework. 50 

48See GAO, A Framework for Managing Fraud Risks in Federal Programs, 

GA0-15-593SP (Washington, D.C.: July 28, 2015). 

49Pub. L No. 114-186, § 3, 130 Stat 546 (2016). 

500ffice of Management and Budget, Management's Responsibility for Enterprise Risk 

Management and lntemal Control, Circular No. A-123 (Washington, D.C.: July 15, 2016). 

Page 24 GA0-18-598T 
65 

Figure 6: The Fraud Risk Management Framework 

Soorce· GAO I GA0-1e-S96T 

In a December 2017 report, we found that CMS's efforts partially aligned 

with our fraud risk framework. In particular, CMS had 

shown a commitment to combating fraud, in part, by establishing a 

dedicated entity-the Center for Program Integrity-to lead antifraud 

efforts, and offering and requiring antifraud training for stakeholder 

groups, such as providers, beneficiaries, and health-insurance plans; 

and 

taken steps to identify fraud risks, such as by designating specific 

provider types as high risk and developing associated control 

activities. 

Page 25 
66 

Greater Federal-State 

Collaboration to 

Strengthen Program 

Oversight 

However, CMS had not conducted a fraud risk assessment for Medicaid, 

and had not designed and implemented a risk-based antifraud strategy. 51 

A fraud risk assessment allows managers to fully consider fraud risks to 

their programs, analyze their likelihood and impact, and prioritize risks. 

Managers can then design and implement a strategy with specific control 

activities to mitigate these fraud risks, as well as design and implement 

an appropriate evaluation. We concluded that through these actions, 

CMS could better ensure that it is addressing the full portfolio of risks and 

strategically targeting the most-significant fraud risks facing Medicaid. As 

a result, in December 2017 we made three recommendations to CMS, 

two of which were to conduct fraud risk assessments, and create an 

antifraud strategy for Medicaid, including an approach for evaluation. 52 

HHS concurred with our recommendations, but has not yet implemented 

them. 

The federal government and the states play important roles in reducing 

improper payments and overseeing the Medicaid program, including 

overseeing spending on Medicaid supplemental payments and 

demonstrations. Our prior work shows that oversight of the Medicaid 

program could be further improved through leveraging and coordinating 

program integrity efforts with state agencies, state auditors, and other 

partners. 

Collaborative audits with state agencies. As we have previously 

reported, CMS has made changes to its Medicaid program integrity 

efforts, including a shift to collaborative audits-in which CMS's 

contractors and states work in partnership to audit Medicaid providers. In 

March 2017, we reported that collaborative audits had identified 

substantial potential overpayments to providers, but barriers-such as 

staff burden or problems communicating with contractors-had limited 

their use and prevented states from seeking audits or hindered the 

success of audits." We recommended that CMS address the barriers that 

limit state participation in collaborative audits, including their use in 

managed care delivery systems. CMS concurred with this 

51 See GAO, Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Efforts with 

the Fraud Risk Framework, GA0-18-88 (Washington, D.C.: Dec. 5, 2017) 

52See GA0-18-88. 

53See GAO, Medicaid Program Integrity: CMS Should Build on Current Oversight Efforts 

by Further Enhancing Collaboration with States, GA0-17-277 (Washington, D.C." March 

15, 2017). 

Pag9 26 
67 

recommendation and has taken steps to address them for a number of 

states, but has not yet made such changes accessible to a majority of 

states. 

State auditors and federal partners. We have found that state auditors 

and the HHS-OIG offer additional oversight and information that can help 

identify program risks. To that end, we routinely coordinate our audit 

efforts with the state auditors and the HHS-OIG. For example, we have 

convened and facilitated meetings between CMS and state audit officials 

to discuss specific areas of concern in Medicaid and future opportunities 

for collaboration. The state auditors and CMS officials commented on the 

benefits of such coordination, with the state auditors noting that they can 

assist CMS's state program integrity reviews by identifying program risks. 

State auditors also have conducted program integrity reviews to identify 

improper payments and deficiencies in the processes used to identify 

them. We believe that these reviews could provide insights into program 

weaknesses that CMS could learn from and potentially address 

nationally. Coordination also provides an opportunity for state auditors to 

learn methods for conducting program integrity reviews. The following are 

recent examples of reviews conducted: 

In 2017, the Oregon Secretary of State Audits Division found 

approximately 31,300 questionable payments to Coordinated Care 

Organizations (which receive capitated monthly payments for 

beneficiaries, similar to managed care organizations), based on a 

review of 15 months of data. In addition, the state auditor found that 

approximately 47,600 individuals enrolled in Oregon's Medicaid 

program were ineligible, equating to $88 million in avoidable 

expenditures. 54 

Massachusetts' Medicaid Audit Unit's recent annual report (covering 

the time period from March 15,2017, through March 14, 2018) 

reported that the state auditor identified more than $211 million in 

unallowable, questionable, duplicative, unauthorized, or potentially 

fraudulent billing in the program'' 

54State of Oregon, Secretary of State, Dennis Richardson and Oregon Audits Division 

Director, Kip Memmott, Oregon Health Authon<ty Should Improve Efforts to Detect and 

Prevent Improper Medicaid Payments Report 2017-25 (Salem, Ore.: November 2017). 

55Commonwealth of Massachusetts, Office of the State Auditor Suzanne M. Bump, Office 

of the State Auditor-Annual Report Medicaid Audit Unit, March 15, 2017-March 14, 2018 

(Boston, Mass.: March 15, 2018). 

Page 27 GA0-18-598T 
68 

A 2017 report released by the Louisiana Legislative Auditor's Office 

stated that the office reviewed Medicaid eligibility files and claims data 

covering January 2011 through October 2016, and found $1.4 million 

in questionable duplicate payments. 56 

In fiscal year 2017, the Mississippi Division of Medicaid reported that 

they recovered more than $8.6 million through various aud~s of 

medical claims paid to health care providers. The division also 

referred seven cases to the state's attorney general's office, in which 

the division had identified $3.1 million in improper billing 5 7 

At a May 2018 federal and state auditor coordination meeting that we 

participated in, the HHS-OIG provided examples of the financial impact of 

its work related to improper payments, including 

one review of managed care long term services and supports that 

identified $717 million potential federal savings, 

three reviews of managed care payments made after beneficiaries' 

death that identified $18.2 million in federal funds to be recovered, 

and 

two reviews of managed care payments made for beneficiaries with 

multiple Medicaid IDs that identified $4.3 million in federal funds to be 

recovered. 

Healthcare Fraud Prevention Partnership. The Healthcare Fraud 

Prevention Partnership (HFPP) is an important tool to help combat 

Medicaid fraud. In 2012, CMS created the HFPP to share information with 

public and private stakeholders, and to conduct studies related to health 

care fraud, waste, and abuse. According to CMS, as of October 2017, the 

HFPP included 89 public and private partners-including Medicare-and 

Medicaid-related federal and state agencies, law enforcement agencies, 

private health insurance plans, and antifraud and other health care 

organizations. The HFPP has conducted studies that pool and analyze 

multiple payers' claims data to identify providers with patterns of suspect 

billing across private health insurance plans. In August 2017, we reported 

that the partnership participants separately told us the HFPP's studies 

56Louisiana Legislative Auditor, State of Louisiana, Duplicate Payments for Medicaid 

Recipients with Multiple Identification Numbers (Baton Rouge, La .. March 29, 2017). 

57 Mississippi Division of Medicaid, Medicaid Recovers $8.6 Million in Fiscal Yeer 2017 

(Jackson, Miss.), accessed May 29, 2018, https://medicaid.ms.gov/medicaid-recovers-8-6-

mil!ion-in-fisca!-year-2017 /. 

Page 28 
69 

GAO Contacts and 

Staff 

Acknowledgments 

helped them identify and take action against potentially fraudulent 

providers and payment vulnerabilities of which they might not otherwise 

have been aware, and fostered both formal and informal infonmation 

sharing. 55 

Chairman Johnson, Ranking Member McCaskill, and Members of the 

Committee, this concludes my prepared statement. I would be pleased to 

respond to any questions you may have. 

If you or your staff members have any questions concerning this 

testimony, please contact Carolyn L. Yocom, who may be reached at 

202-512-7114 or yocomc@gao.gov. Contact points for our Office of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Other individuals who made key contributions to this 

testimony include Leslie V. Gordon (Assistant Director), Deirdre Gleeson 

Brown (Analyst-in-Charge), Muriel Brown, Helen Desaulniers, Melissa 

Duong, Julianne Flowers, Sandra George, Giselle C. Hicks, Drew Long, 

Perry Parsons, Russell Voth, and Jennifer Whitworth. 

GAO, Medicare: CMS Fraud Prevention System Uses Claims Analysis to Address 

Fraud, GA0-17-710 (Washington, D.C.: Aug. 30, 2017). 

Page 29 GA0·18·598T 
70 

Related GAO Reports 

Improper Payments: Actions and Guidance Could Help Address Issues 

and Inconsistencies in Estimation Processes. GA0-18-377. Washington, 

D.C.: May 31,2018. 

Medicaid: CMS Should Take Steps to Mitigate Program Risks in 

Managed Care. GA0-18-291. Washington, D.C.: May 7, 2018. 

Medicaid: Opportunities for Improving Program Oversight. GA0-18-444T. 

Washington, D.C.: April12, 2018. 

Medicaid Demonstrations: Evaluations Yielded Umited Results, 

Underscoring Need for Changes to Federal Policies and Procedures. 

GA0-18-220. Washington, D.C.: January 19,2018. 

Medicaid: Further Action Needed to Expedite Use of National Data for 

Program Oversight. GA0-18-70. Washington, D.C.: December 8, 2017. 

Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Efforts 

with the Fraud Risk Framework. GA0-18-88. Washington, D.C.: 

December 5, 2017. 

Improper Payments: Additional Guidance Could Provide More Consistent 

Compliance Determinations and Reporting by Inspectors General. 

GA0-17-484. Washington, D.C.: May 31, 2017. 

Medicaid Demonstrations: Federal Action Needed to Improve Oversight 

of Spending. GA0-17-312. Washington, D.C.: April3, 2017. 

Medicaid Program Integrity: CMS Should Build on Current Oversight 

Efforts by Further Enhancing Collaboration with States. GA0-17-277. 

Washington, D.C.: March 15,2017. 

High-Risk Series: Progress on Many High-Risk Areas, While Substantial 

Efforts Needed on Others. GA0-17-317. Washington, D.C.: February 15, 

2017. 

Medicaid: CMS Needs Better Data to Monitor the Provision of and 

Spending on Personal Care Services. GA0-17-169. Washington, D.C.: 

January 12, 2017. 

Medicaid: Program Oversight Hampered by Data Challenges, 

Underscoring Need for Continued Improvement. GA0-17 -173. 

Washington, D.C.: January 6, 2017. 

Page 30 GA0-18-598T 
71 

Related GAO Reports 

Improper Payments: Strategy and Additional Actions Needed to Help 

Ensure Agencies Use the Do Not Pay Working System as Intended. 

GA0-17-15. Washington, D.C.: October 14, 2016. 

Medicaid Program Integrity: Improved Guidance Needed to Better 

Support Efforts to Screen Managed Care Providers. GA0-16-402. 

Washington, D.C.: April22, 2016. 

Medicaid: Federal Guidance Needed to Address Concerns About 

Distn"bution of Supplemental Payments. GA0-16-108. Washington, D.C.: 

February 5, 2016. 

Medicaid: Additional Efforts Needed to Ensure that State Spending is 

Appropriately Matched with Federal Funds. GA0-16-53. Washington, 

D.C.: October 16,2015. 

Medicaid: Service Utilization Patterns for Beneficiaries in Managed Care. 

GA0-15-481. Washington, D.C.: May 29,2015. 

Medicaid: Additional Actions Needed to Help Improve Provider and 

Beneficiary Fraud Controls. GA0-15-313. Washington, D.C.: May 14, 

2015. 

Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited 

Data and Unclear Policy. GA0-15-322. Washington, D.C.: April10, 2015. 

Medicaid Demonstrations: HHS's Approval Process for Arkansas's 

Medicaid Expansion Waiver Raises Cost Concerns. GA0-14-689R. 

Washington, D.C.: August 8, 2014. 

Medicaid Financing: States' Increased Reliance on Funds from Health 

Care Providers and Local Governments Warrants Improved CMS Data 

Collection. GA0-14-627. Washington, D.C.: July 29, 2014. 

Medicaid Demonstration Waivers: Approval Process Raises Cost 

Concerns and Lacks Transparency. GA0-13-384. Washington, D.C.: 

June 25, 2013. 

Medicaid: More Transparency of and Accountability for Supplemental 

Payments Are Needed. GA0-13-48. Washington, D.C.: November 26, 

2012. 

Page 31 
72 

(102808) 

Related GAO Reports 

Medicaid Demonstration Waivers: Recent HHS Approvals Continue to 

Raise Cost and Oversight Concerns. GA0-08-87. Washington, D.C.: 

January 31, 2008. 

Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver 

Projects Raise Concerns. GA0-02-817. Washington, D.C.: July 12, 2002. 

Page 32 GA0-1 B-59BT 
73 

Testimony Before the United States Senate Committee on Homeland Security 

and Governmental Affairs 

June 27, 2018 

10:00 a.m. 

Dirksen Senate Office Building, Room 342 
74 

Testimony of: Brian P. Ritchie 

Assistant Inspector General for Audit Services 

U.S. Department of Health and Human Services, Office of Inspector General 

Good morning, Chairman Johnson, Ranking Member McCaskill, and distinguished Members of 

the committee. I am Brian P. Ritchie, Assistant Inspector General for Audit Services, U.S. 

Department of Health and Human Services. Thank you for your longstanding commitment to 

ensuring that the Medicaid program's 67 million beneficiaries are well served and the 

taxpayers' approximately $600 billion investment is well spent. I appreciate the opportunity to 

discuss the Office of Inspector General's work to combat fraud, waste, and abuse in Medicaid 

and what more can be done to secure the future of this important program. 

Introduction 

Medicaid spending represents one-sixth of the national health care economy, and Medicaid 

serves more people, including some of the Nation's most vulnerable individuals, than any 

other Federal health care program. Congress created the Office of Inspector General (OIG) 

for the U.S. Department of Health and Human Services (HHS or the Department) in 1976 as 

an independent body to oversee HHS programs. A key component of my office's mission is to 

promote integrity and efficiency in Medicaid and other Federal health care programs. While 

OIG does not directly operate the Medicaid program, through a nation-wide program of 

audits, evaluations, inspections, investigations, and enforcement actions, OIG has identified 

numerous vulnerabilities to program operations and offered specific recommendations to the 

Centers for Medicare & Medicaid Services (CMS) and its State partners for how to mitigate or 

eliminate those vulnerabilities and enhance the economy and efficiency of the Medicaid 

program going forward. 

OIG shares the committee's commitment to protecting Medicaid from fraud, waste, and abuse 

and has an extensive body of oversight work in this area. Persistent challenges include high 

improper payment rates, inadequate program integrity safeguards, and beneficiary health and 

safety concerns. In our extensive experience combating various types of vulnerabilities in all 

regions of the country, across all provider types, regarding all classes of items and services, one 

program administration shortcoming has emerged as a consistent impediment to effective 

oversight. That shortcoming is the lack of a robust national Medicaid dataset that is complete, 

accurate, and timely. A complete, accurate, and timely Medicaid dataset would greatly 

facilitate Medicaid program operations and promote economy and efficiency. 

Much program integrity work seeks to recover improper payments already made and reduce 

improper payments going forward. In FY 2017, projected improper Medicaid payments 

totaled about $59 billion. CMS must do more to ensure that Medicaid payments are made to 

the right provider, for the right amount, for the right service, on behalf of the right 

beneficiary. 

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Senate Committee on Homeland Security and Governmental Affairs 

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My testimony addresses how to protect Medicaid and its program beneficiaries through the 

lens of OIG's core program integrity principles of prevention, detection, and enforcement. 

Enhanced data functionality offers cross-cutting benefits that would enhance prevention, 

detection, and enforcement to correct problems and prevent future harm. 

Oversight of CMS's Efforts To Address Fraud and Overpayments in Medicaid 

Complete and reliable national Medicaid data are necessary for effective program oversight 

and management and to detect bad actors. 

The ability to detect problems in real time, or as close to real time as possible, enables effective 

oversight and can protect patients and help prevent improper payments. CMS, States, 

Medicaid managed care entities, and providers share the responsibility for detecting and 

addressing problems in the Medicaid program. The lack of national Medicaid data hampers the 

ability to quickly detect and address improper payments, fraud, waste, or quality concerns, 

both within States and across the Nation. 

CMS must ensure the completeness and reliability of data in the Transformed Medicaid 

Statistical Information System. 

Congress has recognized the value of enhanced Medicaid data, but more needs to be done to 

achieve the goal. Through the Balanced Budget Act of 1997, Congress mandated that States 

submit data to provide for a national Medicaid dataset. The Transformed Medicaid Statistical 

Information System (T-MSIS) is a joint effort by CMS and the States to address previously 

identified problems with national Medicaid claims and eligibility data. CMS's goals for T-MSIS 

are to improve the completeness, accuracy, and timeliness of Medicaid data. 

CMS began testing T-MSIS with 12 volunteer States in 2011. T-MSIS builds on and replaces the 

Medicaid Statistical Information System. CMS initially set a goal for all States to submit T-MSIS 

data by July 2014. CMS subsequently extended that deadline several times. After multiple 

missed implementation deadlines, technological problems, competing priorities, and other 

implementation delays, as of May 2018, 49 States (all States except Wisconsin) and the District 

of Columbia had begun reporting data to T-MSIS, but concerns remain about the quality and 

completeness of the data reported. 

OIG is concerned about whether the data will be actionable, as our work has identified 

numerous issues with the completeness and quality of the data. We found that States are not 

consistently submitting the same T-MSIS data elements, limiting the ability to make 

comparisons across all States. Despite CMS's attempts to further standardize meaning through 

a revised standard data dictionary, T-MSIS data elements may not mean the same thing across 

States. Different interpretations across States could result in data that is not comparable across 

different States. 

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Senate Committee on Homeland Security and Governmental Affairs 

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76 

Until CMS and States achieve full implementation, the Department must prioritize obtaining 

complete and reliable T-MSIS data. CMS must ensure that the same data elements are 

consistently reported and uniformly interpreted across States to best inform program 

management and oversight. To accomplish this, OIG recommends that CMS establish a 

deadline for when national T-MSIS data will be available for multi-State program integrity 

efforts. Without the prioritization motivated by a fixed deadline, some States and CMS may 

delay full implementation of T-MSIS to the detriment of Medicaid program integrity. 

CMS should ensure that States report encounter data for all managed care entities. 

Eighty percent of all Medicaid beneficiaries receive part or all of their services through 

managed care. For CMS and States to operate Medicaid effectively at both the Federal and 

State level, it is vital that T-MSIS include complete and accurate managed care encounter data. 

State Medicaid agencies contract with managed care entities to deliver health care services and 

perform certain administrative functions such as data collection and reporting. Most 

importantly, managed care entities are required to report medical claims data, known as 

encounter data, to States that then report the data to CMS via T-MSIS. Encounter data include 

detailed information about the services provided to Medicaid beneficiaries enrolled in managed 

care. Like fee-for-service Medicaid claims, encounter data are the primary record of services 

provided to Medicaid beneficiaries enrolled in managed care. The Society of Actuaries calls 

encounter data "the single most important analytical tool for health plans and health programs. 

Without accurate and timely data, it is not possible to analyze costs, utilization or trends; 

evaluate benefits; or determine the quality of services being provided." 

OIG found that States' Medicaid managed care encounter data were incomplete. Reasons that 

States cited for their failure to report complete information included the inability to collect 

encounter data from some managed care entities and limitations in the State's data systems. 

CMS has made some progress in addressing this problem, including regulatory requirements, 

guidance, and an ongoing data quality monitoring review of submissions of encounter data 

through T-MSIS. However, the Department must do more to ensure that the data necessary to 

support program integrity in Medicaid managed care are complete, accurate, and timely. Thus, 

OIG continues to recommend that CMS ensure that States report encounter data for all 

managed care entities. 

The lack of quality national Medicaid data hampers enforcement efforts. 

States and the Federal Government need a high-quality Medicaid dataset to effectively 

administer the Medicaid program. National data can be used to identify fraud schemes and 

other vulnerabilities that cross State lines. Even localized schemes are more easily concealed 

absent national data. Aberrant utilization or spending patterns may not appear problematic 

until compared against another State's experience or national averages. Identifying such 

schemes in one State can alert other States to patterns of fraudulent or abusive practices that 

3 

Senate Committee on Homeland Security and Governmental Affairs 

June 27, 2018 
77 

may be occurring in their jurisdiction. This information can generate referrals to State law 

enforcement agencies like the State Medicaid Fraud Control Units or joint investigations across 

State lines. Complete and reliable data are critical to identifying improper payments and to 

enable Federal and State enforcement efforts to keep fraudulent and harmful providers out of 

Medicaid and hold bad actors accountable. National Medicaid data holds the promise of 

supporting and amplifying enforcement efforts. We have seen this potential for data to 

strengthen the effectiveness of enforcement efforts. For example, in July 2017, OIG and its law 

enforcement partners conducted the largest ever National Health Care Fraud Takedown. 

Sophisticated data analytics played an indispensable role in enabling the success of this 

takedown. The end result-charges against more than 400 defendants across 41 Federal 

districts for their alleged participation in health care fraud schemes involving about $1.3 billion 

in false billings-protected the programs and sent a strong signal that theft of taxpayer funds 

will not be tolerated. Notably, 120 defendants, including doctors, were charged for illegally 

prescribing and distributing opioids and other dangerous drugs, and 295 providers were served 

with exclusion notices for conduct related to opioid diversion and abuse. A concurrent data 

brief underscored the magnitude of the opioid problem, identifying concerns about extreme 

use and questionable prescribing of opioids in Medicare Part D. That is the potential of dataleveraged by skilled auditors, investigators, and analysts-to protect the program, to protect 

beneficiaries, and to bring bad actors to justice. 

Unfortunately, we currently cannot replicate this type of analysis in Medicaid. Development of 

a national Medicaid dataset would promote economy and efficiency in Medicaid by facilitating 

timely detection of and rapid response to improper payments and fraud. Quality national 

Medicaid data provide visibility into payments and offer the transparency necessary to 

determine whether Medicaid is paying the right amount, to the right provider, for the right 

service, on behalf of the right beneficiary. OIG can harness the power of accurate, timely, and 

complete data not only to support enforcement efforts, but also to identify vulnerabilities to 

avoid, and best practices to replicate with the ultimate goal of promoting value and improving 

quality of care. While CMS and States have made important strides to improve Medicaid data, 

more can be done to ensure T-MSIS achieves its full potential. Ultimately, T-MSIS will be only 

as useful as the data it receives. This is why CMS must ensure the completeness and reliability 

of T-MSIS data and improve provider enrollment data to prevent unscrupulous providers from 

enrolling in Medicaid and gaining access to Medicaid funds and beneficiaries. Such data are 

essential to the efficiency, effectiveness, and integrity of Medicaid. Savings achieved through 

improved program integrity and reduced improper payments could fund improved services for 

beneficiaries. 

Leveraging Tools To Prevent Fraud 

Although OIG has extensive experience conducting investigations and enforcement actions to 

recoup improper payments and exclude fraudulent providers, the first pillar of our program 

integrity strategy is prevention. Keeping bad actors and ineligible beneficiaries out of the 

program on the front end prevents improper payments. Complete and reliable data can help 

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Senate Committee on Homeland Security and Governmental Affairs 

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78 

States achieve this front-end integrity. By knowing with whom they are doing business, States 

can enroll trusted providers and avoid paying, or having their beneficiaries endure subpar 

services from, providers who do not deserve such trust. 

States have not fully enacted enhanced provider screening. 

To ensure that Medicaid pays the right provider, the program must be able to identify the 

providers with whom it does business, and keep bad actors out of the program. Preventing bad 

actors from entering the Medicaid program not only reduces improper payments, but also 

protects patients from harm. 

States must screen providers commensurate with the potential risk for fraud, waste, and abuse 

that they pose to Medicaid, with high-risk providers requiring more intense scrutiny. However, 

States often fail to effectively screen high-risk providers, including key safeguards like 

conducting fingerprint-based criminal background checks and site visits. Previous OIG work 

found that many States had yet to implement fingerprint-based criminal background checks 

and site visits. OIG made recommendations to CMS to assist States with implementing these 

activities. CMS concurred with OIG's recommendations and has provided assistance to States. 

However, CMS has extended the deadline for implementation of fingerprint-based criminal 

background checks, indicating that States have not yet resolved the vulnerability inadequate 

background check procedures pose for provider enrollment. OIG has ongoing work to provide a 

status update on implementation of fingerprint-based criminal background checks. 

CMS mu'st ensure that States timely and fully implement these critical safeguards lest bad 

actors defraud Medicaid of millions of dollars and endanger beneficiaries. For example, in 

Virginia two individuals conspired to defraud a special caregiver program covered under 

Medicaid by submitting timesheets for payment for services that were never rendered. One of 

the conspirators was actually incarcerated on the days when he falsely claimed to have 

provided Medicaid services. Better compliance with criminal background check requirements 

can help prevent similar fraud schemes. 

In another example, in North Carolina a mental health facility operator submitted fraudulent 

Medicaid claims for services for beneficiaries with developmental disabilities. The operator 

submitted at least $2.5 million in fraudulent claims using stolen beneficiary information from a 

defunct company that he previously co-owned, and he received more than $2 million in 

reimbursements from Medicaid. State site visits could have revealed that the beneficiaries 

never actually received services. 

These cases exemplify why OIG recommends that CMS improve provider screening by working 

with States to implement fingerprint-based criminal background checks and site visits for highrisk providers. 

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Senate Committee on Homeland Security and Governmental Affairs 

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79 

For provider screening to be truly effective, States need timely, complete, and accurate data to 

identify the providers seeking access to Medicaid monies and patients. OIG has issued several 

recommendations to reduce duplicate provider enrollment data collection by sharing data 

across States or creating central repositories. Sharing data across States and with Medicare 

data systems would streamline the Medicaid enrollment process and reduce the chance for 

error within any one database. A joint enrollment system would provide a "one-stop shop" for 

State Medicaid officials and providers-reducing provider burden and duplication in reporting, 

verifying, and updating information. This could reduce data-collection duplication and burdens 

on States and providers and improve the completeness and accuracy ofthe data available to 

Medicaid. The President's FY 2019 Budget request includes a proposal to consolidate provider 

enrollment screening for Medicare, Medicaid, and the Children's Health Insurance Program. 

Reducing Improper and Wasteful Payments and Ensuring Compliance With Fiscal Controls 

Ensuring Compliance with Fiscal Controls 

Reducing improper payments to providers is a critical element in protecting the financial 

integrity of Medicaid. In FY 2017, HHS reported a Medicaid improper payment rate of 10.1 

percent. CMS has engaged with State Medicaid agencies to develop corrective action plans 

that address State-specific reasons for improper payments as a part of CMS's Payment Error 

Rate Measurement program, which measures Medicaid improper payments. CMS has 

facilitated national best practices calls to share ideas across States, provided State education 

through the Medicaid Integrity Institute, offered ongoing technical assistance, and provided 

additional guidance as needed to address the root causes of improper payments. CMS has 

indicated that it continues to provide guidance to States on their procedures for calculating and 

claiming costs under waiver programs for home and community-based services. 

DIG audits have identified substantial improper payments to providers across a variety of 

Medicaid services, including school-based services, nonemergency medical transportation, 

targeted case management services, and personal care services. DIG has also identified several 

States that made improper payments to Medicaid managed care entities. More specifically, we 

found that several States made monthly capita ted payments on behalf of deceased Medicaid 

beneficiaries, and we identified several States that made duplicate monthly capitated payments 

for the same beneficiary. CMS should continue to engage with State Medicaid agencies to 

develop corrective action plans and provide specific guidance to States regarding services and 

benefits most vulnerable to improper payments. 

OIG audits have identified billions of dollars in Medicaid overpayments that States should pay 

back. OIG has conducted extensive work looking at how much of this money CMS has 

collected. One OIG study found that CMS had collected about 80 percent of $1.2 billion in 

Medicaid overpayments identified in certain audits. OIG plans continued work in this area to 

ensure the program effectively reclaims overpayments. 

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Senate Committee on Homeland Security and Governmental Affairs 

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80 

At times, States may exploit the Federal-State partnership for Medicaid financing to improperly 

shift costs to the Federal Government. OIG has identified a number of State policies that may 

inflate the Federal share of Medicaid expenditures. States have misused provider taxes, 

intergovernmental transfers, supplemental payments, and inflated payment rates to increase 

the Federal Medicaid funding that States receive. Such practices may distort the statutorily 

defined Federal share of Medicaid expenditures and undermine the Federal-State partnership. 

CMS has tried to curtail inappropriate State financing mechanisms that inflate the Federal share 

of Medicaid costs. For example, CMS issued guidance to State Medicaid directors and State 

health officials to clarify the rules for health care provider taxes. 

But more needs to be done. CMS should closely review State Medicaid plans and plan 

amendments to identify any potentially inappropriate cost-shifting from States to the Federal 

Government. 

Oversight of Eligibility Determinations 

States are not always correctly determining Medicaid eligibility for beneficiaries. 

Correctly determining beneficiary eligibility is vital to the accuracy of Medicaid payments. To 

ensure that Medicaid makes payments on behalf of the right beneficiary, it is critical to 

determine whether the beneficiary receiving services is actually eligible for Medicaid. Recent 

OIG audits ofthree States estimated that more than $1.2 billion in Federal Medicaid payments 

has been made on behalf of potentially ineligible and ineligible beneficiaries. Lack of 

enrollment data systems functionality was a key contributor to these payments. 

OIG recently reviewed whether certain States were correctly determining eligibility, following 

changes made by the Affordable Care Act (ACA) to Medicaid eligibility rules. ACA allowed 

States to expand Medicaid eligibility for certain low-income adults and claim a higher Federal 

Medical Assistance Percentage for those who are newly eligible under the expansion. As a 

result of States incorrectly determining beneficiaries' eligibility, payments made on behalf of 

those beneficiaries could be incorrect, resulting in the improper shift of costs from the State to 

the Federal Government. OIG reviews of Medicaid eligibility determinations by California, New 

York, and Kentucky reveal that these States did not always comply with Federal and State 

requirements to verify applicants' income, citizenship, identity, and other eligibility criteria. In 

total, across these three States, OIG estimated that more than $580 million in Federal Medicaid 

payments were made on behalf of 183,579 potentially ineligible beneficiaries, and about $655 

million in payments made on behalf of 413,349 ineligible beneficiaries-over $1.2 billion in 

total for more than 596,000 beneficiaries. Both human and system errors contributed to these 

payments, with some enrollment data systems lacking the ability to (1) deny or terminate 

ineligible beneficiaries; (2) properly redetermine eligibility when a beneficiary aged out of an 

eligibility group; (3) maintain records, per Federal requirements, relating to eligibility 

determinations and verifications; and (4) retrieve and use information from other Government 

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Senate Committee on Homeland Security and Governmental Affairs 

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81 

databases, such as those managed by the Social Security Administration and Department of 

Homeland Security. 

To ensure compliance with Federal and State requirements for determining Medicaid eligibility, 

we recommended that States ensure that enrollment data systems are able to verify eligibility 

criteria, develop and implement written policies and procedures to address vulnerabilities, and 

undertake redeterminations as appropriate. 

Medicaid is overpaying for prescription drugs due to underpaid rebates 

To help contain the costs of prescription drugs in Medicaid, manufacturers are generally 

required to pay rebates to the States for covered outpatient drugs under the Medicaid Drug 

Rebate Program. As part of the rebate agreements, manufacturers must report product and 

pricing information to CMS that is used to calculate the rebates owed. CMS and States share 

responsibility for ensuring that manufacturers pay all rebates to which the States and Federal 

Government are entitled. 

Ensuring that manufacturers report product and pricing information correctly is a challenge for 

HHS. Manufacturer misreporting can result in manufacturers' underpaying rebates, which 

inappropriately increases Federal and State Medicaid costs. We found that from 2012 to 2016, 

Medicaid may have lost $1.3 billion in base and inflation-adjusted rebates for 10 potentially 

misclassified drugs. 

Overseeing States' collection of manufacturer rebates is also a challenge for HHS. OIG has 

identified instances in which States failed to bill for or collect Medicaid rebates for physicianadministered drugs, forgoing money owed to those States and the Federal Government. OIG 

has ongoing work assessing CMS's oversight of the Medicaid Drug Rebate Program to identify 

opportunities for improvement. 

Quality of Care 

Medicaid must know with whom it is doing business, not only to prevent improper payments to 

ineligible providers, but also to protect beneficiaries from low-quality care. OIG has raised 

concerns about the varying standards, and in some cases, minimal vetting, for Medicaid 

personal care services (PCS) providers, potentially exposing the Medicaid program to financial 

fraud and Medicaid beneficiaries to abuse and neglect. For example, an elderly woman in 

Idaho was found dangerously malnourished and dehydrated after her Medicaid-funded 

caregiver failed to provide her with water and food. Investigators found the woman living in 

filth, when Medicaid was paying a PCS attendant to care for her everyday needs. OIG continues 

to recommend that CMS improve States' ability to monitor billing and care quality by requiring 

States to either enroll PCS attendants as providers, or require them to register with their State 

Medicaid agencies, and assign each attendant a unique identifier. 

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Senate Committee on Homeland Security and Governmental Affairs 

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82 

Group Homes 

In response to reports of abuse and neglect of developmentally disabled residents in group 

homes, OIG launched a series of audits examining how States responded to critical incidents in 

group homes. OIG found that up to 99 percent of these critical incidents were not reported to 

the appropriate law enforcement or State agencies as required. To address these troubling 

findings, we worked with experts from HHS Administration for Community Living, HHS Office 

for Civil Rights, CMS, the Department of Justice, and State stakeholders to create a joint report 

entitled Ensuring Beneficiary Health and Safety in Graup Hames Through State Implementation 

af Comprehensive Compliance Oversight. This report contains workable, holistic solutions that 

States can use to protect the health and safety of their residents living in group 

homes. Building on State efforts to protect people with disabilities in group homes, the report 

features suggested Model Practices for States and offers suggestions on the Federal level for 

CMS. These Model Practices focus on four main aspects of handling critical incidents: 

investigation, reporting, correction, and transparency and accountability. The joint report 

contains detailed suggestions, including what actions States should take when group homes 

repeatedly fail to report incidents. 

Partnerships With MFCUs and Law Enforcement and Using Data To Protect Programs 

Medicaid Fraud Control Units (MFCUs), the State agencies authorized to fight fraud and prevent 

patient abuse and neglect, are key partners in battling fraud and abuse in Medicaid. In FY 2017, 

MFCUs reported more than 1,500 convictions, nearly 1,000 civil settlements and judgements, 

and more than $1.8 billion in criminal and civil recoveries. OIG partners with MFCUs in joint 

investigations to hold wrongdoers accountable, recover stolen taxpayer dollars, and send a 

strong message to deter would-be fraudsters. 

OIG provides oversight and administers the grants that fund the MFCUs. In this role, OIG 

continually strives to maximize the effectiveness of State MFCUs, thereby empowering States 

to better serve their populations. OIG actions to drive the effectiveness of MFCUs include 

enhancing OIG oversight using a data-driven risk assessment to target engagement, improving 

MFCUs' capabilities through training, increasing law enforcement collaboration between 

MCFUs and OIG, and working to help the MFCU program obtain resources consistent with an 

evolving Medicaid program. 

Although Medicaid has grown substantially since 2010, the fraud-fighting resources of the State 

MFCUs have not kept pace. The 50 existing MFCUs receive 75 percent of their funding on a 

matching basis from the Federal Government but often they encounter severe restrictions on 

their ability to maintain or expand staff. In addition to the challenges of securing Stateappropriated dollars for the MFCU match, some Units have difficulty in recruiting and retaining 

staff because of salary limitations. 

9 

Senate Committee on Homeland Security and Governmental Affairs 

June 27, 2018 
83 

Number of MFCU Staff and 

Medicaid Expenditures FY 2010·2017 

2010 2011 2012 2013 2014 201$ 2016 2017 

.. 

Between FY 2010 and 2017, while total MFCU staff resources increased 11.5 percent, total 

Medicaid expenditures for both Federal and State Governments increased 50 percent. In 2010, 

each MFCU employee had oversight responsibility for nearly $218 million in program 

expenditures, but by FY 2017 that ratio increased, and each MFCU employee was responsible 

for overseeing nearly $293 million. MFCUs are a wise investment, offering an estimated return 

of $6.52 for every $1 invested. 

Conclusion 

Effectively overseeing Medicaid remains a top management challenge for HHS. OIG has offered 

several suggestions to improve Medicaid program operations, including the following 

unimplemented recommendations: 

• CMS should ensure that national Medicaid data are complete, accurate, and timely. 

CMS should facilitate State Medicaid agencies' efforts ta screen new and existing 

providers by ensuring the accessibility and quality at Medicare's enrollment data. 

• CMS should pursue a means to compel manufacturers to correct inaccurate 

classification data reported to the Medicaid Drug Rebate Program. 

CMS should require States to either enroll PCS attendants as providers or require PCS 

attendants to register with their State Medicaid agencies and assign each attendant a 

unique identifier. 

10 

Senate Committee on Homeland Security and Governmental Affairs 

June 27, 2018 
84 

OIG plans to continue prioritizing Medicaid oversight to prevent and detect fraud, waste, and 

abuse, and take appropriate action when fraud, waste, or abuse occur. 

OIG has the capacity to leverage advanced data analytic techniques to detect potential 

vulnerabilities and fraud and better target our resources to those areas and individuals most in 

need of oversight. However, to date, this innovative way to enhance and strategically target 

our oversight efforts cannot be accomplished in Medicaid without better quality, national 

Medicaid data. This is the consistent cross-cutting impediment to effective prevention, 

detection, and enforcement within the Medicaid program. While neither CMS nor State 

Medicaid agencies presently command the data necessary to optimally support a 21st century 

Medicaid program, we believe this committee's continued oversight will help achieve this goal. 

Thank you for your ongoing leadership and for affording me the opportunity to testify on this 

important topic. 

11 

Senate Committee on Homeland Security and Governmental Affairs 

June 27, 2018 
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A Majority Staff Report of the 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

Senator Ron Johnson, Chairman 

June 20,2018 
91 

EXECUTIVE SUMMARY 

The U.S. health care financing system is broken and increasingly is dominated by the 

government. By transitioning to a third-party payment system, we have separated the consumer 

of health care products and services from the direct payment for them. Most consumers do not 

know what treatments costs, and except for the cost of insurance or copays, they really do not 

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have predictably soared. Since 1960, the share of all health care spending paid by government 

has more than doubled, from about one-fifth to just under half. The result: Overall health 

spending now consumes about 17 percent of the nation's gross domestic product. 

HEALTH SPENDING: % OF GDP 

Central to this unsustainable growth is Medicaid. Medicaid began in 1965 as essentially 

an afterthought, a program so negligible that President Lyndon Johnson did not even mention it 
92 

when it when he signed it into law alongside Medicare. 1 Envisioned as "a small program to 

cover poor people's medical bills,"2 Medicaid enrolled just four million people in its first year, at 

a per-enrollee cost of only $222. 

Today, Medicaid has grown to be the nation's largest health insurer, covering about 70 

million people, at a cost to taxpayers of$554 billion per year. 3 Per-enrollee costs are now 

$7,973-a 3,491 percent increase since 1966.4 This growth is especially dramatic when current 

Medicaid spending is compared to the $165 billion that Medicaid would have cost in 2015 if it 

had grown only at the rate of inflation and growth in population since 1990. 5 Federal 

government projections expect this gro\\1h to accelerate in the coming years, primarily due to the 

Affordable Care Act's (ACA) Medicaid expansion. 6 

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As Medicaid spending consumes even more of the federal budget, it is important that 

Medicaid dollars are spent properly-so that the funds flow only to those Americans in need. 

However, independent government watchdogs and ongoing oversight by the Committee on 

1 Lyndon B. Johnson, Remarks with President Truman at the Signing in Independence of the Medicare Bill (July 30, 

1965), available at http://www.presidency.ucsb.edulws/?pid=27123. 

'Kate Zemike, Abby Goodbough & Pam Belluck, In Health Bill's Defeat, Medicaid Comes of Age, N.Y. TIMES 

(Mar. 27, 20 17), available at https://www.n}1imes.coml20 17/03/27/health/medicaid-obamacare.html? _PO. 1 U.S. Dep't of Health & Human Servs., 2016 Actuarial Report on the Financial Outlook for Medicaid(20J6), 

available at https://www.medicaid.gov/medicaid/finance/downloadslmedicaid-actuarial-report·20 I 6.pdf. 4 Medicaid & CHIP Payment & Access Comm'n, Medicaid Enrollment and Total Spending Levels and Annual 

Growth, in MACStats: Medicaid & CHIP Data Book (Dec. 20 17), available at https://www.macpac.gov/wpcontent/uploads/20 15/11/EXHIBIT -I 0.-Medicaid-Enrollmcnt-and-Total-Spending-Levels-and-Annuai-Growth-FY s1966%E2%80%9320 16.pdf. 5 Chairman Johnson's statT calculated this number using Consumer Price Index (CPI-U) data and figures from 

Bureau of Labor Statistics and the U.S. Census Bureau. 6 Letter !Tom Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, to Seema Verma, Adm'r, 

Ctrs. for Medicare & Medicaid Servs. (Sept. 27, 20 17). 

2 
93 

Homeland Security and Governmental Affairs show that the Medicaid program is plagued by 

waste, fraud, and abuse: 

Medicaid overpayments to providers stand at $37 billion per year, a 157 percent 

increase since 2013. 7 

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The Department of Health and Human Services Office of Inspector General (HHS 

OIG) recently estimated that California spent more than $1 billion in federal 

Medicaid funds for 445,000 ineligible or potentially ineligible bcncficiaries8 

The HHS OIG also found that New York made federal Medicaid payments of $26.2 

million on behalf of more than 47,000 ineligible people. 9 

Medicaid fraud convictions by state Medicaid Fraud Control Units nationwide have 

increased 17 percent since 2013, while criminal recoveries nearly doubled in 2017 

compared to the year beforc. 10 At the end of2017, state Medicaid Fraud Control 

Units had nearly 20,000 open fraud investigations. 11 

7 U.S. Gov't Accountability Office, GA0-18-444T, Medicaid: Opportunities/or improving Program Oversight 

(Apr. 2018), available at https://www.gao.gov/assets/700/691209.pdf. 8 U.S. Dep't of Health & Human Scrvs. Off. of Inspector Gen., A-09-16-02023, California Made Medicaid 

Payments on Behalf qfNew/y Eligible Beneficiaries Who Did Not Meet Federal and State Requirements (Feb. 

20 18), available at https://oig.hhs.gov/oas/reports/region9/91602023.pdf. 9 U.S. Dep't of Health & Human Servs. Off. of Inspector Gen., A-02-15-01 015, New York Did Not Correctly 

Determine Medicaid Eligibility for Some Newly Enrolled Beneficiaries (Jan. 20 18), available at 

https:lloig.hhs.gov/oas/rcportslregion2/2150 1 0 15 .pdf. 10 U.S. Dep't of Health & Human Servs. Olf. of Inspector Gen., Medicaid Fraud Control Units Fiscal Year 2017 

Annual Report (March 20 18), https://oig.hhs.gov/oei/reports/oci-09-18-00 180.pdf. 

II Jd 

3 
94 

• The U.S. Government Accountability Office (GAO) has discovered Medicaid 

benefits for dead people and prisoners; hundreds of thousands of beneficiaries who 

provided apparently false social security numbers; 12 and an ACA data hub granting 

coverage to fictitious applicants. 13 

• Private insurers have made "spectacular profits" 14 from Medicaid expansion in 

California, with one insurer's margins increasing 578 percent in the expansion's first 

two years, from $71 million to $484 millioni 5 

• The Centers for Medicare & Medicaid Services (CMS) has vast authority granted by 

a 2005 law to police Medicaid fraud, 16 but it has largely failed to do so. GAO and 

other watchdogs have warned CMS for the past 15 years that Medicaid is uniquely 

vulnerable to fraud and overpayments. 

• CMS has not even attempted to recoup for federal taxpayers the more than one billion 

in potentially fraudulent Medicaid payments in California, New York and 

Kentucky, 17 and has not said whether it will go after the excessive payments to 

insurers in California. 

With the ACA's reimbursement formula giving states an incentive to enroll more 

beneficiaries to obtain more federal money, CMS has allowed certain states to game 

the system. California, for example, has received a share of Medicaid expansion 

dollars vastly disproportionate to other states, 18 even while California officials gave 

Medicaid money to ineligible people. 

Medicaid is a program to assist low-income Americans and others in need. This staff 

report is not meant to challenge the intentions of such assistance. But for American taxpayers to 

have confidence that Medicaid funds are only going to those truly in need, CMS must better 

police waste, fraud, and abuse in the Medicaid program. The depth of Medicaid's fiscal 

problems shows the need for continued congressional attention on health care reform to slow 

Medicaid's rate of growth and more equitably fund state Medicaid programs. 

12 U.S. Gov't Accountability Office, GA0-15-313, Medicaid: Additional Actions Needed to Help Improve Provider 

and Beneficimy Fraud Controls (May 2015), available at https:l/www.gao.gov/products/GA0-15-313. 13 U.S. Gov't Accountability Office, GA0-16-29, Patient Protection and Affordable Care Act: CMS Should Actio 

Strengthen Enrollment Controls and Manage Fraud Risk (Feb. 2016), available at 

https://www.gao.gov/assets/680/675767.pdf. 

14 Chad Terhune & Anna Gorman, Insurers make hill ions ojfA1edicaid in California during Obamacare expansion, 

L.A. Times, Nov. 5, 2017. 15 Medi-Cal Managed-Care Financial Results, 2012, KAISER HEALTH NEWS, available at 

https://kaiserhealthnews. files. wordpress.com/20 17/ll/medi-cal_financials3. pdf. 16 Deficit Reduction Act of2005, Pub. L. No. 109-171, 120 Stat. 4 (2006). 17 "Improper Payments in State-Administered Programs: Medicaid": Hearing before the Subcomm. on Gov 't 

Operations & the Subcomm. on Intergovernmental Affairs of the H. Comm. on Oversight & Gov 't Reform, 115h 

Con g. (20 18). 18 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, to Edmund Brown Jr., 

Governor of Cal. (Sept. 27, 20 17) (California "represents 34 percent of all Medicaid expansion spending, even 

though California represents only 12 percent of the total U.S. population" (citations omitted)). 

4 
95 

FINDINGS 

Senator Ron Johnson, Chairman of the Senate Committee on Homeland Security and 

Governmental Affairs, has been conducting oversight of Medicaid program integrity and 

escalating costs since February 2017. This oversight has included several letters to CMS and 

requests for information from eight states. To date, the Chairman's oversight has found: 

Congress substantially expanded CMS's oversight responsibilities in the Deficit 

Reduction Act of2005, 19 requiring CMS to root out Medicaid fraud, waste and abuse. 

Yet CMS has failed to live up to the requirements of this Jaw by conducting only 

irregular, highly flawed audits of Medicaid providers and failing to meet annual 

deadlines for program integrity reporting to Congress. 

• CMS has not taken basic steps to fight Medicaid fraud, including reviewing federal 

eligibility determinations for accuracy and even creating an antifraud strategy. Since 

2015, GAO has made II separate anti-fraud recommendations to CMS. CMS has 

implemented none. 20 

• HHS programs overall are riddled with fraud. New data show that HHS fraud totals 

nearly $6 billion, by far the highest of any federal agency and 68 percent of the total 

fraud reported across the government. 21 

Although there is no specific breakdown for Medicaid in HHS fraud numbers, 

evidence indicates that Medicaid fraud is rampant. 

o The Committee identified nearly 1,100 people convicted or charged 

nationwide since 2010 in fraud or related schemes targeting Medicaid to 

obtain prescription opioids. 22 

o GAO and other watchdogs have documented potential improper or fraudulent 

Medicaid payments totaling more than $1 billion in at least eight statesCalifornia, New York, Kentucky, Illinois, Arizona, Florida, Michigan, and 

New Jersey. 23 

• The ACA worsened the problem of Medicaid fraud and overpayments by giving 

states incentives to declare people newly eligible to receive I 00 percent federal 

reimbursement during the Medicaid expansion's first three years. 

19 Deficit Reduction Act of2005, Pub. L. No. 109-171, 120 Stat. 4 (2006). 20 Improper Payments in State-Administered Programs: Medicaid, supra note 17. 21 Resources, PAYMENTACCURACY.GOV, https:l/paymentaccuracy.gov/resources/. 22 Maj. StaffofS. Comm. on Homeland Sec. and Gov't Affairs, Drugs for Dollars: How Medicaid Helps Fuel the 

Opioid Epidemic (2018). 21 GA0-15-313, Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls, 

supra note 12. 

5 
96 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY ............................................................................................................ ! 

FINDINGS ...................................................................................................................................... 5 

TABLE OF CONTENTS ................................................................................................................ 6 

THE MEDICAID PROGRAM AND CMS'S ROLE IN IT.. ......................................................... 7 

CMS'S LAX OVERSIGHT OF MEDICAID PROGRAM INTEGRITY ..................................... 9 

Medicaid fi'aud ............................................................................................................................ 9 

Medicaid overpayments ............................................................................................................. 10 

Medicaid audits and eligibility .................................................................................................. 12 

CMS's LAX ATTENTION TO STATE MEDICAID PROGRAMS ........................................... 14 

Fraud in state Medicaid programs ............................................................................................ 14 

California: More than $1 billion in potentially fraudulent Medicaid payments ...................... 15 

Medicaid maximization schemes ............................................................................................... 17 

'fHECOMMITTEE'S OVERSIGHT OF CMS AND MEDICAID ............................................. 19 

Medicaid's escalating costs and enrollment figures ................................................................. 19 

Medicaid fi'aud and the opioid crisis ........................................................................................ 20 

Union dues skimming from Medicaidfimds .............................................................................. 20 

STEPS TOWARD REFORM ....................................................................................................... 22 

6 
97 

THE MEDICAID PROGRAM AND CMS'S ROLE IN IT 

Medicaid provides free or low-cost health coverage to low-income people, families and 

children, pregnant women, the elderly, and people with disabilities. 24 The program is run day-today by states and overseen by CMS/5 which is a component entity ofl·IIIS. 

Federal taxpayers contribute a specified percentage of Medicaid program expenditures to 

the states. 26 HHS calculates and annually publishes this federal contribution, known as the 

Federal Medical Assistance Percentage. 27 There is generally no cap on the amount that the 

f:::deral government contributes to Medicaid in a particular state. 28 

Much of Medicaid's recent growth is due to the ACA, which expanded Medicaid 

eligibility to include adults under 65 with incomes up to 133 percent of the federal poverty 

levc!. 29 CMS significantly understated its projections for per-enrollee spending on adults newly 

eligible for Medicaid under the ACA. 30 HHS now estimates that federal Medicaid 

expenditures-which were $299 billion in fiscal year 2014-will rise 96 percent to $588 billion 

by 2025 31 CMS recently acknowledged "the heightened potential for waste, fraud and abuse in 

states that chose to expand their Medicaid program under the [ACA]."32 

CMS has vast authority to fight this fraud and waste. The ACA provided additional antifraud tools, includin~ allowing "CMS to suspend payments to providers on the basis of a credible 

allegation of fraud." 3 The Improper Payments Information Act of2002 also directed CMS and 

other federal agencies to publicly report overpayments to Medicaid providers 34 CMS's broadest 

authorities came in the Deficit Reduction Act of 2005, which provided "a serious restoration of 

fiscal responsibility ... closing loopholes and preventing the unscrupulous gaming of the 

Medicaid systcm."35 The legislation expanded CMS's role and responsibilities to combat 

Medicaid waste, fraud and abuse by creating a Medicaid Integrity Program. 36 Among other 

provisions, the law required that CMS: 

24 Medicaid & CHIP Coverage, HEALTHCARE.GOV, https://www.healthcare.gov/medicaid-chip/getting-medicaidchipi, 

25 .Medicaid 101: Administration. MACPAC, https://www.macpac.gov/medicaid-1 0 1/administration/. 26 F;nancial Management, MED!CAID.GOV, https://www.mcdicaid.gov/medicaid/finance/. 27 Office of the Assistant Sec'y for Planning & Evaluation, Federal Afedical Assistance Percentages or Federal 

Financial Participation in State Assistance Expenditures, U.S. DEP'T OF HEALTH & HUMAN SFRVS. (Mar. I, 2015), 

https://aspe.hhs.gov/fedcral-medical-assistance-percentages-or-fedcral-financial-participation-state-assistanceexpenditures. 

28 See Alison Mitchell, CONG. RESEARCH SERV., R42865, Medicaid D1:sproportionate Share Hospital Payments, at 1 

(June 17, 2016), http://www.crs.gov/rcports/pdf/R42865. 29 Eligibility, MEDJCAID.GOV, https://www.medicaid.gov/affordab1e-care-act/eligibility/index.html. 30 Letter tram Sen. Ron Johnson, supra note 6. 

31 !d. 

32 Email !Tom Emily Felder, CMS, to S. Comm. on Homeland Sec. & Gov't Affairs maj. staff(May 18, 2018). 33 U.S. Gov't Accountability Office, GA0-12-288T, Medicaid Program Integrity: Expanded Federal Role Presenrs 

Challenges to and Opportunities for Assisting States (Dec. 20 II), available at 

https://www.gao.gov/assets/590/586719 .pdf. 34 Improper Payments Information Act of2002, Pub. L. No. 107-300, 116 Stat. 2350 (2002). 35 151 Cong. Rec. S12, 149-219 (daily ed. Nov. 2, 2005). 30 42 U.S.C.A. § 1396u·6. 

7 
98 

Review Medicaid providers "to determine whether fraud, waste, or abuse has 

occurred~'; 

Audit Medicaid claims to identifY "overpayments to individuals or entities receiving 

Federal funds"; 

• Hire I 00 new employees to focus solely on program integrity; 

Provide anti-fraud education and training 

Prepare anti-fraud plans every five years; and 

Report annually to Congress on the use of anti-Medicaid fraud funds 37 

37 Deficit Reduction Act of2005, Pub. L. No. !09-171, 120 Stat. 4 (2006). 

8 
99 

CMS'S LAX OVERSIGHT OF MEDICAID PROGRAM INTEGRITY 

Medicaid program integrity had been considered primarily a state responsibility during 

the program's first four decades38 In the early 2000s, as independent watchdogs shined a light 

on Medicaid waste, fraud, and abuse, federal policymakers insisted that CMS do more. By 

2005-four decades into Medicaid's existence-CMS had only eight full-time employees 

working to help states fight Medicaid fraud and abuse. That constituted about 0.2 percent of 

CMS's entire workforce, at a time when federal taxpayers spent more than $168 billion on 

Medicaid39 Each of CMS' s eight employees was responsible for monitoring $21 billion in 

fraud. 

In 2006, CMS established a Medicaid Integrity Group. Nearly a decade later, just after 

the ACA took effect, CMS subsumed that group under a broader Center for Program Integrity 

also focusing on Medicare-meaning that the Medicaid Integrity Group "no longer exists as a 

separate unit." 40 

The change highlights what government watchdogs have repeatedly found: that CMS's 

oversight of Medicaid program integrity-and its compliance with the 2005 law-has been 

spotty at best. Despite its vast authority to fight Medicaid waste and fraud, CMS struggles with 

its oversight of Medicaid program integrity. 

Medicaid fraud 

Medicaid fraud ranges from billing the government for services not performed to 

improperly billing for illicit prescriptions such as dangerous opioids. Although health care fraud 

is difficult to detect and often not prosecuted, 41 evidence indicates that fraud is pervasive in the 

Medicaid program and that CMS is failing to adequately police Medicaid fraud. 

• In 2015, GAO found "thousands of Medicaid beneficiaries and hundreds of providers 

involved in potential improper or fraudulent payments" in four states-Arizona, 

Florida, Michigan, and New Jersey. 42 

38 U.S. Gov't Accountability Office, GA0-12-627. National Medicaid Audit Program: CMS Should Improve 

Reporting and Focus on Audit Collaboration with States (June 2012), available at 

https://www.gao.gov/assets/600/59160 !.pdf. 39 U.S. Gov't Accountability Office, GA0-06-578T, Medicaid Integrity: Implementation of New Program Provides 

Opportunities for Federal Leadership to Combat Fraud, Waste, And Abuse (Mar. 2006), available at 

https://www.gao.gov/assets/1201113123.pdf. 

40 U.S. Gov't Accountability Office, GA0-15-207T, Medicaid Information Technology: CMS Supports Use of 

Program Integrity Systems but Should Require States to Determine Effectiveness (Jan. 2015), available at 

https:/ /www. gao. gov I assets/67 0166823 3 .pdf. 41 Paul Jesilow & Bryan Bwton, Detecting Healthcare Fraud and Abuse in the United States, OXFORD RESEARCH 

ENCYCLOPEDIAS: CRIMINOLOGY & CRIMINAL JlJSTICE, available at 

http://criminology.oxfordre.comiview/ I 0.1 093/acrefore/9780 190264079.001.000 1 /acrefore-9780 190264079-e-275; 

U.S. Gov't Accountability Office, GA0-16-216. Health Care Fraud: Information on Most Common Schemes and 

the Likely Effect of Smart Cards (Jan. 2016), available at https:iiwww.gao.gov/assctsi680/674 77l.pdf 42 GA0-15-313, Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls, 

-:iapra note 12. 

9 
100 

• The Committee also found evidence of Medicaid fraud in its examination of 

Medicaid's role in helping to fuel the opioid epidemic. 43 In January 2018, Chairman 

Johnson released a staff report highlighting nearly 300 criminal cases involving at 

least I ,072 defendants in which peo;le were convicted or charged with abusing 

Medicaid to obtain or sell opioids 4 The criminal schemes identified by the 

Committee ranged from large drug rings that employ beneficiaries as "runners" to fill 

oxycodone prescriptions to nurses who steal hydrocodone pills from patients45 The 

Committee held a hearing in conjunction with the report to hear from local law 

enforcement and a former state Medicaid official about how Medicaid fraud helps to 

fuel the opioid crisis. 46 

• In a series of undercover operations between 2014 and 2016, GAO submitted 

applications to the federal ACA marketplace with names of fictitious enrollees and 

with fake or no documentation47 In nearly every instance, the marketplace granted 

Medicaid coverage to the non-existent enrollees----<:omplete with premium tax 

credits-including in a number of stings that occurred three years after the ACA took 

effect. 48 The marketplace verified the fraudulent eligibility through a CMS-created 

"data hub." GAO warned in 2016 that the hub, which "plays a key role in the 

eligibility and enrollment process," was vulnerable to fraud. 49 

In April2018, GAO testified that CMS had failed to implement II separate GAO 

recommendation to fight Medicaid fraud, including providing regular fraudawareness training to employees and requiring new hires to undergo such training, 

conducting Medicaid fraud risk assessments, and creating and implementing "an antifraud strategy." 50 

Medicaid overpayments 

Federal law defines improper payments as those that should not have been made or were 

made in incorrect amounts. 51 Although improper payments include overpayments and 

underpayments, only 0.8 percent of the $36.7 billion in Medicaid improper payments in fiscal 

year 2017 were underpayments. 52 Although the exact percentage of overpayments that 

'"Drugs j(;r Dollars: How Medicaid Helps Fuel the Opioid Epidemic, supra note 22. 

44ld. 

"ld. 

46 "Unintended Consequences: l'vfedicaid and the Opioid Epidemic": Hearing before the S. Comm. on Homeland 

Sec. andGov'tAffairs. 115th Cong. (2018). 47 GA0-16-29, Patient Protection and Affordable Care Act: CMS Should Act to Strengthen Enrollment Controls and 

Manage Fraud Risk, supra note 13. 

'

8 Id 

49 !d. 50 Improper Payments in State-Administered Programs: lv!edicaid, supra note 17. 51 PAYMENTACCURACY.GOV, https://paymentaccuracy.gov/. 52 U.S. Dep't of Health & Human Servs., Agency Financial Report (20 17), available at 

https://www .hhs.gov/sites/default/files/fy-20 17-hhs-agency-financial-report.pd f. Because Medicaid improper 

payments are overwhelmingly overpayments, this report is using the term overpayments where appropriate. 

10 
101 

constitute fraud is unclear, there is no doubt that all overpayments waste federal tax dollars. 

Evidence suggests that CMS could do more to police Medicaid overpayments. 

Federal law required every federal agency to estimate improper payments and report 

the estimates annually to Congress beginning in FY 2004. 53 HHS, however, did not 

start reporting improper Medicaid payments until 2007. 

In 2008, the first full year in which IIHS disclosed improper Medicaid payments, they 

were already the highest of any federal program at $18.6 billion. 54 This figure 

prompted a stern warning from GAO, which linked improper payments to fraud and 

warned that CMS needed "a culture of accountability over improper payments" to 

"reduce fraud and address the wasteful spending that results from lapses in 

controls." 55 GAO added that the magnitude of Medicaid payment errors "indicates 

that CMS and the states face significant challenges to address the program's 

vulnerabilities. " 56 

• In 2015, GAO reported that while CMS had helped state Medicaid programs 

implement systems to detect overpayments, it had failed to require states to measure 

whether those systems worked. 57 With no requirement, most states did not 

implement metrics to measure success. 58 Around that time, Medicaid improper 

payments began rising, going from $14.4 billion in 2013 59-the year before 

Obamacare took effect-to $37 billion in 2017-a 157 percent increase. 60 During the 

same period, the Medicaid improper payment rate, the percentage of total federal 

Medicaid expenditures estimated to be improper, rose 74 percent 61 Medicaid alone 

now constitutes 26 percent of improper payments across the entire federal 

government. 62 

As recently as 2017, GAO warned in its most recent High Risk repmt that "CMS's 

improper payment rate estimates may be inaccuratc." 63 According to GAO, 13 years 

after Congress required CMS to better police Medicaid fraud, CMS must still "take 

53 Improper Payments Information Act of2002, Pub. L. No. 107-300, 116 Stat. 2350 (2002). 54 U.S. Gov't Accountability Office, GA0-09-628T, Improper Payments: Progress Made but Challenges Remain in 

Estimating and Reducing Improper Payments (Apr. 2009), available at https://www.gao.gov/products/GA0-09-

628T. 

55 !d. 

"!d. 

57 GA0-15-207T, Medicaid Information Technology: CMS Supports Use of Program Integrity Systems but Should 

Require States to Determine Effectiveness, supra note 40, 

58 !d. 59 Letter from Beryl Davis, Dir., Fin. Mgmt. & Assurance, U.S. Gov't Accountability Oftice, to Sen. Thomas 

Carper, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, et al. (Dec. 9, 2014), available at 

https://www.gao.gov/assets/670/667332.pdf. 

60 GA0-18-444T, Medicaid: Opportunities for Improving Program Oversight, supra note 7. 61 U.S. Dep't of Health & Human Servs., Agency Financial Report (2016), available at 

https :1 iwww .hhs .gov Is ites/ de fault/files/fy-2 0 16-h hs-agency-fin an cia !-report. pdf. 62 GA0-18-444T, Medicaid: Opportunities/or Improving Program Oversight, supra note 7. 63 U.S. Gov't Accountability Office, GA0-17-317, High-Risk Series: Progress on Many High-Risk Areas, While 

Substantial Eflbrts Needed on Others (Feb. 20 17), available at https://www.gao.gov/products/GA0-17-317. 

II 
102 

appropriate measures to reduce improper payments, as dollars wasted detract from 

our ability to ensure that the individuals who rely on the Medicaid programincluding children, and individuals who are elderly or disabled-are provided 

adequate care." 64 

Medicaid audits and eligibility 

CMS's lax oversight has extended into the most vital area of Medicaid program integrity: 

ensuring only those eligible for Medicaid receive the program's benefits. 

In 2011, CMS was forced to redesign its required audits of Medicaid providers, which 

were then the largest part of the CMS Medicaid integrity program. 65 Due to poor 

CMS data that were missing basic provider information, the audits identified less than 

$20 million in potential overpayments, at a cost of at least $102 million for 

contractors to conduct the audits. 66 

Upon the ACA's implementation in 2014, evidence emerged that CMS was not 

paying enough attention to its fraud-related responsibilities for the fastest-growing 

part of Medicaid: managed care. GAO found that CMS and other federal entities had 

'·taken few steps to address Medicaid managed care program integrity" and that CMS 

had failed to update its managed care program integrity guidance to states since 

2000. 67 Unless CMS took "a larger role in holding states accountable," GAO warned, 

"a growing rsortion of federal Medicaid dollars [would be] vulnerable to improper 

payments." 8 Although HHS concurred with several GAO recommendations, it 

contended that a key anti-fraud recommendation-that CMS hold states accountable 

by requirin? them to audit payments to Medicaid managed care providers-was 

"unclear."6 

By 2015, CMS had started interim reviews of Medicaid expansion eligibility 

determinations. However, CMS officials excluded from review Medicaid eligibility 

determinations in states where the federal government made such determinations, 

meaning that 67 percent of the country escaped such scrutiny. 70 In the 17 states that 

then had their own exchanges, CMS suspended until fiscal year 20 18-the first four 

years of the ACA-its requirement that states review their own eligibility 

64 GA0-18-444T, Medicaid: Opportunitiesfor Improving Program Oversight, supra note 7. 65 U.S. Gov't Accountability Office, GAO-l2-674T, lvfedicaid: Federal Oversight of Payments and Program 

integrity Needs lmprovement(Apr. 2012), available at https://www.gao.gov/assets/600/590392.pdf. 66 ld.; GA0-12-288T, Medicaid Program Integrity: Expanded Federal Role Presents Challenges to and 

Opportunities for Assisting Slates, supra note 33. 67 U.S. Gov't Accountability Office, GA0-14-341, Medicaid Program Integrity: Increased Oversight Needed to 

Ensure Integrity of Growing Managed Care Expenditures (May 2014), available at 

h ttps:/ /www. gao .gov /assets/6 7 0/663 3 06. pdf. 

68 /d. 

60 !d. 70 U.S. Gov't Accountability Office, GA0-16-53, Medicaid: Additional Effi>rts Needed to Ensure that State 

Spending is Appropriately Matched with Federal Funds (Oct. 20 15), available at 

https:i/www.gao.gov/assets/680/673159.pdf. 

12 
103 

71 !d. 

72 /d. 

''!d. 

determination71 Citing ACA-related changes to Medicaid eligibility standards and 

state eligibility systems, CMS required states that operate their own exchanges to 

conduct temporary "pilot eligibility reviews." 72 Those reviews did find Medicaid 

expansion eligibility errors in eight of nine states-including enrollment of people 

whose incomes were too high to be eligible. 73 

CMS is still not reviewing eligibility determinations in states using the ACA's 

federally-facilitated exchanges as GAO has been recommending since 2015, 74 or 

filing annual reports on its Medicaid integrity program to Congress as required by the 

2005 law75 According to GAO's latest High Risk report, CMS filed the 2013 and 

2014 reports in 2016-and was more than a year late with the 2015 report. As a 

result, CMS is still unable to discharge its most fundamental duty to American 

taxpayers: "to ensure the fiscal integrity of the [Medicaid] prograrn." 76 

74 GA0-18-444T, Medicaid.: Opportunities for Improving Program Oversight, supra note 7. 75 GA0-17-317, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others, 

supra note 63. 76 [d. 

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104 

CMS's LAX ATTENTION TO STATE MEDICAID PROGRAMS 

As a joint federal-state program, Medicaid varies state-to-state. CMS claims it "works 

closely with [its] state partners to provide them with the tools and knowledge to effectively 

operate their programs." 77 While CMS has taken some steps to improve state-based integrity 

programs-including the establishment of the Medicaid Integrity Institute with the Justice 

Department in 2007-evidence suggests that CMS can do much more to root out waste, fraud, 

and abuse in state Medicaid programs. 

GAO has identified several problems with CMS's oversight of and communication with 

state Medicaid programs. 

As late as 2014, CMS program integrity guidance issued in 2000 to states for 

Medicaid managed care was still not available on the CMS website, and state officials 

reported they did not usc the guidance to fight fraud or overpayments. CMS told 

GAO at the time that the 14-year-old guidance was being "updated" but could not 

provide "a timelinc for its completion." 78 

CMS has still not provided guidance to states on the availability of automated 

information through Medicare's enrollment database, which would help states screen 

Medicaid providers. GAO has been urging this step since 2015 79 

CMS has not sought "to identify opportunities to address barriers that limit states' 

participation in collaborative audits," as GAO has also recommcnded. 8

° Federal 

officials say CMS has sometimes allowed state officials to refuse to participate in 

these audits, which limited CMS's oversight of fraud and other program integrity . 81 ISSUeS. 

Fraud in state Medicaid programs 

money. 

CMS 's lax oversight of states is leading, in part, to Medicaid fraud and wasted taxpayer 

In March 2018, the Illinois auditor revealed that the state paid $71 million tor 

Medicaid services for more than 8,000 people without checking whether they were 

still eligible within the 12-month period required by federal law. 82 Auditors also 

77 Email from Emily Felder, supra note 32. 78 GA0-14-341, Medicaid Program Integrity: Increased Oversight Needed to Ensure Integrity of Growing Managed 

Care Expenditures, supra note 67. 79 GA0-18-444T, Medicaid: Opportunities for Improving Program Oversight, supra note 7. 

80 Id. 81 Interview with Gov't Accountability Office officials and S. Comm. on Homeland Sec. & Gov't Affairs maj. staff 

(Apr. 23, 20 18). 82 Financial Audit for the Year Ended June 30, 2017, STATE OF ILLINOIS DEP'T OF HEALTHCARE & FAMILY SERVS. 

(Mar. 6, 20 18), available at https://www.auditor.illinois.gov/Audit-Reports/Compliance-Agency-List/OHFS/FY17-

0l!FS-Fin-Full.pdf 

14 
105 

determined that Illinois paid Medicaid costs for people who were never Medicaid 

eligible because their immigration status was not verified or they lacked a valid social 

security number, and that Illinois failed to recoup $76 million in overpayments to 

private Medicaid-program insurers. 83 

In New York, the HHS OIG reported in January 2018 that state officials calculated 

Medicaid eligibility incorrectly for more than 30 percent of beneficiaries sampled by 

auditors. 84 The errors resulted in federal Medicaid payments of an estimated $26.2 

million for more than 47,000 ineligible people. 85 

In August 2017, HHS OIG identified an estimated $73 million in federal Medicaid 

payments for nearly 70,000 potentially ineligible beneficiaries in Kentucky. 86 

California: More than $1 billion in potentially fraudulent Medicaid payments 

In California, the HHS OIG identified an estimated than $1 billion in federal Medicaid 

payments on behalf of 445,000 ineligible or potentially ineligible people. 87 Of that total, the OIG 

found $629 million in federal taxpayer funds to have been paid for 366,000 ineligible people. 88 

• CMS appears unwilling to recoup taxpayer dollars wrongly paid out from California's 

Medicaid program. During a hearing of the House Committee on Oversight and 

Government Reform in April 201 8, CMS 's deputy director for Medicaid, Timothy 

Hill, testified that CMS did not intend to collect the more than $1 billion in fraudulent 

payments from California. 89 Hill testified: 

Rep. Meadows: So, Mr. Hill, are you going after the $1.2 billion? 

Mr. Hill: The $1.2 [billion] is identified as potential 

overpayment. There was not a recommendation to 

collect it because ... 

Rep. Meadows: Well, let me give you a recommendation. Collect it. I 

mean, it is the American taxpayers' dollars. Is it your 

sworn testimony here today ... because you did not get a 

recommendation to collect $1.2 billion in improper 

payments, you are not going after it? 

83 John O'Connor, Illinois Fails to Recoup $76 Million in Medicaid Overpayment, U.S. NEWS (March 24, 2018), 

https://www. usnews.com/newslbcst-states/i ll inois/ articles/20 18-03 · 24/i llinois-fails-to-recoup-7 6-m illion-inmedicaid-overpayment. 

84 U.S. Dep't of Health & Human Servs., A-02-15-01015, supra note 9. 

R5 !d. 

"U.S. Dep't of Health & Human Servs., A-04-16-08047, Kentucky Did Not Always Perform Medicaid Eligibility 

Determinations for Non-Newly Eligible Beneficiaries in Accordance with Federal and State Requirements (Aug. 

20 17), available at https://oig.hhs.gov/oas/reports/region4/41608047.pdf. 81 U.S. Dep't of Health & Human Servs. Off. of Inspector Gen., A-09-16-02023, supra note 8. 

88 !d. 89 Improper Payments in Stale-Administered Programs: Medicaid, supra note 17. 

15 
106 

90 Id 

Mr. Hill: No, the recommendations were to fix the systems in 

California ... 

Rep. Meadows: So are you going after it or not? 

Mr. Hill: We are not issuing a disallowance to California ... 90 

CMS's reluctance to police California is all the more glaring in light of the size of 

California's Medicaid program. California received $20.3 billion for Medicaid 

expansion from the federal government in 2015-34 percent of all Medicaid 

expansion s~ending, even though California represented only 12 percent of the U.S. 

population. I As Chairman Johnson wrote to CMS administrator Verma in September 

2017, enrollment under Medicaid expansion has substantially exceeded projections in 

California and many other expansion states. 92 

• California exemplifies how the ACA's Medicaid expansion reimbursement formula 

has allowed some states to game the system. Although the traditional federal 

matching rate ranges from 50 percent to as high as 73 percent, there is a far higher 

matching rate for people made newly eligible for Medicaid under the ACA-1 00 

percent through 2016, before phasing down to 90 percent in 2020 and beyond93 This 

higher matching rate provides states a tremendous financial incentive to categorize 

more people as newly eligible to obtain more federal money. 

CMS's lax oversight extends to its review of California's state Medicaid plan. 

Because CMS allowed California to pay higher Medicaid rates to managed care 

companies during the ACA's first few years, insurance companies profited 

handsomely94 According to managed care financial results from California's 

Medicaid program, Health Net, the largest Medicaid insurer nationwide, reported a 

profit of$71 million in California in 2013. 95 In 2014, the first year of the ACA's 

Medicaid expansion, Health Net's profits rose to $170 million, and reached $484 

million in 201596-a 578 percent increase during the ACA's first two years. CMS 

has not stated publicly whether it will seek to recoup any ofthis funding from 

California. 

91 Letter from Sen. Ron Johnson, supra note 6. 

92 !d. 03 Robin Rudowitz, Understanding How States Access the ACA Enhanced Medicaid Match Rates, KAISER FAMILY 

FOUNDATION (Sept. 29, 2014 ), https://www.kff.org/medicaid/issue-bricf/understanding-how-states-access-the-acaenhanced-medicaid-match-rates/. 

94 Terhune & Gorman, supra note 14. 95 Medi-Cal Managed-Care Financial Results, 20/2, supra note 15. 

96 !d. 

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107 

Medicaid ma:'Cimizatio11 schemes 

Because the federal contribution to Medicaid is generally unlimited, some states choose 

funding sources for their share ofMedicaid's cost in a manner designed to maximize the federal 

government's contribution. 97 Under these so-called "Medicaid maximization schemes," the 

states miificially inflate what the federal government contributes while reducing the state 

contribution. 98 Both GAO and the HHS 010 have repeatedly warned that these Medicaid 

maximization schemes undermine the federal-state Medicaid paJinership99 

• Intergovernmental transfers (lOTs) include "transfers of ... funds between State 

and/or local public Medicaid providers and the State Medicaid agency." 100 IGTs 

"often do not represent a true expenditure for health care services," which means 

"states arc not fully financing their share of Medicaid costs as was intended." 101 In 

one instance, Michigan "paid" $122 million of its own funds to county health 

facilities, along with a federal match-and the same day, the county facilities 

transferred all but $6 million of the state funds, and the federal match, back to the 

state. 102 States have used federal matching funds received "for a range of purposes 

with no direct link to improving quality of care or increasing Medicaid services." 103 

According to GAO, CMS "generally does not require (or otherwise collect) 

information from states on the funds they use to finance Medicaid, nor ensure that the 

data that it does collect are accurate and complete." 104 

• States tax healthcare providers, then return the funds to the providers and trigger a 

97 See generally Non-Federal Financing, MACPAC, https://www.macpac.gov/subtopic/non-fcderal-financing/ 

(detailing various sources of funding) (last visited May 22, 20 18). 98 See U.S. Gov't Accountability Office, GA0-14-627, Medicaid Financing: States' Increased Reliance on Funds 

from Health Care Providers and Local Governments Warrants Improved CMS Data Collection, at 2-3 (July 2014), 

available at https://www.gao.gov/assets/670/665077.pdf. 99 U.S. Gov't Accountability Office, GA0-16-l95T, Medicaid: Improving Transparency and Accountability of 

Supplemental Payments and State Financing Methods, at 6 (Nov. 20 15), available at 

https://www.gao.gov/asscts/680/673493.pdf; Spotlight on Afedicaid: State Policies That Result in Inflated Federal 

Costs, U.S. DEP'T OF HEALTH AND HUMAN SERVS., OFFICE OF INSPECTOR GEN., 

https:/ioig.hhs.gov/newsroom/spotlight/20 14/inflated-federal-costs.asp (last visited May 22, 2018). 100 "Examining Medica;d and CHIP's Federal Medical Assistance Percentage": Hearing before the Subcomm. on 

Health a/the House Comm. on Energy ami Commerce, !14th Cong. (2016) (statement ofJohn Hagg, Dir. of 

Medicaid Audits, Off. oflnspector Gen., Dep't of Health and Human Servs.). 101 Teresa Coughlin & Stephen Zuckerman, States' Use a/Medicaid Afaximization Strategies to Tap Federal 

Revenues: Program Implications and Consequences, URBAN INSTITUTE, at II (June 1, 2002), 

https://www.urban.org/sites/dcfault/filcs/publication/60 176/31 0525-States-Use-of-Medicaid-MaximizationStrategics-to-Tap-Federal-Revenues.PDF. 102 U.S. Gov't Accountability Office, GA0-04-574T, Medicaid. Intergovernmental Transfers Have Facilitated State 

Financing Schemes, at 5-6 (Mar. 2004), availahle at https://www.gao.gov/assets/120/ll 0702.pdf. 103 Spotlight on Medicaid: State Policies That Result in Inflated Federal Costs, U.S. DEP'T OF HEALTH AND HUMAN 

SERVS., OFFICE OF INSPECTOR GEN., https://oig.hhs.gov/newsroom/spotlight/20 14/inflated-federal-costs.asp (last 

visited May 22, 2018). 104 GAO-l6-I95T, Medicaid: Improving Transparency and Accountability of Supplemental Payments and State 

Financing Methods, supra note 99, at 13; see also GA0-14-627, Medicaid Financing: States' Increased Reliance on 

Fundsfr;m Health Care Providers and Local Governments Warrants Improved CMS Data Collection, supra note 

98, at 39 ("CMS does not collect accurate and complete data from all states on the various sources of funds to 

finance the non federal share .... "). 

17 
108 

federal match. 105 This shell game artificially inflates what the federal government 

contributes. 106 These taxes are "increasingly popular and [have] resulted in billions 

of dollars in additional Medicaid spending." 107 An Oregon official described the 

state's provider tax as a "dream tax," where "we [Oregon] collect the tax from 

hospitals, we put it up as a match for federal money, and then we give it back to the 

hospitals." 108 Connecticut has a similar scheme that, if approved by CMS, would 

enable it to pocket f\.Jnds from federal taxpayers to bolster the state's bottom line. 109 

Supplemental payments are "payments that are separate from the regular payments 

states make based on claims submitted for services rendered." 110 One type of 

supplemental payments, disproportionate share hospital (DSH) payments, helps offset 

costs that hospitals accrue when serving Medicaid beneficiaries and other low-income 

patients. 111 Such payments are "capped at a facility-specific level and state level." 112 

But states also make non-DSH supplemental payments to hospitals and other 

providers that "are not subject to firm dollar limits at the facility or state level." 113 In 

fact, these payments "are not necessarily made on the basis of claims for specific 

services to particular patients and can amount to tens or hundreds of millions of 

dollars to a single provider, annually." 114 They can also exceed the costs of services 

provided. 115 According to GAO, ''CMS lacks data at the federal level on [these] nonDSH supplemental payments," and "the payments are not subject to audit." 116 

Similarly, according to GAO, CMS should require more "reliable[] and timely 

information" concerning supplemental payments states make to providers. 117 

105 See GA0-14-627, Medicaid Financing: States' Increased Reliance on Fundsfi'om Health Care Providers and 

Local Governments Warrants Improved ClYfS Data Collection, supra note 98, at 2. 

106/d. 

107 Alex Brill, Medicaid Provider Taxes: Closing a Loophole, TAX NOTES, at 5 (June 29, 2015), available at 

http:! /www .ae i. org/wp-content/up loads/20 15/06iilri II-Medicaid-Provider-Taxes. pdf. 108 Peter Wong, Oregon House Extends Hospital Tax, PORTLAND TRJBUNE, Mar. II, 2015, available at 

http://portlandtribune.com/pt/9-news/253422-l23198-oregon-house-extends-hospita1-tax. 

109 Red Jahncke, Why Tax Hospitals? It's a Medicaid Shell Game, WALL ST. J., Dec. 29, 2017, available at 

https:/lwww. wsj .com/articles/why-tax-hospitals-its-a-medicaid-shell-game-1514 586150. 110 GA0-14-627, Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local 

Governments Warrants Improved CA!S Data Collection, supra note 98, at 2. 111 GAO-l6-l95T, Medicaid: Improving TransparenG)' and Accountability of Supplemental Payments and State 

Financing Methods, supra note 99, at 5. 112 !d.; see also Alison Mitchell, CONG. RESEARCH SERV., R42865, Medicaid Disproportionate Share Hospital 

Payments, at 1 (June 17, 20 16), http://www.crs.gov/reports/pdf/R42865. 113 GA0-16-l95T, Medicaid: Improving Transparency and Accountability a/Supplemental Payments and State 

Financing Methods, supra note 99, at 5. 

114 !d. 115 In 2012, GAO reported that ''39 states made non-DSH supplemental payments" that exceeded "total costs of 

providing Medicaid care by about $2.7 billion." !d. at 7. 116 /d. at 8. 117 See id. at 6-7; see also id. at 8-9 (describing need for "complete and reliable provider-specific data" on non-DSIJ 

supplemental payments because such data is needed to identifY payments that may be "excessive" and 

inappropriate). 

18 
109 

THE COMMITTEE'S OVERSIGHT OF CMS AND MEDICAID 

As the Chairman of the Senate's chief oversight committee, Senator Johnson has a duty 

to conduct oversight of federal agencies, including CMS, to ensure the government spends 

federal tax dollars efficiently and effectively. 

Medicaid's escalating costs and enrollment figures 

In the early days of the Trump Administration, Chairman Johnson became concerned 

about growing evidence that Medicaid expansion costs and enrollment were spiraling far beyond 

initial projections. Committee majority staff sought CMS's help in exploring this problem and 

understanding CMS's actions to address it. 118 

On September 27, 2017, Chairman Johnson sent a letter to Administrator Verma 

formally requesting information about the escalating costs of Medicaid expansion and 

CMS's efforts to address the rising costs. 119 Chairman Johnson raised concerns that 

the cost surge could stem "from the Medicaid expansion's reimbursement formula, 

which gives states a financial incentive to categorize people as newly eligible to 

obtain more federal money." 12° Chairman Johnson also sent letters to eight states 

with particularly alarming rates of growth in Medicaid costs or enrollment. 121 

• In October 2017, Administrator Verma responded. She wrote that CMS "takes very 

seriously [its] responsibility to see that only eligible individuals are enrolled in 

entitlement programs." 122 

o Administrator Verma wrote that CMS had provided enhanced funding for 

modernized or new state Medicaid eligibility systems and taken other steps, 

such as holding "multiple all-state calls and in-person trainings," to provide 

guidance to states on how to "implement the federal [Medicaid] match rate 

methodology appropriately." 123 

Administrator Verma's response did not address the repeated warnings from 

government watchdogs that CMS's actions to police Medicaid program 

integrity have been insufficient. 124 She wrote that CMS conducts quarterly 

reviews of state Medicaid expenditure reports and had disallowed only "over 

$15 million" in claims for services for newly eligible beneficiaries. 125 In 

118 See e.g meeting with Cntrs. for Medicare & Medicaid Servs. and S. Comm. on Homeland Sec. & Gov't Affairs 

maj. staff(May 4, 2017); meeting with Brian Neale, Cntrs. for Medicare & Medicaid Servs. and S. Comm. on 

Homeland Sec. & Gov't Affairs maj. staff(Mar. 31, 2017). 119 Letter from Sen. Ron Johnson, supra note 6. 

120/d. 

121 E.g Letter from Sen. Ron Johnson, supra note 18. 

"'Letter from Seema Verma, Adm'r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson, Chairman, S. 

Comm. on Homeland Sec. & Gov't Affairs (Oct. 27, 20 17). 

123 /d. 

124 !d. 

125 Jd. 

19 
110 

comparison to the estimated $37 billion in annual Medicaid overpayments, 126 

CMS's disallowance data shows that it could be doing more to police 

Medicaid program integrity. 

Medicaid fraud and tile opioid crisis 

Chairman Johnson also uncovered evidence suggesting a correlation between the 

Medicaid program and the nation's opioid crisis. 

• On January 17, 2018, Chairman Johnson convened a hearing of the Committee and 

released a staff report detailing how the structure of the Medicaid program creates a 

series of incentives for opioid abuse. 127 The report detailed hundreds of examples of 

opioid-related fraud in the Medicaid program and explained how Medicaid is serving 

as a funding source for obtaining and illicitly distributing opioids. 128 Chairman 

Johnson sent a copy of the report to Administrator Verma, along with specific 

questions about CMS's efforts to eliminate Medicaid's role in the opioid epidemic. 129 

Administrator Verma responded on February 9, focusing instead on Medicaid's role 

in ensuring beneficiaries have treatment for substance abuse disorders. 130 While 

treatment is certainly an important element of Medicaid, Administrator Verma's 

response failed to address the key questions Chairman Johnson asked, specifically his 

request that she explain CMS's "work to improve the structure of the Medicaid 

program to limit the perverse incentives that lead to opioid abuse." 131 The Committee 

sought supplementary materials from CMS, which has provided only limited 

information to date about its work to address Medicaid's role in the opioid crisis. 

Union dues skimming from Medicaid funds 

On April30, 2018, Chairman Johnson wrote to Administrator Verma urging CMS to 

review the practice of"dues skimming," in which states allow unions to classify home health 

care workers as government employees for purposes of collecting union dues from Medicaid 

payments. 132 Dues skimming allows states to take an estimated $200 million each year in union 

dues-money that would otherwise help for the care of Medicaid beneficiaries. 133 

126 GA0-18-444T, Medicaid. Opportunities for fmproving Program Oversight, supra note 7. 127 Unintended Consequences: Medicaid and the Opioid Epidemic, supra note 17; Drugs for Dollars: How Medicaid 

Helps Fuel the Opioid Epidemic, supra note 22. 128 Drugs for Dollars: How Medicaid 1/e/ps Fuel the Opioid Epidemic, supra note 22. 129 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, to Seema Verma, 

Adm'r, Ctrs. For Medicare & Medicaid Servs., & Eric D. Hargan, Acting Secretary, Dcp't of Health & Human 

Servs. (Jan. 17, 2018). 130 Letter from Seem a Verma, Adm'r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson, Chairman, S. 

Comm. on Homeland Sec. & Gov't Affairs (Feb. 9, 2018). 131 Letter from Sen. Ron Johnson, Chairman, supra note 6. 132 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, to Seema Verma, 

Adm'r. Ctrs. For Medicare & Medicaid Servs. (Apr. 30, 2018). Ill !d. 

20 
111 

Administrator Verma responded on June 13,2018. 134 She informed the Chairman that 

CMS "does not possess" information about the amount of Medicaid funds diverted for union 

dues, but that CMS was reviewing whether to implement changes to "ensure Medicaid fund are 

legally spent." 135 The response enclosed correspondence with the Illinois Governor about 

Medicaid dues skimming, but otherwise provided no responsive documents. 136 

134 Letter fi·om Seema Verma, Adm'r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson, Chairman, S. 

Comm. on Homeland Sec. & Gov't Affairs (June 13, 2018). 

'''ld. 

136 Jd. 

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112 

STEPS TOWARD REFORM 

Medicaid is an important program that helps millions of Americans in need. But as the 

program has grown over the past half-century, it has expanded at a pace that is now threatening 

to overwhelm federal and state budgets. 137 The ACA is putting new strains on CMS and 

Medicaid, 138 making it vitally important that the federal government ensure that no tax dollars go 

to waste. 139 

Yet as this staff report shows, CMS is failing to safeguard the hundreds of billions of 

dollars that fund Medicaid each year. 140 A series of government watchdog reports, dating back 

more than a decade, show that CMS is not effectively policing Medicaid fraud. A succession of 

CMS administrators have not provided the effective oversight that Congress required in 2005. 141 

The Committee's oversight of soaring expansion costs, 142 the pernicious role of opioids, 143 and 

the plague of Medicaid fraud 144 further demonstrates that CMS has not proven an effective 

steward of Medicaid taxpayer dollars. This unfortunate trend has continued, despite the Trump 

Administration's stated goal to reign in Medicaid fraud. 145 

The time is ripe for CMS to take proactive steps to reduce Medicaid fraud and improve 

program integrity. It must make a more serious commitment to Medicaid program integrity and 

sustain that effort through smart and effective oversight of state Medicaid programs. That 

commitment must extend through every part of the agency. 

There are several steps that CMS could take toward improving Medicaid's program 

integrity. 

CMS should enact the II open GAO anti-fraud recommendations dating to 2015, 

especially those urging CMS to review federal Medicaid eligibility determinations for 

accuracy and to provide fraud-awareness training for all CMS employees. 146 

• CMS should take perhaps the most basic step of all: create, document and implement 

a Medicaid anti-fraud strategy. 147 

137 Letter from Sen. Ron Johnson, supra note 6. 

1}8 /d. 139 "Nomination o[Seema Verma to be Administrator of the Centers for Medh:are and A1edicaid Services": Hearing 

hefore the S. Comm. on Finance, !15th Cong. (20 I 7). 140 Robin Rudowitz & Allison Valentine, Medicaid Enrollment & Spending Growth: FY 2017 & 2018, KAISER 

FAMILY FOU;-.<DATION (Oct. 19, 20 14). https:llwww.kff.org/medicaidlissue-bricf/rnedicaid-enrollment-spendinggrowth-fy-20 17-20 I 81. 141 Deficit Reduction Act of2005, Pub. L. No. 109-171, 120 Stat. 4 (2006). 142Letter from Sen. Ron Johnson, supra note 6. 143 Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic, supra note 22. 144 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov't Affairs, & Claire McCaskill, 

Ranking Member, S. Comm. on Homeland Sec. & Gov't Affairs, to Seema Verma, Adm'r, Ctrs. for Medicare & 

Medicaid Servs. (May 15, 20 18). 145 James Swann, Trump Budget Would Boost Spending to Fight Medicare, Medicaid Fraud, BLOOMBERG (Mar. 20, 

20 17), https:l/www.bna.com/trump-budget-boost-n57982085442/. 

H-6 GAO-l8-444T, A1edicaid: Opportunities for Improving Program Oversight, supra note 7. 147/d 

22 
113 

CMS ought to crack down on states that allow fraud or otherwise abuse Medicaid 

funding, starting with recouping the more than $1 billion California spent on behalf of 

ineligible or potentially ineligible beneficiaries. 148 

CMS should make a sustained effort to slow and then eliminate the $37 billion in 

overpayments plaguing the Medicaid program each year. 149 

CMS should take seriously Medicaid's role in the opioid epidemic and make 

structural changes to the program that eliminate incentives leading to opioid abuse 

and illicit fraud. 150 

CMS must work with government watchdogs, especially the non-partisan GAO and 

HHS OIG, to better police Medicaid fraud. 

CMS must become more responsive to and cooperative with Congressional oversight 

seeking to identify and eliminate Medicaid fraud. 

In addition, Congress could take steps to address fundamental incentives that currently 

present challenges to Medicaid program integrity. 

• Congress should reduce the "safe harbor" for states' taxes on health care providers to 

limit Medicaid maximization schemes that have inflated federal payments to states. 151 

Congress should transition Medicaid to a block grant funding mechanism for existing 

Medicaid expansion populations, 152 instead of the current open-ended federal 

entitlement This mechanism would help reduce incentives for states that seek to 

maximize federal funds and potentially enroll ineligible people. A block grant system 

would also provide a more equitable distribution of federal funding to states that have 

been good stewards of taxpayer dollars. 153 

148 U.S. Dep't of Health & Human Servs. Off. oflnspector Gen., A-09-16-02023, supra note 8. 149 GA0-18-444T, Medicaid: Opportunities for Improving Program Oversight, supra note 7. 150 Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic, supra note 22. 151 Limit States' Taxes on Health Care Providers, CONG. BUDGET OFFICE (Dec. 8, 2016), 

https :/ lwww. cbo .gov /budget -options/2 0 16/5223 0. 152 Graham-Cassidy-Heller-Johnson Plan to Replace ACA Funding With a New Block Grant and Cap Medicaid 

Would Decrease Federal Funding for States by $160 Billion from 2020-2026; Then a $240 Billion Loss in 2027 if 

the Law is Not Reauthorized, KAISER FAMILY FOUNDATION (Sept 21, 20 17), https:ilwww.kff.org/healthreform/press-releaselgraham-cassidy-heller-johnson-plan-to-replace-aca-funding-with-a-new-b!ock-grant-and-capmedi ca id-would-decrease-federal-funding-for-states-by-160-billion-from -2020-2026-rlJen-a-240-bi II ion-loss-inl. !53 !d. 

23 
114 

To: 

Fr: 

Re: 

MEMORANDUM 

January 17,2018 

Members of the Senate Committee on Homeland Security & Governmental 

Affairs (HSGAC) 

HSGAC Minority Staff 

Additional Information on the Relationship between Medicaid Expansion 

and the Opioid Epidemic 

Medicaid is a federal program jointly funded by states and the federal government that 

provides health care coverage to low-income adults, children, pregnant women, people with 

disabilities, and elderly individuals. 1 When enacted, the Affordable Care Act (ACA) required 

states to offer Medicaid coverage to adults between the ages of 18 and 65 with incomes up to 

133% of the federal poverty level. 2 States were required to provide Medicaid to those 

individuals regardless of health or family status by 2014. 3 The U.S. Supreme Court 

subsequently held that the ACA's Medicaid expansion was unconstitutionally coercive, making 

expansion optional for states 4 As a result, to date 32 states and the District of Columbia have 

expanded Medicaid and 18 states have not expanded Medicaid. 5 

Critics of the ACA, including Senator Ron Johnson, Chairman of the U.S. Committee on 

Homeland Security and Governmental Affairs, have recently alleged that Medicaid expansion 

may be fueling the opioid epidemic in communities across the country. 6 At the request of 

Ranking Member Claire McCaskill, this memorandum provides information on Medicaid 

expansion and the opioid epidemic. Key findings include: 

• The opioid epidemic predates Medicaid expansion. 

• Recent increases in opioid mortality stem from fentanyl and heroin, not 

prescription opioids. 

1 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid 

Services, Medicaid: Overview (www.medicaid.gov/medicaid/index.html) (accessed Jan. 16, 

2018). 

2 U.S. Department of Health and Human Services, Centers for Medicare and Medicaid 

Services, Medicaid & CHIP: Medicaid expansion & what it means for you 

(www.healthcare.gov/mcdicaid-chip/medicaid-expansion-and-you/) (accessed Jan. 17, 2018). 

3 Id. 

4 National Federation of Independent Business v. Sebelius, 567 U.S. 519 (2012). 

5 Families USA, A 50-State Look at Medicaid Expansion (Jan. 2018) 

(http:!/familiesusa.org/product/50-state-look-medicaid-expansion). 

6 See, e.g., Letter from Senator Ron Johnson, Chairman of the U.S. Senate Committee on 

Homeland Security and Governmental Affairs, to Daniel R. Levinson, Inspector General, U.S. 

Department of Health and Human Services (Jul. 27, 2017); Medicaid.fue/ing opioid epidemic? 

New theory is challenged, Associated Press (Aug. 31, 2017) 

(www.apnews.com/a860fb7b0e0c4117b9420b3bcfb928c6). 
115 

• Mortality data indicate there is no statistically significant evidence that Medicaid 

expansion affects drug-related overdoses. 

Empirical research indicates determinants of opioid deaths are demographic 

characteristics and prescriber behavior. 

States that expand Medicaid under the Affordable Care Act are better equipped to 

address behavioral health care and substance abuse treatment needs. 

I. OPIOID EPIDEMIC PREDATES MEDICAID EXPANSION 

One method to establish causation is to demonstrate that the causes preceded the effects. 

Historical statistical data indicate that the opioid epidemic predates Medicaid expansion in the 

ACA. In 1995, Purdue Pharma introduced OxyContin, a controlled-release opioid, and 

overdoses across the United States increased rapidly. Between 1997 and 2002, OxyContin 

prescriptions for non-cancer pain grew from 670,000 to 6.2 million. 7 Mortality rates attributed 

to opioid overdoses doubled between 1999 and 2013. 8 

According to an analysis conducted by Andrew Goodman-Bacon, an assistant professor 

of economics at Vanderbilt University, a statistical analysis of mortality rates indicate that the 

upward trend in drug poisoning started in 2010, four years prior to the expansion of Medicaid. 9 

He wrote, in conjunction with his co-author Emma Sandoe: 

Figure 1 plots age-adjusted drug-related mortality rates among those aged 25-54 in states 

that did and did not expand Medicaid under the ACA ... The figure also plots the 

difference in mortality between expansion and non-expansion states (relative to the 

difference in 2009; dashed lines are 95-percent confidence intervals based on standard 

errors clustered by state). Expansion states did have relatively more drug deaths than nonexpansion states in 2015, but the upward trend in deaths in expansion states started in 

2010, four years before the Medicaid expansion began. The results are the same if we 

exclude the six early expansion states. By the simplest criterion for causality, that causes 

must precede effects, these results cannot be taken as evidence of Medicaid expansion 

causing these deaths. 10 

7 Andrew Goodman-Bacon and Emma Sandoe, Did Medicaid Expansion Cause the 

Opioid Epidemic? There's Little Evidence That It Did, Health Affairs (blog) (Aug. 23, 2017) 

(http://healthaffairs.org/blog/20 17/08/23/did-medicaid-expansion-cause-the-opioid-epidemictheres-little-evidence-that-it-did/). 

8 /d. 

9 ld. 

10 !d. 

2 
116 

Figure 1. Age-Adjusted Drug-Poisoning Mortality Rate for Ages 25-54 by Medicaid 

Expansion Status, 1999-2015 

It 

II. RECENT INCREASES IN OPIOID MORTALITY STEM FROM FETANYL AND 

HEROIN, NOT PRESCRIPTION OPIOIDS 

Since 2013, nearly all increases in opioid overdoses are attributable to heroin and heroin 

substitutes, including fentanyl. Data from the U.S. Centers for Disease Control indicate that 

although overdose deaths containing any opioid is continuing to increase, recent surges in 

nverdoses result from heroin and other synthetic opioids such as fentanyl, carfentanil, and 

tramadol. 12 

11 !d. 

12 U.S. Centers for Disease Control and Prevention, Opioid Data Analysis 

(https://\Wiw.cdc.gov/drugoverdose/data/analysis.html) (accessed Jan. 16, 2018). 

3 
117 

Overdose Deaths Involving Opioids, by Type of Opioid, United States, 2000-2016 

13 

Ill. MORTALITY DATA INDICATE THERE IS NO STATISTICALLY 

SIGNIFICANT EVIDENCE THAT MEDICAID EXPANSION AFFECTS DRUGRELATED OVERDOSES 

In 2017, Brendan Saloner from the Johns Hopkins Bloomberg School of Public Health 

and Johanna Maclean of Temple University issued a paper on the impact of Medicaid expansion 

under the Affordable Care Act on substance abuse disorder treatment utilization and financing. 14 

In this research. Saloner and Maclean examined data from the National Vital Statistics Mortality 

Files between 2010 and 2015 and narrowed the data set to deaths classified as alcohol poisonings 

and drug-related overdoses. 15 They further narrowed the data to poisonings and overdoses 

among non-elderly adults aged 18 to 64 years and compared deaths within expansion and nonexpansion states. 16 The authors found "no statistically significant evidence that Medicaid 

expansions affected fatal alcohol poisonings or drug-related overdoses." 17 

13 !d. 

14 Maclean, J. C., & Saloner, B. (2017), The Effect ofPublic Insurance Expansions on 

Substance Use Disorder Treatment: Evidence from the Affordable Care Act (No. w23342), 

National Bureau of Economic Research. 

15 !d. 

16 /d. 

17 /d. 

4 
118 

IV. EMPIRICAL RESEARCH INDICATE DETERMINANTS OF OPIOID DEATHS 

ARE DEMOGRAPHIC CHARACTERISTICS AND PRESCRIBER BEHAVIOR 

The American Journal of Public Health published a literature review of empirical 

research that found: "Opioid-related mortality trends have been marked by considerable 

sociodemographic differences." 18 The authors wrote: 

We found 22 studies ... that examined the contribution of sociodcmographic 

characteristics, including race/ethnicity, gender, age, socioeconomic status (SES), and 

rural-urban residence, to increased opioid-related mortality. In general, opioid-related 

mortality rates have been higher among men, non-Hispanic Whites and American 

Indian/ Alaska Natives, middle-aged individuals, those living in rural areas, and those of 

lower SES. 19 

The authors also reviewed the empirical data regarding the role of prescriber behavior in 

increased opioid-relatcd mortality. 20 They found: 

Eight studies providing evidence that increased prescriptions for opioids may have played 

a role in increased opioid-related mortality; 

• Seven studies providing evidence of the contribution of increased dosages to increased 

opioid-related mortality; 

Seven studies that provided evidence for the contribution of prescription of oxycodone, 

particularly the long-acting formulation of OxyContin, to increased opioid-related 

mortality; and 

One study providing evidence that high-volume prescribing may have played a role in 

increased opioid-related mortality. 21 

V. STATES THAT EXPAND MEDICAID UNDER THE AFFORDABLE CARE ACT 

ARE BETTER EQUIPPED TO ADDRESS BEHAVIORAL HEALTH CARE AND 

SUBSTANCE ABUSE TREATMENT NEEDS 

The Medicaid program plays a critical role in addressing the opioid epidemic. In 2015. 

Medicaid provided coverage to three in ten people grappling with opioid addiction in the United 

18 Nicholas B. King, Ph. D, et al., Determinants of1ncreased Opioid-Related Mortality in 

the United States and Canada, 1990··2013: A Systematic Review, American Journal of Public 

Health (Aug. 2014). 

19 !d. 

20 Jd 

21 !d. 

5 
119 

States. 22 Medicaid covers services such as intensive outpatient treatment and inpatient 

detoxification. 23 The ACA broadened Medicaid coverage to include medication assisted 

treatment, a recovery program that combines medication (methadone, buprenorphine, or 

naltrexonc) with counseling and other therapies. 24 All Medicaid programs cover at least one of 

the three required medications, and most states cover all three. 25 

The expansion of Medicaid has been critical to confronting substance abuse disorders. 

Healthcare economists Richard G. Frank, the Margaret T. Morris Professor of Health Economics 

in the Department of Health Care Policy at Harvard Medical School, and Dr. Sherry A. Glied, 

Dean of the Wagner School of Public Service at New York University, have estimated that states 

that expanded Medicaid have helped 1. 3 million additional patients access behavioral health care 

services. 26 Additionally, recent empirical research has shown that states that expanded Medicaid 

under the ACA were associated with an increase in prescriptions for one of the required 

medications for medication assisted treatment." 

Additionally, the U.S. Department of Health and Human Services found that "evidence is 

mounting" that Medicaid expansion enables patients to access care to confront opioid 

addiction28 In an issue brief on the role of the ACA in addressing the opioid epidemic, the 

findings of the Assistant Secretary for Planning and Evaluation are quoted below: 

• Among low-income adults, Medicaid expansion was associated with a 7.5 percent 

reduction in unmet need for mental health treatment and an 18.3 percent reduction in 

unmet need for substance use disorder treatment services. 

22 Kaiser Family Foundation, Medicaid and the Opioid Epidemic: Enrollment, Spending. 

and the Implications of Proposed Policy Changes (Jul. 14, 2017) (www.kff.org/medicaid/issuebrietlmedicaid-and-the-opioid-epidemic-enrollment-spending-and-the-implications-of-proposedpolicy-changes/). 

23 !d. 

24 Kaiser Family Foundation, Medicaid's Role in Addressing the Opioid Epidemic (June 

201 7) (https://kaiserfami1yfoundation.files. wordpress.com/20 17/03/medicaid_s-role-inaudressing-thc-opioid-epidemic.png). 

25 !d. 

26 Richard G. Frank and Sherry A. Glied, Keep Obamacare to keep progress on treating 

opioid disorders and mental illnesses (op-ed), The Hill (Jan. 11, 20 17) 

(http: //thehill. com/b logs/pundits-b 1o g!hea1thcare/3 13 6 72-keep-o bamacare-to-keep-progress-ontreating -opioid-disorders ). 

27 Hefei Wen, Ph. D. eta!., Impact ()j'Medicaid Expansion on Medicaid-covered 

Utilization ofBuprenorphine for Opioid Use Disorder Treatment, Medical Care: Official Journal 

of the Medical Care Section, American Public Health Association (Apr. 2017). 

28 U.S. Department of Health and Human Services, Assistant Secretary for Planning and 

Evaluation, Continuing Progress on the Opioid Epidemic: The Role of the Affordable Care Act 

(Jan. 11, 2017) (https://aspe.hhs.gov/system/files/pdf/255456/ACAOpioid.pdf). 

6 
120 

Medicaid expansion in Ohio led to especially large improvements in access to care and 

financial security for expansion enrollees with opioid use disorder. 75 percent reported 

improved overall access to care, 83 percent reported improved access to prescription 

medications, and 59 percent reported improved access to mental health care. 

• Medicaid expansion in Kentucky was linked to a large increase in Kentuckians receiving 

treatment for substance use disorder. 29 

29 ld 

7 
121 

DEP.•.RTMENT OF IlEAL Til & !lUMAN SERVICES 

Centers for Medicare & Medicaid Services 

Room 352-G 

200 independence Avenue, SW 

Washington, DC 20201 

CMSNEWS 

FOR IMMEDIATE RELEASE 

June 26, 2018 

Contact: CMS Media Relations 

(202) 690-6145 I CMS Media Inquiries 

c9~i~ .. OFFICE OF COMMUNICATIONS 

CMS announces initiatives to strengthen Medicaid program integrity 

Agency actions will help ensure the sustainability of vital safety net program for all beneficiaries 

Today, the Centers for Medicare and Medicaid Services (CMS) announced new and enhanced initiatives 

d~signed to improve Medicaid program integrity through greater transparency and accountability, 

strengthened data, and innovative and robust analytic tools. 

'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. With historic growth in Medicaid 

comes an urgent federal responsibility to ensure sound fiscal stewardship and oversight ofthc program," 

said CMS Administrator Seema Verma. ''These initiatives are the vital steps necessary to respond to 

Medicaid's evolving landscape and fulfill our responsibility to beneficiaries and taxpayers." 

Recent years have seen a rapid increase in Medicaid spending driven by several factors, including 

Medicaid expansion, from $456 billion in 2013 to an estimated $576 billion in 2016. Much of this growth 

came from the program's federal share that grew from $263 billion to an estimated $363 billion during 

that period. While the responsibility for proper payments in Medicaid primarily lies with the states, 

oversight of the Medicaid program requires a partnership. CMS plays a significant role in supporting state 

efforts to meet high program standards. 

Administrator Verma has set forth three pillars to guide CMS' work in the Medicaid program: Flexibility, 

Accountability, and Integrity. Emphasizing these, she expanded on the role of CMS saying, "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. Beneficiaries depend on Medicaid and CMS is accountable for the 

program's long-term viability. As today's initiatives show, we will use the tools we have to hold states 

accountable as we work with them to keep Medicaid sound and safeguarded for beneficiaries." 

Page l of2 
122 

The initiatives announced today include stronger audit functions, enhanced oversight of state contracts 

with private insurance companies, increased beneficiary eligibility oversight, and stricter enforcement of 

state compliance with federal rules. 

Important New Initiatives 

I. Emphasize program integrity in audits of state claims for federal match funds and medical loss 

~:.tios (MLRs). Audits are central to CMS' partnership with states-not only encouraging compliance 

but also revealing how to improve integrity at all levels. Under this initiative, CMS will begin auditing 

some states based on the amount spent on clinical services and quality improvement versus 

administration and profit. The MLR audits will include reviewing states' rate setting. Overall, audits 

will address issues identified by the Government Accountability Office (GAO) and Office of 

Inspector General (OIG), as well as other behavior previously found harmful to the Medicaid 

program. 

2. Conduct new audits of state beneficiary eligibility determinations. CMS will audit states that have 

been previously found to be high risk by the OIG to examine how they determine which groups are 

eligible for Medicaid benefits. These 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 to issue potential disallowances to states based on Payment Error Rate Measurement (PERM) 

program findings in 2022. The PERM program measures improper payments in the Medicaid program 

and the Children's Health Insurance Program (CHIP) on a rolling three year cycle and produces 

national and state-specific improper payment rates. 

3. Optimize state-provided claims and provider data: CMS will utilize advanced analytics and other 

innovative solutions to both improve Medicaid eligibility and payment data and maximize the 

P.9.t.ential for program integrity purposes. The Trump Administration has made partnering with states a 

priority. CMS is committed to work closely with states to ensure that the agency and oversight bodies 

have access to the best, most complete and accurate Medicaid data. For the first time, every slate plus 

Washington, D.C. and Puerto Rico arc now submitting enhanced data to CMS. Over the course of the 

coming months, we will be validating the quality and completeness of the data. 

Ongoing Integrity Work 

Working with states to ensure Medicaid provides high-quality care for our most vulnerable people is a central part 

ofCMS' mission. To learn about noteworthy efforts in place to protect Medicaid's integrity-including provider 

screening and education, streamlined access to data, and an enhanced Medicaid Scorecard-see 

https://www.medicaid.gov/state-resource-center/downloads/program-intcgrity-strategy-factsheet.pdf 

### 

Get CMS news at cms.gov/newsroom, sign up for CMS news via email, and follow CMS on Twitter CMS 

Administrator @ScemaCMS, @CMSgov, and @CMSgovPress. 

Page 2 of2 
123 

DEPARTMENT OF HEALTH & HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

Room 352-G 

200 Independence Avenue, SW 

Washington, DC 2020 I 

FACT SHEET 

FOR IMMEDIATE RELEASE 

June 26, 2018 

Contact: CMS Media Relations 

(202) 690-61451 (;tyjSJvlfclj,ljnq,tj[i£,<; 

~~i~ .. OFFICE OF COMMUNICATIONS 

CMS Medicaid Program Integrity Strategy 

Enhanced Medicaid Program Integritv Strategy 

The last several years have seen a rapid increase in Medicaid spending driven by several factors, including 

Medicaid expansion, ffom $456 billion in 2013to an estimated $576 billion in 2016. Much of this growth 

came ti·om the federal share that grew from $263 billion to an estimated $363 billion during the same period. 

With this historic growth comes an equally growing and urgent responsibility to ensure sound stewardship 

and oversight of our program resources. As part of CMS's plan to reform Medicaid using the three pillars 

of flexibility, accountability and integrity, we are announcing a new strategy to ensure we are keeping the 

Medicaid program sustainable for our future. 

While the responsibility for proper payments in Medicaid primarily lies with the states, oversight of the 

Medicaid program requires a partnership, and CMS plays a significant role in supporting stale efforts and 

increasing state oversight, accountability, and transparency. Because of this responsibility, CMS is 

announcing new and enhanced initiatives that will create greater transparency in and accountability for 

Medicaid program integrity performance, enable increased data sharing and robust analytic tools, and seek 

to reduce Medicaid improper payments across states. The initiatives include stronger audit functions, 

increased beneficiary eligibility oversight, and enhanced enforcement of state compliance with federal 

rules. 

CMS's Robust Plan for New or Enhanced Medicaid Program Integrity Initiatives 

Strengthen the Program Integrity Focus of Audits of State Claiming for Federal Match 

Funds and Rate Setting CMS will begin targeted audits of some states' managed care 

organization (MCO) financial reporting. Plans have implemented risk mitigation strategies like 

Medical Loss Ratio; CMS will be checking to make sure claims experience actually matches what 

plans have been reporting. Audit activities will include review of high-risk vulnerabilities 

identified by the Government Accountability Office and Office oflnspector General (OIG), as 

well as other behavior previously found detrimental to the Medicaid program. 
124 

Conduct New Audits of State Beneficiary Eligibility Determinations - CMS will initiate audits 

of state beneficiary eligibility determinations in states previously reviewed by OIG. These audits 

will include assessment of the impact of changes to state eligibility policy as a result of Medicaid 

expansion; for example, we will review whether beneficiaries were found eligible for the correct 

Medicaid eligibility category. 

Optimize state-provided claims and provider data: It is an administration priority for CMS to 

work closely with states to ensure that CMS and oversight bodies have access to the best, most 

complete and accurate Medicaid data. For the first time, all 50 states, D.C. and Puerto Rico are 

now submitting data on their programs to the Transformed Medicaid Statistical Information 

System (TMSlS), and over the course of the coming months CMS will be validating the quality 

and completeness of the data. CMS' s ongoing goal is to use advanced analytics and other 

innovative solutions to both improve TMSIS data and maximize the potential for program 

integrity purposes. This will allow CMS to identify instances like a beneficiary receiving more 

hours of treatment than hours in a day or other flags that necessitate further investigation. 

Use Data Innovation to Empower States and Conduct Data Analytics Pilots CMS will share 

its extensive knowledge, gained from processing and analyzing large, complex Medicare data sets, 

to help states apply algorithms and insights to analyze Medicaid state claim data and identify 

potential areas to target for investigation. 

Offer Provider Screening for States on an Opt-In Basis - CMS will pilot a process to screen 

Medicaid providers on behalf of states. Centralizing this process will improve efficiency and 

coordination across Medicare and Medicaid, reduce state and provider burden, and address one of 

the biggest sources of error as measured by the Payment Error Rate Measurement (PERM) program 

today. 

Enhanced Data Sharing and Collaboration between CMS and the States. CMS will work with 

States to enhance data sharing and collaboration to tackle program integrity efforts in both the 

Medicare and Medicaid programs. For example, CMS is making the Social Security 

Administration's Death Master File available for States to support provider enrollment activities. 

Publicly Report State Performance on the Medicaid Scorecard- CMS has released a 

Medicaid scorecard that presents state performance measures related to their Medicaid programs. 

Future versions of the scorecard will include state program integrity performance measures like 

PERM, the Medicaid improper payment error rate. 

Provide Medicaid Provider Education to Reduce Improper Payments CMS will strengthen 

efforts to provide effective Medicaid provider education to reduce aberrant billing, including 

education focused on comparative billing reports. CMS also will work with states on other provider 

facing tools and investments we are currently making. 

CMS's Existing Initiatives Protect Medicaid 

Managed Care Rate Reviews- Beginning in 2014, CMS implemented enhanced review of state 

capitation rates for coverage of the new expansion population to ensure that capitation rates are 

consistent with federal requirements and appropriately contain costs. CMS has since expanded 

that review to all managed care capitation rates and adopted a regulation providing more detailed 

requirements related to rate setting. All managed care rates are reviewed to ensure that the rates 

2 
125 

are actuarially sound and based on commonly accepted actuarial principles. Our rate review 

includes monitoring strategies implemented by states to mitigate rate setting risk, such as MLRs 

and risk corridors. Based on our review of these strategies states witt be paying back an estimated 

$3.2 bittion from the risk-mitigation strategies in 2014 and an estimated $5.5 billion return from 

those arrangements in 2015. This represents about nine percent of capitation payments for newly 

eligible adults in 2014 and 2015. 

Ensure State Compliance with the Medicaid Managed Care Final Rule- CMS will monitor 

state implementation of, and enforce compliance with, program integrity safeguards such as (I) 

reporting overpayments and fraud, and (2) screening and enrolling Medicaid managed care 

providers. 

Financial Oversight. CMS engages in robust financial oversight to ensure that when states 

ultimately claim for federal match on their expenditures, that federal Medicaid funds are spent 

lawfully and appropriately. We use specialized accountants and financial management specialists 

to review state claims each quarter, using trend analyses, environmental scanning and the results of 

external audits to find anomalies, and request additional docwnentation or justifications when 

necessary. We also engage in state specific reviews, going on-site to review state Medicaid 

Fv15rams to ensure that state expenditures and corresponding claims for federal matching funds are 

allowable. In Fiscal Year 2017, these efforts resulted in questioning $2.7 billion in Medicaid costs 

and averting nearly $500 million in questionable reimbursements. 

• Payment Error Rate Measurement (PERM) Reviews The PERM program measures improper 

payments in the Medicaid program and the Children's Health Insurance Program (CHIP) where 

each state is audited on a rolling three year basis and annually produces national and state-specific 

improper payment rates for each state Medicaid program. The improper payment rates are based 

on federal reviews of the fee-for-service (FFS), managed care, and eligibility components of 

Medicaid and CHIP in the fiscal year under review. Through the PERM program each state is 

reviewed once every three years. 

Medicaid Eligibility Quality Control (MEQC) Program - The MEQC program uses statedirected reviews in the two off-cycle PERM years to address Medicaid beneficiary eligibility 

vulnerabilities. MEQC focuses on areas not addressed through PERM reviews and on areas 

identitled as error-prone through the PERM program. 

Medicaid Provider Screening and Enrollment CMS uses multiple tools to assist states with 

provider screening and enrollment compliance, and allow them to leverage Medicare data and 

activities. These include the Provider Enrollment, Chain and Ownership System (PECOS), state 

s'lie.~isits for technical assistance and education, Medicare data compare services, and the Medicaid 

Provider Enrollment Compendium (MPEC). 

State Program Integrity Reviews - CMS conducts reviews to determine if state policies and 

practices comply with federal regulations, identity program vulnerabilities that may not rise to the 

level of regulatory compliance issues, identify states' program integrity best practices, and monitor 

state corrective action plans. 

Medicaid Integrity Institute (Mil) CMS's Mil provides training and education to more than 

one thousand state Medicaid PI staff annually. Course topics include provider screening and 

enrollment, managed care, personal care services, opioids, beneficiary fraud, data analytics, and 

investigatory techniques. 

3 
126 

Healthcare Fraud Prevention Partnership (HFPP) - The HFPP is a voluntary public-private 

partnership between the federal government, state agencies, law enforcement, private health 

insurance plans, and healthcare anti-fraud associations that aims to detect and prevent healthcare 

fraud through data and information sharing. 

CMS's Unified Program Integrity Contractors (UPICs)- CMS's UP!Cs are contracted entities 

th~t p~rfami activities that identify and reduce fraud, waste, and abuse by individuals and entities 

furnishing items and services under Medicare and Medicaid. The UP!Cs work closely with states 

to perform numerous functions to detect, prevent, and deter specific risks and broader 

vulnerabilities to the integrity of the Medicaid program, including conducting provider 

investigations and audits. 

4 
127 

Agent Eligibility and 

Underwriting Guide 

HumanaOne Health & Life Products· 

HUMA.NA 

one. 
128 

HumanaOne' Eligibility and Underwriting Guide 

Humana is proud to offer HumanaOne health, 

life and dental insurance for individuals and families. 

The HumanaOn~ br<lnd ot individual pmduc.1s are l11sur~d by sub$ldiades of Humann, lnc. 

Thi~ is yaur guide to assessing your client's eligibility for HumanaOne health and lffe products. Applications are 

subject to approval. For information on Human a One products and processes., please see the HumanaOne Product 

and Pfocess Guid~. 

Use the phone numbers. and addresses below to g£>t the information you need quickly. You can also contact your 

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We v<Jiue your partners hlp, and we thank you for your 5upport. 

Important Phone Numbers and E~Mail Address 

Agent Service Center Hrs: 7am-7pm M-lh {CT) 

7am-6pm F (CT) 

App!itation team Ka: 7am-7pm M-Th {CT) 

7am-6pm F (CT) 

9arn·3pm S (CTJ 

Billing and premium 

Health daims and customer service 

Dental claims and customer ~erv!.ce 

·Life claims and customer service 

Licensing and commission inquit1e~ 

Important WebsitE!s 

J.BOO·Bll-2572 

1·800·552-0758 

1-800· 458-1354 

1-800-833·6917 

1·800-:233-4013 

1-800-458-1354 

1·800-558-4444 <8919 

Humn:naOne agentworkbem::h Human.uom 

SJ!cs support matetiak, agent commw1lcat!ons HumanaOnc agent workbem:h 

Rare cal,ulatcr ordering www.humanaoner.ates.rnm 

c--Query HumanuOnr. agent work. bench 

agentask@humana.com 

IMPORTANT: Please advise your client not to cancel any t.urrent health or life insuranct! coverage until receipt of written 

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129 

Eligibility and underwriting guide 

Table of contents 

Eligibility requirements .... . 

ls..s.ue ages. . . ... , ........ . 

Children-only health coverage .. 

Current pregnancy/expectant parent .. 

Oth~r coverage ... 

u.s. cith:cnshlp. 

Foreign traveL. 

Toban:o usage .. 

Health underwriting guid€1ines , , • . . . . ......... , ...... . 

Ineligible occupations (not applicabl~ in Florida}. 

Health build chorts. 

ln~ligibh.' health (Onditions .. 

Ad ions for common mec1kal (CndJtions-r!der states. 

A{1ions for common medica! conDitionsH· .. notHlder states ..... 

Actions for cancer-rid~r and non-rider states •..•.... 

HurnanaOne Short Term Medical Plans., .. 

e-Query service (Ask an Underwriter) 

..2 

.2 

. 2 

. ............ 2 

.2 

. ... 2 

. .. 3 

. ...•........•.....•.. 3 

"<3 

.3 

. .4 

11 

25 

JB 

. .... 41 

e-QtJer'y is a service which alto~ you to as5ess your client's insurance eligibi!ity more accurately with the assistance 

of a Humana underwriter. It directly links you to a dedicated team of underwriters by means. of an electronic: form 

hosted on HurnanaOne agent workbench. 

e-Query does not repfac:e the Underwriting Guidelines herein. but rather compliments it, To aa:ess the e~Query 

form you will need to log onto the HumanaOne Agent Workbench from the Agent Portal on www.humana.com, 

and dick on the "e-Query/Ask an Underwriter" link under the questions section, e-Query is not currently available 

in the state of Wisconsin. 
130 

Eligibility requirements 

For health coverage 

) Issue ages: 2 weeks- 64 Yl years 

Newborns on family and child only applications will be eligible for coverage when they have had a t'NO week. well 

baby exam with normal results. 

Please Note: This applies to full term babies, If they are born premature or with complications, we will underwrite 

as necessary. 

> Maximum issue age of a dependent child varies by state. 

> Dependents may include stepchildren, .and/or legally adopted children. (Dependent definitions vary by state.) 

Children-only health coverage 

Children can be insured alone. The custodial parent or legal guardian who can attest to child's health history must 

compl~te the application. If an undervYriting interview is required. the person that completed the application 'lflli!l 

be interviewed. The youngest c.hild will be the primary applicant and any others will be listed as dependents, 

Newborns applying for coverage require a two week well baby exam with normal results. Medica.! records are 

required for any child that is 2 weeks to 2 months of age. A child only health policy is ineligible, if any family 

member of the applicant(s) is pregnant or currently an expectant parent. See the terms indicdted under Current! 

Pregnancy/Expectant parent. 

Application scenarios: 

1) Parent A has custody and resides in a state tn which Hum ana offers coverage. Parent B wilt be paying for the 

health insurance. Parent A must complete and sign the application to verify the health history. Parent B must 

sign the payer portion of the application. 

2} Parent A has custody and resides in a state in which Humana does NOT offer coverage. Parent B will be 

paying for the health insurance. Because benefits are based on the applicant's primary resident, Humana will 

not be able to accept an application for the child(ren). 

3) Bo1h parents share cus.tody and reside in a state in whir.h Human a offers (,overage. Either p<Hent can 

complete and sign the application. 

4) Both parents share custody a,.,d reside in a state in which Humana offers coverage, however, their dependent 

student attends school in a state where Hum ana does not offer coverage. Coverage may be extended to the 

parents and their dependent tal lege student{s}. 

Current pregnancy/expectant parent 

For family applications, before apptylng for coverage, the mather mun be two weeks postpartum, with no adverse 

findings, and the newborn must be two weeks old and have had a normal two week baby exam. 

For child~only health policies. if any family member of the chitd is currently an e.xpectant parent. the application is 

ineligible. Before applying for coverage, the mother must be two weeks postpartum, with no adverse findings, 

and the newborn must be 2 weeks of age, and have had a normal two week weft baby exam wlth normal results. 

Other coverage 

A person who is currently covered by another plan must repl.ace that (OVerage witl1 Humana. However, it is 

important that he or she does not cancel existing coverage until written notification is received from Hum<ma 

that coverage will be issued. Some states may require a replacement form. 

U.S. citizenship 

The applicant's primary residence must be in a state where the product is approved for sale. If the applicant is not 

a U.S. dtizen, he or she must have lived in the U.S. for a minimum of one year, plans to remain in the U.S. fof over 

three years, has had a normal physical exam with blood work from a U.S. physician, and has no plans of foreign 

travel of greater than three months continuou:sly. An immigration ph~ical does not meet the criteria for an 

acceptable physical e):am. 
131 

Foreign travel 

An .applicant who live~ in a foreign country is not eligible for coverage. nor is an .applicant who has plans for 

extended foreign travel of three consecutive months at a time or longer. (May vary by state.) 

Ext:~ptions: An applicant who, for the purpose of Missionary Work. has plans for extended fol'eign travel for 0-2 

years from the time of the appliciltion is ~ligible for coverage. An applicant with foreign travel plans e.x<.".ee-ding 2 

years for Missionary Worl;. would not be eligible. 

An applicant who, tor the purposE! of studying abroad or occupational/business travel has plans for extended 

foreign travel for 0-2 years from the time of the application is ~ligible for Leverage. An applk.ant with foreign 

travel plans exceeding z years for studying abl'oad or occupationallbusine~!5.1tavel would not be eligible, 

Tobacco usage - health 

Humana has: tVYO tohacco classes: 

1. Non-user: Does not use ANY form of tobacco currently or has. not used ANY tobacco cessation products in 

the last 12 months. 

2. Tobacco user 

People who do not smoke or use any form of tobacco have their premium discounted. Humana. conducts random 

nicotine testing during underwriting (e:view. 

Health underwriting guidelines 

Th~ !allowing (ircumstances may result in a person not being eligible for health coverage: 

1) Currentfy pregnant, an e:-:pectant pa(ent (including fathers and/or other family members)-entire 

application is ineligible; 

2) Health history that includes one of the ineligible health conditions; 

3) Height/weight that exceeds the limits identified in the health build chart; or 

4) Employment in an ineligible occupation. Not applicable ln Florida. 

5) ~on-U.S. citizen who has not con:~.ulted i1 physir.ian in the U.S. 

6) Health history that includes 3 or more risk factors (build/overweight, elevated cholesterolleie'li'ated 

triglycerides, hypertension. tobacco useL 

7) Hypertension with SO% rateable build. 

B) Hypertension with current treatment for Sleep Apnea. 

A "yes" answer to any one of these circumstances may result in a declination of coverage. However, this 

information only provides their potentia[ eligibility; it i:~o nat a fin~l determination. All final cove-rage decisions are 

mad~ by our Underwriting department upon receipt of an application. This. assessment is. not an offer of oov~rage 

orr~ notlc.e of declination for your dient. 

Ineligible occupations (applicable to Florida for applications 2/2/2010 and after) 

> Air traffic controllers 

> Asbestos and toxic chemical workers: 

> Commercial fishermen who do not return to port every day 

> Divers (professional scuba or skin) 

,> E~plq~ive workers 

> High-risk aviation {experimental and test pilots, crop dusters.) 

> Jockeys 

) Oit and natural gas workers, including offshore operations 

> Professional auto racel"i 

) Professional rodeo participants 

> rrofessional and semi-professional athletes {Note: Golfers are acceptable) 

) Structural steel workers, iron workers and steeplejacks 

) Underground miners 
132 

4 

Health build charts 

Use this table as a guide to determine if an applicant is rateable because of his or her build. Hum.ana may request 

a paramedical exam {at our expens-e) to confirm an applicant's height and weight. An applicant must have 

maintained an acceptable bl.lild within the 12 monthS prior to applying to be considered eligible. If an individual's 

weight exceeds our "Standard" class but tess than our "Dedine" limit, they will be subject to a premium increase 

o/25-50%. 

To qualify for the lower build ra1ing, an applicant must lase the weight to reach the lower rang~ and maintain the 

weight loss for 12 months. 

AppJkant~ who have applied for individual insurance and who have been offered a r.ating due to build may a!so 

have an obesity rider added to his or her offer. Any diagnostic procedure, treatment. or surgery for obesity 

including any complications thereof, will be excluded from coverage. In states where riders are not offered, 

coverage may be dedined. 

!fan applicant is app!yiog for both a HumanaOne h-e-alth plan as welt as for HumanaOne Term life Insurance, the 

Health Build Chart will be followed during the underwriting process. (May vary by state.) 

Female Male 

-- -- :standard decline 

4'11" 88-151 l:os 1751bs 

5'0" 90·l>Sibs 180 ibs"--··-

5'1" 93-160 lbs 187 lbs 

5'2" g7-1G7lbs 193lbs 

5'4~ 10.2-189 bs 211 lbs 1----+.:.::__:.;..__+ ··----- 5'5"" 106·i9tl !bs .21Bib5 

5'3" Hl0~1721bs 199lbs 5'6"' 110-.200 lbs 2:211lbs 

5'4" l0l-l7Bib. 2061bs s·r 1l.3·Z06 lbs 232 lbs 

5'5"' 106-183 !bs ··- -----·-

211. !bs s·a~ ll-~lli;;-···--t~·-.. ----

5'6" 110-189\bs ll9lb:5 5'9" 119·Zl9lbs I 2d5 A=ls 

5'7" 113-195 lbs 2251bs 

&·r 138-257 lbs 2:67. !bs 

6'Y 141-259 lbs 2891bs 

6'1" l34-232lbs 266lbs 6'4" 145-266 lb< 298 lbs ~·-~---~~~--~~----_J 
133 

Ineligible health conditions 

A series af medical questions will be asked of each of the proposed insured. Any applicant age 1a and older must 

review and attest to the questions individually, {age requirements vary by :state}. Befaw is a partial listing of 

conditlom that may cause Humana to dedine coverage. The lirt is not aH~indmive. 

Please note that if your client ls applying for both a h-ealth plan and a life policy at the same time, and they are 

denied a health plan based on their health status, the process will discontinue as well for the life policy. 

Below conditions are permanent dedin~s. unless otherwise indicated. Handling of the below conditions may vary 

by state. 

A 

Achalasia, card!o .spasm 

A<hondropla.sia 

Auomega!y 

Addison's disea.se 

Adrenal disorders 

..;;L.d, A!'\C, or HIV 

Akohol dependence or abuse-lndivlrlua! conslderat!'On, 

after S :,-ears of recovery 

Alport syndrome 

Alzheimer'.\ dlseas~ 

Amyloidosis 

Amy?trophic lateral sclerosis (Al5 or Lou Gehrig's dise.ue) 

Anemia-aplastic Cooley's, 8~12 d!!ctidency, hemolytic, 

Med1terranean, pernicious, sid:.!e: cell nr Th.l!am:rnia Major 

Anencephaly 

Ar\eurysm-lf present or within 5 year~ 

Angina 

Angloplasty 

Ank.ylosing spom;ly!itis 

Anorexia nervosa-mdividua1 consideration, <~fter 8 years 

of re<overy 

Anticoagulant 'therapy 

AntiphosphoHpid syndrome. 

Antic:ardioHpln antibody syndrome 

Aortk arch arteritis 

Aortic insufficiency/stenosis/regurgitation-moderate 

Aortitis 

,Arnold·Chiari malformatlon 

Arterial embolism {dot) 

Artet"1al CKdusion 

Arte-nosderosts, atllerosderosis 

~rtcriosderosis obliterans {ASO) 

Arteriovenous malformaticm (A-v malformation} 

Arteritis 

Artifidal heart valve 

Asperger's syndrome-ext:P.pt II'L Indiana 

Asote!i 

Ataxia telangiectasia 

Athero_sderosis obliterans 

AtherosderO$i$ thrombotic disease 

Atna! fibn!!at10n-one event lc~ than 2 ya21rs ago or murtip!e 

events or chronic or with Pacemaker or C.ardiverter 

Atrial septal defect-presen11Jr if surgically correo~:ted 

with c.ompliutiom 

Autism-varies by state: 

Bant1's syndrome 

Basal cell carcinoma-it present 

Berger's disease 

Biliary cirrhosis 

Bipolar disorders 

B!adrler entropy-symptom~tlc 

Blastomycosis 

Brachia! plexus disordf'.f 

Br<Jin <~ttac:k 

Brain tumors 

.Oright's dis-ease 

Bronchie<:tasis-if !u1'9 r~ection, no residuals. 

no tobacco- individual consideration 

Bronchia! ectasis 

Bruit 

Buerger's d1sea\e {thromboangntis obliterans) 

Bulimia-individual considration. after a year:s of re-covery 

Bur kin's lymphoma {ma!ign<~nt lymphoma) 

Bypass surge-ry 
134 

Ineligible health conditions 

c 

Cachexia 

Cancer with lymph node involvement or metastasis 

Cardiac decompensation 

Cardiac defibrillator (implantable} 

C:ardiac ot tomorbidlt)' risk. factors-3 or more 

(build/overweight, elevated cholestero!l triglyercerides. 

hypertension, tobacco use) 

Cardiomega[y 

Cardiomyopathy 

Cardiospasm 

C~liac Disease 

Centra! serous retinopathy 

Cerebral palsy 

Cerebrovascular accident 

Cerebrovas.c1.1lar disease 

Charcot-Marie-Tooth disea~e 

Chedial:: Kigask.l syndrome 

Chondrocafdnosi:sChristmas disease 

Chromosomal al:tnormalitles 

Chronic granutom<Jtou~ disease 

Chronic glomerulonephritis 

Chronic hepatitis 

Chronic obstructive pu!mona(y diil!ase (C:OPO) 

Chronic progressive extemal opthillmoplegia {CPEO) 

(krho~s of the tivt::r 

Coarctation of the aorta 

Cocaine abuse 

Colitis (ulcerative) 

Collagen diseases 

Congenital heart anoma!ie:sCongcnita! lymphedema 

Congestive heart failure (CHF} 

Connective tissue disorder 

Cor pulmonale 

Coronary artery bypass surgery (CAEJS} 

Coro-nary iJrtery di<;~a<>e {CAD) 

Coronary fistula 

Coronary heart disease {CHD) 

CREST syndrome 

Creutzfcldt·JakClob disease 

Crig!eer-N;:,Jaar syndrome 

Crohn disease 

Curvature oi the ~pine with pulmonary, c;:,rdiac or 

spinal coal involvement 

Cushing syndrome/disease 

Cystic fibrosis 

Cystic kidney diseases 

Cyrtic medial necrosis 

D 

Dejerine type sclerosis 

Delirium 

Delusions 

Oementia 

Dernyelinating diseases 

Dopr.e~sant addiction-current history of addiction with 

current usage 

Dermatitis herpetiformis-with evidence of significant 

immunologic compromise 

Derma1:omyositls 

Deprc$sion-major. if hospitalization required or with 

suicidal attempt or tdeation 

DiGeorge syndrome 

Diabetes insipidus 

Diabetes meflitus {type 1 and type :Z) 

Down syndrome 

Drug dependence ot i!buse 

{illicit, illegal, over the <o1,10ter or presuiption) 

Drug psy(hosis 

owar1ism 

Eaton-L,;~mbert syndrome 

Ebstein's malformation {Ebst~in's anomaly) 

Edwmd's syndrome 

Ehlefs·Dan!os syndrome 

Eisenm101nger's complex (Eisenmenger's syndrome) 

Ejection Fraction-less than 50o/~ or more th<ln 75% 

Embo!ism-atterial is permanent decline; pu!mon<Jry depends 

on frequency, treatment, etc. 

Emphysema 

EI'\Cephaloce!e 

Encephalotystocel~ 

En<epha!opathy 

Eosinophilic granuloma 

Epidermolysis bu!losa 

Erythema Multiforme (Stevens Johnson syndrome)-it 

present or less than one year since wmplete reco11ery or 

residuals 

Esophageal varices 
135 

Ineligible health conditions 

Fabry di!i~ase 

Factor V deficiency 

factor VIII or IX deficiency 

Familial A<tde-nomatous polyposis 

Fanconi syndrome-fancont anemia 

Fibromya!gla 

Flexure·hepatit or splenic 

Fragile X syndrome 

Fragilitas ossium 

G 

Gal.octorrhea-i1 present 

Galactosemia 

Gargoylism (mucopoty5ao:h<~rid0'5iS) 

Gastrcctomy---totill fcmoval 

Gastric: bypass/stapling 

Gastrop.aresis 

Gauche!'S dis.ease 

Gende:t identity disorder 

Generat paresis 

G[ycogen storage disease 

Gui!!ain-Batt1! Syndrome1Po!yneuritis-if present or less than 

3 years sinc'E! recoverl!.d or if residual disabilityJpermanent 

impairment 

H 

--~------.-~-~~---~-~----~~~~~-·· 

Hallucinations 

'Hand-Schuel!er-Chratian disease 

Heart attack or disea!ie 

Heart enlargementlhypertrophy 

Heart· lung transplants 

Heavy (hain disease 

Hemiph:gia 

Hemochromatosis 

Hemophilia A or D 

Hemophilia vascular 

r-tenorh-Schocn!cin purpura 

Hepatic flexure 

Hepiltomegaly 

'Hepatitis {autoimmune} 

Hepatitis A-it less than 6 mantlls after complete rec:nvery 

Hcpi;!ititis B carrier 

HepatitisC 

.. ljepatltls D (HOC or delta virus} 

Hepatiti'i E (HEV) 

HepatitiS <i {HGV) 

Hepatom1!galy 

Here-ditary an9ioedema. 

Hereditary spherocytosis-if present 

Hlrschspwng's disease-:....lt unopefated or symptomatic 

Hlstoq1tosis X 

Histoplasmosis-If present or disseminated and less 

than 3 years since complete recovery 

H!Vpt;lsitive 

Hodgkin's disea~e 

Hugh~ syndrome 

Human T-ceU leukemia virus 

Human T~celllymphotropic virus 

Hunner's ulcer 

Huntington's chorea 

Hydrocephalus 

Hydronephrosis-if present or bilateral 

Hyperhydrosis-if presem or it surgically corrected with 

residual symptoms or any (Omplications 

Hyperparathyroidism-it unoperated 

Hyper:splenism 

Hypogonadism (primary) 

Hy_popa.rathyroidism 

Hypoplastic anemia 

Hysteria 

I 

-~·--~-----·-~----~---·-----------

Idiopathic thrombocytopenic purpura {child form}~if 

present 

lgA nephropathy/Berger's Disease 

lgG subclass delidency 

Immune d1!f1Ciency 

Infectious neuritis-if presenter multi pte episodes 

lnsulln re'iist21nce 

1ntermitt~n.t claudication 

Interstitial cystitis {chron.lc}/Hunner's: Ulcer 

lntestinal infarction/Intestinal ischemia-unless acute with 

complete recovery more than 6 weeks ago 

lnte"Stin.al obsHuctlon-if present 

Iritis-it one episode, less thar1 6 months ago or 

multiple episodes 

Ischemic heart disease 

lschemlciulcerative colitis 

tV drug use 
136 

8 

Ineligible health conditions 

Jaundice (adult)-present or fess than 6 months :since 

<:ompletc recovery 

Juvenile dermatomyositi~-lf present or less than 2 yean;· 

since complet(! recovery 

K 

Kahler's disease 

Karposi's .sarcoma 

Kartagenl:'r's syndrome 

Kerat.o<onus-pre.sent -and surgery recommended 

Kidn~)l injury-major injury with history of dialysis 

Kidney failure-If chronic or a<ute less than 2 months 

sin<e reoovery 

Kidney s1one-lf present or if man~ than 4 epi.sodt!:s 

Kidney transplant 

Klinefelter's syndrome 

Korsakoff's psychosis 

Left bundle branch block 

Left ventrku1ar hypertrophy 

Lfl'gionella pne-umophilla {legionnaire's disease) 

letterer·Slwe: disea!>e 

.L.eukemiu 

Leul<oenccph<~lopathy 

Lipidosis (Niemann Pick disease} 

Liver Dbsccs.s with residuals 

liver cancl!:r 

Uver transplant 

Lobstein's disease 

Lou GE"hrig's disease {ALS.} 

Lung cancer 

Lung transplant 

Lyme's disease-if present 

Lymphoblastoma 

lymphllma 

Lymphoma, Hodgkins 

Lymphomatoid papu!osi.~ 

M 

M<~laria-more than one occurrence with 

complic.ations or frequent disabling attac.~s 

Manic di-sorders 

Marchiafava~Mi-theli syndrome 

Marfan's syndrome 

Med~11lary cystic (idney 

Mcdulfi:lry sponge kidney-if present or !cs.s than 18 ycilrs 

of ag;e or it more: than 18 years of age-bilateral 

Mentalretardati<Jn-severe, emotionally unstable, 

seizures or psychiatri( impairments 

Mesenteric vascular disease 

Metabolic syndrome 

Miaotephaly 

Milroy's disease 

Mitral imufficienr.y 

Mitral stenosis. 

Mixed connective tissue diseas~ 

Moebius syndrome/Mobius syndrome 

Mucopo!ysaccharidosis 

Mu!tlcystlc !ddnC"y 

Multiple myeloma 

Multiple personality disorder 

Multiple sclerosis" 

Muscular dystrophy 

Myasthen.ia gravis 

Myelitis-if present or less than Ei months sinte 

complete recovery 

Myocardial infarction (MI} 

Myocardial isc.hemlil 

Myotonic dystr-ophy 

Myxedema--it present 

N 

Nad·Pate!la syndrome 

N<trc.otlc use/addiction 

Nephritis (chr.oni!:} 

Nephrocalclnosi.J; 

Nephrosclerosis 

Nephrotic syndrorne. 

Neuritis-if present 

Neurofibromatosis 

Neurogenic. bladder-if present 

Neuromuscular disorderj. 

Nfemann·Pick disease (lipidosis) 

0 

Ocdu.sion 

Organi( brain disorderlsyndromPOrgan transplant recipient 

Ostl:litis fibros01 cystica 

Osteitis fibrosa t:y.!;tica disseminata 

Orteitis fibrosa (ystica generalisata 

DsieogenesU imperiect211Lobstein's Disease 

O~.tarian cancer 
137 

Ineligible health conditions 

Pacemaker 

Paget's diseasc 

Pam:reatic: cyst or pseudotyst 

Pancytopenia 

Paralysis 

Paranoid dlsorder 

P<lr;:~plegia 

Parlo:inson's disease 

Paroxysmal notturnal hemoglobinuria 

Pathologh:al fractures 

Pemphigus 

Percutaneous traruluminal coronary angioplasty 

f"erJarterit!s nodosa 

Petipheral O(clusive atter!ol disease {POAO) 

Peripheral vasculur diseuse or intermittent claudi(iltion 

Pernicious anemia 

Pick's disease 

Pierre Robin's syndrome 

Pituitary Adenoma-if present 

Pituitary dwarlism/Achondroplasia 

Plasmacytoma 

PnetJmocyst!s carlnli pneumonia {PCP) 

Pneumonitis 

Poliomyelitis-if p;esent or more than one limb trwol\'ed 

Polyarteritis 

Polycystic kidney 

Polycystic ovarian syndrome (PCOS) 

Polycythemia vera 

Polyglandular autoimmune disease 

Polyneuritis (Guil!ain-Batrc syndrome)-if present or 

less than 3 years since recovered or residual di..-abi!ay/ 

permanent impairm~nt 

Porphyria-diagnosed leso; than S years prior to applitation 

~Portal hypertension 

Post-Polio syndrome 

Pregnant, an expe<t.ant parent {including fathf:H andtor 

other family members)-the entire applic.ation is ineligible 

Primary biliary drrhosis 

Primary pulmonary hyp-erteruion 

Primary ~derosing cho!dngitis. 

Pdnzmental's a."lgina 

Pseudocyst-if pte-se-nt 

Pseudotumor carebri 

PsittJ(OSis ~with extensive respi(atory involvement 

Psoriasis-if ~vere or use of UV light 

Psychiatrk disorder-severe induding childhood 

and ado-lescence 

Psychosis 

Pulmonary embolismtthrombos!s-if present, on 

anticoagulants or if less than 1 year 

P'ulmonary fibrosis 

Pulmo-nary he.art diseaseo 

Pulmonic insufficiency-it moderate to severe 

Pulmoni( rtenosis 

Pulse less disease 

Pylori( Stenosis-if present 

Pyogenic arthritis 

9 ......................... . Quadriplegia 

!!_, ___ ....................................................... ---·-.. ---·-·· Ref! ex sympathetic dysttop hy 

Renal failure-chronic, uremia 

Renal hypertenston 

Renallnsufticiency-chron1c or renal failure 

Respiratory fuilure 

Retinu! dct.:~chment-lf present 

Retinop<lthy-(cnhPI serous .:md diabetic 

Rhabdomyosarcoma 

Rheumatic heart disease 

Rheumatoid arthritis 

Russel-Silver syndrome-if less than 24 yeaH ot age 

S<:~n::oidosis 

Schizo-aHective disorders 

Schizophrenia 

Sderoderma~~gt!ncralized 

Senility 

Severe ..::ombineti immunodellchmty 

Se-xual deviation or disorder 

Shunt 

Si<:~lden"Osis 

Sick sinus syndrome 

Sickle. cell ane.rnia 

St!ent myocardial ischemia 

SJogr!!ll's d1sease 

9 
138 

10 

Ineligible health conditions 

Sleep apnea-central or mixed sleep apnea, or current 

tobac(o user, or with ratable build, or with hypertension 

or if surgery suggested 

Spherocytosis./ Hereditary Spherocytosis-if present 

Spina bifid.a {Manlfesta) 

Splenic f!ex:urc 

Spondylitis 

Sprue disease 

Spurway's disease 

Status As:thmaticus 

Stents-artery or blood vessel 

Stevens Johnson 5yndrome /Erythem.a Multiforme-if 

present or lc~~ than one year since complete reco11ery 

or history of with residuals 

Still's disease 

Stimulant usage 

Stokes-Adams syndrome 

Stroke 

Sturge-Weber syndrome 

Suicide attempttideation 

Syndrome X 

Syphilis-if present or less than one year since complete 

recovery or more than t year since complete recovery without 

two normal lab results 

Syringomyelra 

Systemic f1brosderosing syndrome 

Sy~tf!.mic lupu<; P.tythematn~i~ (Su: or lupus) 

Systemic sclerosis 

T 

Takayas.u's arteritiS 

Tetralogy of fal!ot 

Thalassr.mia major 

Thrombocythcmi.:~ 

Total anoma!ou~ pulmonary venous connection 

Transient ischemic attack (TIA) 

Trans:pi.'Jnt {except (.omeal) 

Transpo.sition of the great vessels 

Transse)(Uallsm 

Tricuspid atre-si,a 

Tricuspid insufficiency/regurgitation-moderate or severe 

Tdcusp1d stcno.~ois 

Tnsomy 21 syndrome (Down syndrome) 

Truncus arteriosus 

TuOerou~ sclerosis 

Turner'S syndrome 

u ··········---···-.. ··-·····- Ulcerative co!itisJproctitis 

Underdevelope.d left ventricle syndrome 

urachal remnant-if present 

Uveitis-if chronic or less than 6 months since recovery 

v 

Valv.e disorder 

Valve replacement 

varicos-e veins of the esophagus 

Vascular hemophilia 

Ventricular :arrhythmias 

Ventricular septal defect-pres-ent or less than 1 ye<~r s:inc:e 

tepa.tred or if nu·gical!y corrected witl1 complications 

Von Hyp.ote-Lindau syndrome 

Von Wille brand's dlse:ase/Pseudohemophi!i:a 

w 

Waldenstrom's mac:rog!obutinemia 

Warnick's dise~~e 

Wegener's granulomato-sis (Wegener's syndrome} 

Weight reduction surgery-other than gastric banding 

Williams. syndrome 

Wilson's diseas-e 

Wiskott-Aidric:h syndrome: 

X 

XYY syndrome 

Zollinger· Ellison syndrome 
139 

Actions for common medical conditions-rider states 

These guidelines may vary due to state·spedfic la"WS and regulations but can be followed as a general outline. This 

i:t not all inclusive. Final decision is based on underwriting review. Underwriting assessments in the below grid are 

based on customary and usual treatment seen for the conditions noted. Below are examples only; Humana will be solely responsible for the final underwriting decision, which is based on ihe completed application and the applicant's health history. Guidelines are subject to change without prior notke. 

NOTE: If an applicant on an application requires more than three exclusion riders (tvvo in Indiana). the applicant 

will be dedined. 

Condition ~ r.st:>rVP 1~ rrgllt :D rate 1CK :IK- ron~tion andlor mE'di(at/o" 

~~:!~:;:;:;;:!~~:::~~~:~:~~fr~:;:;;~s.:~~~~'::fl S1500 or lower $2500- SSOOO S200D- ~5200 $6000 or hlgher 

f-rn<d:-'-'-i::C~C'tio':;"'::mc:'·-:""':::':.:11<::,· ':.""~•:."::m::"'"='m::•:."":::.' ---~f-rl:.:•.::du::ct::i.::bl:.:..e: plus Rx deductible plus R)( dedudible no Rx _ ~~ductible plus RlC 

Add Koflu.>~f GERD/ He.artburn 

f--~,,-~~-,-.l,-no~l~l~-,~~1>-len~,.--.~n:-~:-!M~.~--u-~-:to-~-m-,~~i(-,"-~-~~~t~-,.~i~~,,----t~S:a-,~oa-ro~· -----~~~-~~d-,~d----r.S~t<-M~a~ru ___ ,_ 

(QTC only). n('l ri:<O:Tll'1'it'f1cieU t'OfiY.J('!3!ir.n!t nr ti?"Si;f':::\lc_~-,------r.,--.,-----::-.,--+-.,-.,-----i-:---:--:--:---:---1 

Pri!SE:nf. llfi!:Sfdpt:on me:c!(a.iio:'Hl, RrG~ Srdndnm or n.are Up 5t.;odatd SJ~ndard tJ' :l.:t:e Up 

no h1atd ht--J1"1~<1 nrE:"'ir.-m 't..Y /l. OH: KY !'. OH: 

Stand<ltc: or ruder S1dndaHl Ul ~id~l 

1-- ?n:!scr-;jl!HAl Mm!lc<r;ion us.eoJI:e!ntty, hia).ai.hm.f1li•. --bfti~~~,-, -----t-':Ri:::d!c:.!f:..:c.::..;.::;:.-__ -r.R~ifl-f:r-------+:-R,.:.\$8'==='---j 

----·-·----·--·-----

~ 

.. --.. ·+------+-·------------- ----·-- Acne/Rosacea 

f---n.:.•~.:.'~'·-"~o~~re~.r~m~•n~to~r~c_K~·"~"~"·~·~,~~~------·-- ~s'~"-~'Oa~rd~------1~s=:~~d~~;:.d~~---t'~"~"d~'-"-------·rs;c'•-'d~~~~d~----~ ?w;a.p:ir..r1 m:'!-j:,, r:t < G fl'l':r.:hs :;iutl! r'llf'J ~>!-e-. no lbf.t~~ S;.anci<J.'"d or P.iltifl(: Sl~od~:1~ Sgr.dilr<ll~ :\.:u::;; 

f~<w:.:~n<! or E{,!Ul\'o'Jlent KY & OH. • K'r' & OH. 

fil'5C.f:p~r.:'" mL'\ls, cvmpletec ~ 6 m:m:hs agr1. (Uillv!~;e 

re::o:-•i'!!'f, Wl A<:<u:CJ.'l~ t:-r ew..:1vcl~n; 

/•.{cu:ane ~rP.atment vi ~u:-.•sl~t,t_ or ,; l \'oO-M Snce 

~n~n;ml!nt comple!f~ 

/>.c;:v;ane m::.umem vi e:<'J"'<Jiet!1. m > 1 '{f!!:lr ago o;:f1C<! 

tH!C<1ll!!tll tomplewr.:<t:'\lery 

-~~2':~~~ .. ·-·------·--- ft~':!)l'l'fl!'!/Fle~, pel"ldrfi'J o• 'iC1reau!f·ti "'~!lfl(] 

~~asor,,;J pt~(np<t\:nmetis !3 ref:JI:; .cr !25.~ per '(e3r. ar 

01( ~rc ir!"lrm.momer.opy tH!cltrru~n: 

S~and<~rd or Ridt!! St.:ndaH! or R·d2! 

Rtder 

Sti!ndard 

,_,-,.-5-

0

;-----·-fc,c-.,-,.-:cscc,":-·-------l:c1,_-,,4--·.·-,,-·--.. ---......... .. 

Nl..' NV: NV: 

D~l·r·~ 11 ;Qt;ii~(l)BSer ()(:dme 1i l~..:o u:se .DedmE d IOb5W> <.~Se 

i'te",.~f:p:ron rre<t. mort' :han J tt;rdl:c. per}""-"'· na S:a.'lciard :::r Ratit.g ~;,;nd.:l!d or Riltlflq St<indaro' Sl<:".d3.tci o: ~3:r:1g 

II':"(Tl:Jilt''\here-,;o'( t~eiltme!\; KY & GH· KY & OH' rY & OH 

J----.---~------------+'StC:..a~:.::'"::.'"::..'':.::".:;:Ri:Cdr_< --f-'S.::":.:"'c:..'Y.::.(! m Rid!\'-'--f-------+'-SI¥_._d<V_o_n_r R_id_"---1 

W:th <Jr wdlCc! p>eo;~n!Jeri 1\l"!"J~·~,:,ti-::;!;~ turrs.;m Of Ridei fM~ St:1mf.itrc- l.:lr ~·de' 

,.~.ur: r:nrrJ;notl;.;Jdll)' prf:S<':fltl.:drnedrc,n:Hh 

RtC:t"' - i:nnwnoth>?r~O)' 1-:----:·------,------------------- ----·-·-·+------'- ----·---- AmpuUJtton/Prosthc:s!S 

!)tilnl!ard Sei!n<.larc -- S:!!!\!i,lfd Stilndard 

lhllt!f R·der 

KY, NM: (k(~r;lc 't.'I,NM:De-dinc 

C~l::SeG uv diabei~s. scveo~ ,J!t(:fy o~l.'<l~ o! oth~lf 

d:'it!dSl~ • . 

!Rd·ne Dt'(im<! 

Anemia~ other tha.o anemia fisted in the inelf9lble 

he<Jith (:ondhiom list 

-~·~·---·----·--·---------~;;;d·----+,-,-"""-.-,,----

~tandar-C ~tand;m.J 

Stamf,mC: 5\ilf!dilid 

Rri:!Cr RH:!t!f 

J::Y, NM: Hedirtc KY. NM: Dedinr. 

0~1111! Dedi a~ 

An~ur~m----------------------+~---------+=-~-------1=-;----·-----1~=---------l r>r<~i:ru Drdr,!: Ot'difi!: f>edJrle DP.dnu; 

lr.d:vldJJa\ !m:::v~!u-1! 

(Cmwler;n:o~ 

l!1cilfi~uaf 

,·::r:"'cera:\Ol"l C'ntl~der¥;Q~1 

!------- ·-~------'------'-------'-----~-· ---~~ 

11 
140 

12 

Actions for common medical conditions-rider states 

r-~----·-----~---- ·----- condition 

$5DOO or higher 

deductible ph..!~~ 

Wt:l Gmlrol!t.d Wt!llure:snipl:!oJ!I t:'le'CI<iltl011, no S!<t'u:ia::J c-1 /latioq :-r:;.•idaa.i ot P.ntll\1} Stdt~Ullrti 0' R.;:tng Cilllr.scli!t9, rm f":X't(C lhiin 2 f::! l131t'>lr. tl~~ lilsr 12 KY & OH . ~y .V. Oil: J:.Y 8 Oil: 

r-~mc_n_th_'--~-----------·~·\~·r~_no~•~d~~-'~iu~ ____ ~s_,~~d~~~"~"'-''~''~'--~------~Y~.~~·d~~'~~~··~"'~~~'-~ Counse.hn1] (.lfl[y, no mt!dica:ion Hall! 10-lO% R;t;e: 11}·2[1% St,1ndilroi 

Mthma 

t<f':'(isr. irmUfPc1, <<(l regular meG-,,-"-tto-.,·-r,~-qu.,-ire-.~;---·+-s~.-,><-i<t-,.1----- ~;~-----·- ~~-.,-ru-m-.-- -5,-an-.d;;------

Menic<!tKm u!.eonly Rid~ ~l<!l'ldarCor R~lill<; 

KY &OH 

)t.andarc ~tar.rlard or.Ralii'IIJ 

KV &OH· 

!-------:---:-~-:-~--:--:-:------~-"=~~- t>..-\eliK.dtion ~. ~tetClC !reatrtl!:'i"'t (r:o:; induiflng Albule~d P.i'de: R:der ·-.----~-R:d~ --

Rtcel Sl.~ddrdt~ Ra:u1g 

inh~Ef) l~<; ;han 3 tl;'Jll!:; arn:l/cr no eme~"iiP-f1C"i room 115its ~'I & OH: ill thepdS[ i2roomhs 

Oral ~teiOOs rec.wed ~ 3 times O! man;. than 2 fR .,,~15 

1!1 the pas; 12mcnth.s 

Attentlon D~Jfkit DiS<Jrdou/ADD/ADHD 

NQ rnHfication I)! C!Mlselin(l. nrlw ~h<;r 

2}'1!Ji5 

Mc.fe lhit1 {•llf.' m<!JkatiC'n 

Atrl.alflbrit!ation 

Smg!1· t,ver:~, nn wmmul!d ~rtt<hc,!l!OM. <mnplnle 

re.<oJ'."-!1"'{. mr;rr than l y<~,w; a~n 

Mulo;pie e...•.ems a• r.!lntinued t<5.e of med..:<Jticn or 

(lltf111iranralilt~f:ilac!;m 

''"""''.,"' ,,,,o..,,.,-,-,"'hiY-,•1'-.,o-r ----

Bad: Sprain!StrainlWhipl<~sh 

·---~.~.I.~':~~.~.:-~~-~~~-~:~e-2_ .. ____ ···--·· lf:Ssthiil\1 ;•e;u J.goorm;;h;c.o'-"'re-0 

BO!Iker's Cyst 

Oed·n.: 

-·-

S.:a.'IUilfd 

R11:ler 

'N' f!,l!~nn!y 

KY &O!l 

::a:1Ciittdl').I'RI!l'N 

JliOI!I 

il'l:lia:e<!!il:f 

't..Y &OH 

S03=li1J.fdDt Rtde~ 

S~CJ:ttiwll 

(l-:'.:1<'11! 

~~dr.e 

Bed:r.e 

S:.:l'lrlard .. _ P,t;ie: 

S:undatd 

Sl.<r:tl.VciOfR.ld;!, 

r~.r.~ Dec!m€ De dine 

r------ ·--

':.!~'ltl¥1: s:~mbrr:: Sld~d<lffi 

R:deror ?.o:ing StatYJd~(! fi.~ng 

H-t· Rc;;,, •. mly IN R<ltt:(Jnlf ll'iolo(.H!· t:Y S Ott 

~:andit!{i ·:u R1d~~ Sidr.d.l!r(iO!fbjer 

-~hl;r ur Rn:IIO.J St:m:Jd;U li.omg 

IN. R.J:eonly lf..I.RJ\,E'Oflty 

KY &lHi r.:v a 011 

S;.al"I'J'I•~ or Rt:J~: ~ar.d<m:lorit:Q~ 

~l<ll'ldd<l; '\l..aJX!<l~(j 51-~r.daw 

o~:hn~ Dt~hril! CP.din~ 

t~iil"ll'! DKifn!! Oedin~ 

l)&du-:e C""'C~ne 1./echnc 

s~~nd3~-r. ~.t.;n13-td 

... -.. -··---·-- '"'""" 'l:df'r ~ICI?T S.t.5r.O~ffl 

S:.~:lmQ Stand<Y.d St;;,'!.d<>rc 

f'n~en~. ~'fmp~ommk flid~: S:~nt!<t:d Sl·andil:11 St.r.d.v-d ·~~ 

~.-,-:~a_,.';-::-"t;lc~"~-~;":;io_n:'-~-·~:----------·---~~-·--~--- ~~-----·--· .~~~--··---- ~:'-'---

;~~~~~~:~rences. ilf re(uflent, fEff:O'>"ed {ll."_)_~_w_'''_"-fl_'_"''_" _· "_"_"'_'"_"_'t--l-''_'~_·_r~_'_'n-:1t1_'"_' -+-''_GEr · _''_r:l-l<~'_'"_"_+'-t¢1-:d-ilr_;t ----1 

Benign Pro.st<lltk Hypertrophy/BPH 

lr.(l~nta! ;,ndiny, ro symptom5, no t:-e~lrrlf!nt o: 

med:<d.hon use 

~tan-:J;;r,-:j or ll.are ''P );,;ll:l,HG (l1 fUl~ up S;,mdiifd or R:l:li? l!P St<:r.ll.lfd Qr Ri!~f! !lp 

OH & "(Y Ridf:f lor rnf'V OH t f .. Y Rider ;.,; med OH & r.Y ~Cel" fol mer: 

Pt:.f!Tl,Jnenl Ridt'f pl:l~ ?t,m"l'H~!lt P.id1•r pltl~ f't•lffliill:1rll iMf'! 

fi.J!illC t~r mecs ii..J:mg b• mt!1.':i IJT ~ D~hne 

UT • [\;!.J:~ UT · 0-i!tlir.e 

1\>~rn,\lliYil !MNph:S 

Rdtlftl.l!or•l"~eds 

UT- D1:1im~t 
141 

Actions for common medical conditions-rider states 

----------·---·--.. ·------------·--·--·----,--------·---··-. ({Jnditton We /~if!~ thf' flr;;h! to race fl)l' t~ condition ilr'!dfat mcd•calton 

IW! wNon -lfiP'Q{Iri;otl'. A rr'>«Jifil!'ff '"'rmg ;, d~/limnm~ bd!t>d an 

lht Jf!Ytfltyat~ oondlt•en lJI'll1 rn.tlmfnl .Htf/IQr PftJCfJption 

~~~.:::!'~:~:~pfMTI~~!:.,., __ ,_ ~r~:.~<J~c;:t{Jfllf. 1URP, Tl.t•.JA. TlJ!P, TUMT, ar ~.J;~er 

~'Jrgt:rj completed. f·O ktlm" up flJ:;I!d~. cc:rnp:e~e 

re<()\'l?l'y, no r~H}.JQJ t::.:rr•pll(iHiwr:. 01 rned:<:"licr. :..~se 

Bladder Infections (Cystith} 

Breust Cyst, NO<lule or Mass 

Br~st QeductioTJ/Macromartia 

~?nt:hitis 

l - 3 i!-pisa~s ,n the p,y,r '(ear, non tob~f:CO u5e:, 

<."O~t:p!e;;~ !t!Ctrve{y 

$1~00 or tower 

deductibl-e plus Rx 

Sr<H'i!!Md 

St~;1dard 

W•.:R.ate25% ~""' 

Stant~ard 

s;zsoo ~ ssnoa 

deductible plu$ Rx 

S:nnda!G 

S;;md~t5 

r<;o,~ 

VA RiE~tlS% 

Standar~ 

12000 ~ 55100 

deductible no Rx 

S!n!J!~IfC 

St~nt!rltC 

fllr:<:r 

\.'i\.Ra;etS% 

Srand<~rc 

.S6000 or higher 

deductibfe plus Rx 

Stcr,d;1nl 

S.lilnd<u•~ 

Rl()er 

lr:d:w:lu30 lr-riil·:d:J3i tnd!vic:V,jl 

<.um1U€tc;=tJ'1 com~u~atto<~ 1 con!tlclert~ucm 

~5e-,o-oo_es_a~~~-r-Ch-,-,,-_.-,o-~-,-,,l,-,-------i~,~~,_~hr.~.,~C-----\·~o~~-i~"~'~-----i~O~oo~.'"~,~----~~l~,~~jin~,~~--~ 

Carpk,~. nalob.Y..\:C U)e forth.; l:;:;t 12 .,'(].'llhs. ~{mptcn-:s .Sra!lCaro i; ite<i!nliYi! lH!"~ j()" :a<;t I! nl--:llnh~. bvtl!l flO\ ~>;!l:liJle 

aursWsJTend<mltlsiTenosynovitls 

$t«ndarc 

--s~~VJ;;;~~f·;;;,~;·.:;,h·;-;;;;;~;~;~;::~;·----·-··--- -~;;;;~~~---··-----· .. - .S~r~d~rc ?~fld~tt:. sw~dan: 

Sincle O<(UIIf:ll(Jt. 'Hl~ ret.:OIIl!:ed ~i1le: S;;m:jaq! Str~niJ¥d ~t;;r;OOru 

M~~~~;;;;~--··-·---~·-·~·"-•~·-·~-·~-·-w-• R;~;-.. ,.--•·-----~~~=-=--~~;--·-_=_-·-- ~-----·-·-

~'!"<11 Tunnel ·-------·-·-·~-----·-::-:----·---f-----------+-.. -------+--c---------j Pt~?Sent JJr res:duai.s Rid~ R:de; Rite; ~!.;;r.dar<J 

--~-gr_·{,J_Ir_e~~~~~:!~V::!... __ ~--·-·-----~:J~~:~-----f.::S'="'='":::".:..'----+S"w'-n;,;,il!,;;,c ____ -t-S'-I'_im_t·,_Hl ____ -l 

________________ CatarCJCts , ___ ------ ___________________ , 

~-r~nt P.iclf~ :tder ~~r.~r St.?r.darr! 

)("f_ {)~~I'll! r-·'(_ Drdne KY Dedi'l~ 

-~.;:;u;cagy ;;;;;;~J.h~i:;;~~;;;;~~~;~~~~Ji;-·----·- ·s;~-n-;;;;J·---- ----------------·-·---· 

5<.3ndilrr:! SI<Jnd-lH! St¥Jdarr. 

Chlamydia 

Co!on Polyps ·---------·---·-------·----· "::--:------ ---------·--------·-·--·--·--·- ?(f'Y,:!IIt Oe< ~m: (Je.;:b~ D~Xt:rw (;echrw 

13 
142 

14 

Actions for common medical conditions--rider states 

r Condition ·~--- -····------,.--·-·-·---,-----------·-- ! ;,11 fil~ffW the mJM to filii! f<Jr t~ condit!fX1 'Pldlor mediC.Uion 

%:::.':~:~;:;~:~~~=~·~;:,~:;;!:, ~";;;;;;;:~:;r::n 51500 or lower S25QQ ~ S5000 52000~ $.5200 S6000 cr higher 

medlc~tlonlas_c_<k<_"~·-"-"'"'-'~-'-m_-_~_"_'· ----- _dod_uct_l_bl_e ~Ius Rx deductibl~e c:"'::."'::R::.'+::.d•:.:d::.uct::::':.:•b:.:l•::.•::o . .:::R::.x +d::.•d:::u::ct:::lb::I•:.;P::Iu:::'::."=-J' 

toiltlm t~m 1 bettlg'l .:.O{!lyp rt':Tlt'\'f'C ..,..,1h111 ;hi! pa\t 5 R1d1~ f;~trmcm-.!10 R;~ (ue~ncr.eml Rioc-r fiJE!ITSliiliE:Iii) Ricre~ (perrr.am!m} 

~ni.urir-q ccJonQ';i(OiJ"f. sd:f:!C•:fed fAits ev;o·y lO year'i lJT. Nun·lobd<:-o- Ma~: VL Non·tohacG. Ma~ Iff. Nan-t<:>biKc • M.M UT: No,,·!!'~ · Mii~ 

ta!int;~ appf;~~- ratmf:i <miilie~. lalir~g 4ltiiES- 1a;mg o~-p:iestQba(r,e. mer !C tnb.:ls:n; IN" !( ;-;:~ba(co u~er !C mb<JC(O use11C 

77 ___ ~-----~-~------~,c=o~:r~at~ing~-----~c=o~"=~g~,G~-----I~c::.o:~ffi=tt=~~------ ~~t;~ __ 

-~1iingl" ~Jgn po!Yfl mmav~c iiJtll';9 (o!onoscopy SH!"Jr.,!fd Swmtm::i St<lnd:lrri St.1ndil!d 

W!!M th~ last 5 year~. no colon r~tKl:'l, flu .sch.edue 

evety5ye¥S 

~ingle bF1~n pcl)-p rem.:JV€'ti Qu~m{J o:;r;>i')nos-r:opy, within 

the p.!5l 5-y~ar'>110 {!lbnr~'<-lk;rl,ivlb:. ups.chet.!u!!d 

l:'~r)IJ-'Jye.lf£ 

More 11'-~1n l ~?f> re!T!Ooled 'Nittio ohe pan S ye-ilrs. 

Sw.g~C~ly rt.'fi).::Jveci {not dl.ll'ir1g caiorw~py) or p-ll't ~I 

,,11.-m s.ng~a~y rt';movt:d or follilw up sd1edu:eri f>'.l.:c.ry 

l· 2ye~s 

1 • 2 polyps rr.!TJ(;v,~ wttl':m- :he p.-,~; 5 yNr~ dunmJ 

cokmasccpy. only 1 tdoooSI:Qpy can•plec'!"J witi"Jll :he 

jl:l~( 5 fl;il!~ f--Qlh;w I;~ ~th~J,t!i:!J !!O?fi' } • 5 ~1"J1 ~ 

MorP. ;h?~-11 pdypl rerr:c.~ed ~.,fltm the past 5 years, 

~-lowupScllo!c:!l!l~t:!~'l'!:l/3-5ye.3ti 

COndyloma 

Pr1!S€n! 0! h:~:or)'OI· noHPV 

Oee:p Vein Thrombosis (DV1) 

Hi-de~ {permanE.'fn) 

UT: NQr!·lob<WJ- Mdf: 

r~tir.g appf:i!·,-

t<.lb.3c...'"O U$efl( 

CO:r,!!ing 

[};:>(h'lt: 

Rkillr (p~llllilll•~1t) 

UT. NcrHd::Jd>.:G ·Mil~ 

:miE<,; ,,ppUrc~ ~ 

tob<r.cotJserlC 

.:::o: r<Jtlflg 

Jed:r:.:: 

Rider 

UT· S5% rMing. M:!1 

tutiJC{O!ISet\ 

\IT: Ol'<ln<! roba<:e.o 

:.J'i!'IS 

PJde.-

UT· :;~; ... .,. rm!r.<;. nQD_ 

wbi'!(.i.'ti tuer~ 

UT: f:Jb<iC(r.lU~<Wi· 

D<:!d:P.t' 

HPVii!ICl!IW!dl!'r. 

s;~~,,.-;)tP.Iy 

R:lj'!f (perrnal'len;) 

IJT: NorHot.Law- M,J;,; 

Bhng~p)lh:·!r.· 

<oi:>d<cous~t!L 

(t):li.ll£19 

D~-!ir.l! 

X,l~{;-.e:nl<lm:fl!i 

Ur: N:J1Huila.o- Ma~ 

f~\lntj .ljlph;S • 

tob¥.Wti!f.'f lC 

CO:ramq 

Det:::n1.:: 

Staodaru 

?.:der 

lJT :.;~r;.)lmm;:,!1:LI!. 

;ci)G(CCU~I;; 

U 1; Tobc.ccc u~'i • 

0-'!("ill~~ 

r.PVun~lWilt!l!.n 

·;r:fl<1r3telr 

f<Jderl!Jd171ar:et'l:} RiOOlpoem;anen::J UT: Noll-loba<,l) • M.n UT: Non-toba<.'J - 111\.1~ 

Mti!"'gapph~.- f,ltin~ .app!ies · 

<obdCCO t.~~ lC :ob.:~>:cou~erlC 

CO: ra:k~<J CO:wting 

D.:..:lYie Oedine 

Ri<!ur(pt.Yr.n:£.!':1) Rir::'l':r(pEI'JTti!Ht!llll --

liL N-:m-tobac.c- '~l<u IJT: NIJ•HObiKO ·Max 

t.1tirHJ ,:pp:il'5 · r<~l~'1Q4i1J!ms· 

!obi!<':(OliS'?fJC :cba!:cousrrlC (0: ratlfl9 (O:ratJng 

OP.'C~ne Di!dine 

5tJr.dJ.m St<JndJrd 

rut:t'f (t!Qe( 

ur· :;:;:;..·, :i):l:!g, x;.rr. Uf: 5~.%ra.:r11g,[Q.{L 

(OL'<lCCO 1.<5t!fS <Ubd(t'OV~&$ 

ur:Tob<tt'(()l:-<1'15· 1JllobiKW1;SH~· 

Ce(!ine C~dine 

HP\'u<!d!!!'A':'lt<l!n HPVunlierwrme11 ~;r.-pdil!~y SCj::ati>!flly 

Oo arni~va-qthmts orU''H! ,:;:p;~ode le::.s th?r. :I rr.o.o:_h~_· '"'"'+D--ed_·n_• _____ 1

..,o_ed_,tr;_, ____ --+':..:)~X:::tl::.:"''------f-'D::.ed:.:i"='-------l 

On!: I:J)IScde-) rr:t!~- ~ ~F.i:mw:::h cOIF~4t:t'l !eo::w[y P.:der R:Cl'r 1\'C€1 St,)"njM~J 

Vl2';i%ra;,:;;glol 

i1\l1Hrhat<'JU~i'!l 

Tc:bacrou'R..r 

i11dwirit:~-::onsid(>ration 

IJT ~~% l<iW"q for UT: 25%- i<J\trJg lar 

fh"l"l·ttit~oY..vJu::.e: J;f)<t<ol;.;r;:cou~er 

Tot.Jcro tt¥~>' Tnt:.r::ro ~N · 

ir.ookh~zl con~Ceraticr: 

1;\~l! (Ort!r-:J!it:!l W:;h p:!~(fi[JhOO n:Nli(MtD-1.------ S~dard ;;-;.~;.;-~;;;:;-·;;·~-;;-- -;:~;-----~~;C~;·- no co.m~lir;•J KY & GH KY & 011" t..Y & OH; 

--~~~~=-1~2._~~~~~~~-------··~·--·----· Oqv-Jtlted Septum {na:sal) 

DIS( Oi$OJdar {h~miated, bulging, ruptuted) 

Pr~ant 'S.UI~"<allr repairffl less !!'1.1!1 l year ~o or 

\•;.'!JhJ~Uual\ 

/ti~1"0;)10Jllillf, 5JJff~Ktdltref)aJrefl roar.: ;:han 1 year a90 

S!dntidrd 

Ri(!~r 

R1der 

S~3rtda!ri 

St~dart!i)!'!Met 

5:crtddn; S\<rnd.arG StJndJrd 

iMef Kn'lel filtit"I 

R:det 1 RH~t-r Ri~ef 

S:anda~c St:>nd<i~Q Sta:d.'itd 

w1!l"1 iulltt!(O\'tl)' ·-·------------+-------+---------+--------+-----------1 Diverth::'-lli1is 
143 

Actions for common medical conditions-rider states 

~~'rgh:o,!J cortec!,&l > 2 ?ears 390 

DUI· P~ramed exam is required 

---·-·-l-'s::'"''..:'':::Nd.:._ ____ ~ __ <~nd_"'_' ____ ~~-"'-d.;~>_·o ______ ~~~~.----

Sin!)le o(<tmGKe. :nme \h{)"l ~j yean 

Mu!rlp~• tK< Uffi!f!C!:S, with:r. 5 }'SJ!"i 

ftatt>30%·Ded,ne 

):t:~nnan:l 

DediEf: 

indr.iduai 

<:r·,;~.u~r<1~0fl 

Swu:la-1.1 

Dedir:<' 

fl.a:-e30~·0eclint? 

StJld<Hll 

DecliM 

tr~vi.-:l'ual 

('(Jn~nW'!•.JttO:I 

St.::r.dant 

D•~dmf! 

lnC:t•..idtJOl 

wo•wJ~tattt)fl 

_:_J_<_•Ih_>_f"_<l_11_<""_~_lh_-' ___________ ~---- ..,-Ri_d_'-,'' ----+:P_iu.e __ ,_______ ~~a~----

f{Jbei Pr-e~t Rtd€:!' St;md:Y.6 S!nn!l;ut St;;r.di\tG 

Tub6 no !or:~er pr~_~'l..:.t._no_<_<!>:.-u_·•_"'".-·'-•-----l-S'.:.."..:."'-'1_, ---+S_ta_od_,_d ___ +S-ta_od_,_''----+-''-"'-''-'"-· ----l 

Eaema 

En''!:arcjed Prost:atli! ~See Benign P'ostatk 

Hypertrophy 

Epilepsy. Grand Mal (GeneraU~:~!- .. -

$tau.:Jart' 

~!.;md~~tl 

fi}Ct;f 

KY (l~~b~ 

Stand.JtO 

lin)er 

t::Y· O~di:"J~ 

Standa>ri 

St<:ndnrd o~ Ra;i!w; 

KY ~ OH: 

St~~d~rti tJr RH1£:f 

Stc:r.dctui 

·-- 1\<C:<!t 

t:Y )~dfti:: 

Stt.:fidJ!c! 

St<!ndani -- K'T'·JechJ.~? 

Sr.e:ndaru 

1---'"-·"-"'"'--'-'-*-~:..P'-"-z.c.'"-·'-"--·---··------ -~l:t~e _ D~!me . ·-:-:--·Fcec:·; :::.!m::.e -··--··-,t--:D='d'.".:::..'.·-·-·---1 la~t o;.ei!Ure > l ye.r.i <:£-o Stannard r..r Rm~ lip Stant;lara vr Ram UJI Sr;;nd;m: St<~Mant iX t\.a:e up 

Epilepsy, Petit Mai{Gener~~~~~---··----+-------j..:.------+---··~--+·-------1 S<?mm~ withrn p.;s't] )'(!ilfS ()(>{l,tu~ I Oe<:lir.;~ ~cline (J<!dirm 

-~~~~!:"~::__ ______________ ?~~~~'"'Fat<: 'lil __ _:~~~~~~~~- S\and,;r~--- -~:~~~~~!::_. 

fibromyalgia 

f'reielll o:lliSt~rvu! Qedint! 

F.-.ctu<e,--·!...::' '--------·-f-'-'C::....:..-- Deci!r:_.:.''----t-"-"'-h_•"-----j..c.'~-d-in_e ----1 

. ..:~~~~-~~~-~~:.~=~-~~~~-~:~-------- i'IP.Sefll- >"Hh i~jtf.·fi'.fY iiXilil·:m de~~!J~ 

15 
144 

16 

Actions for common medical conditions-rider states 

Ciec:iine C-eclirw Dt!dif'lt! 

·-·----- ----- 'iril"ldi'!Hi )W1(\.-JH1 Stand;;rd 

StMdrl•C !!tandaa! Star'ii.Jard 

G""$1rk banding • weight loss surgery 

Lt~p bcr'd •emcrVt:o, tlQ rme:~bl:.! build, w.ei~:~in St<~nlit!td SlindC!m Standam St.~nd.ard 

mair'l:.:unr<llor0tlr.~,1r • 

Utp l:s.lnd rcrn.Uv-.!ti, wtc<Jbl!! ht!ild, ar 'A-'l!:~ht lo!..'i r,m D.;d:r.e o~:mt> Df.C~ne Ot!dl{l~ 

mair:oa1nl?dtmcnr.w;u 

D~hr:e Decime Ot:th.1e 

-~~icHypa~~~~i.:._~~:mg D~d:ne 1),;;,:1we 

--'-'---'--- ('IO(hm~ 

D~~·-·- G&:~D {n:rfhJ~~:) ·see Add fleflux/GEFID 

GestAtional Diabet.-as -------f~------f------+------1---------i ..; 5'p'I'S ag(l, d,e;contrcll;X!duringprcgnancy, 

nur;o(urrer.~ 

---

LIT: ;cbdcco U~IS, --UT: Wl>.ii.:~o.:: U:l'!f~. UT: 

~-tab:'KlO Lfi~:i. ---

UT: l<Jba.::CO l:~r~. 

;ndviciu~ C<,n!>lderotion wrtividu<ll rr,r;sirjl!1.lMr: rnUw1Cr~l ,:ntrs~:l~r.'HI!'..I1 indi·.iill.~.ol: (OnSK.\er,ltk1n 

> S yrs dg<J, dte:! CO!tl1c!!t!d dcnng pregnancy, Standard S;;r,d,mi Sun<latG St.!t!d3rri 

<. 5 ~~ ilt)O, conttoUeO with in:;ohn duriny pregnaflcy, Raw '30% · !t~'le 5(,~ . Kn~ 50%. Rate SO'?i. . 

no 1~:unenc~.::: UT: :tt<J:cou5er'>. Vf: ~l.lt~r(fl :.I.f'fS, UY: tot,ll(CO \lS!'f~. UT: 100acc:v t:~.ers, 

~~. S tr3 <rgo, ::,r·:loll~ with rrt~~lin tit;~~ ~l!gndt~~r;$;~;~:~ c~nsi~o -iS~~~?~~~n~ ~~i~~:: ~~~~;ulcn ~!;.~~:~~n no rerur~'<'n..:e IJf: :ci-...:J((O ~~~d$, vr :ol:a-:.:::e :.&.:fs, UT: ~!::~·:.:::::> U$i-IS, IJl h'Jb;r..:cc t:S·<:r~. 

·t~do1.11liliill ~~JfiSIOI'(ilt!IJ11 JfCJI'I!lJ;i:li (¢J':'i!W:C1<1ll(ilt 11\flMIJ\.Id! C.Cil~l!lt'!i:J!I~'rl ~~;I~~~ (/.l11SL!lt:f~~ 

K!Stllry c. I. no g~Jcc::s.e ti'Si f~law•r"1 prf9nm:.cy cr l)echr:e ~;ir.e Dedie>P. 

•i!l(OS~1~bUtdr.ot•eturnc•JnOI"mal 

;.. ; ~!:!"'~ • .. w:Le >!!ltwer~:u, ')C d:S<:!bJ!:!y, ~~H~~m<.tl 

we-.)lo'•w'-~. r.o tFld;J'i~ 

Rtdt:r Jod :attr~ '!o!' R=d·3 .rr.c' rttlir:ll lor 

m«!icatiom mPdic;~rioru -

··-Rri1lnq ko~;i!tl! 

;}H & .K 1'. R:d£'!' Oli f'; K V f<tr.l:'t 

P,.me2.S% 

UT: tolld{.~CIIJS';!I5, 

w:d•..;r:h:~! cern\-ider-'ltioo 

flJom lor·~:·r;di':b!l,no Ric~r dtl<itiltingicr 

ar.ur.r. fm med:r.:,t:iGr.~ 11l('{l'icil!:o:Jn~ 

S:,HF~,lr•3 Pc:;n;l 

DH f.;i(y llir;(.'t 

!.led mE 
145 

Actions for common medical conditions-rider states 

r---·-------::---::-:------··-·--r---·-----,----··--- ·--··--·--·-·----·---··-·---

IW r~;•ft>n"" rhe ti(lh! ro '"'~~:.~!~~Q~d•rio;~ ;!me/for m~Ki!IIDII ~~= ~~t;:;:;~:::r::'!!';:(~:r:;,~~~~:;;;;:~e~;~~::n sisoo ~t l<>wer $2500-$5000 5.2000 • S5200 S6000 or higher 

~mRdkii!fOil <DH, dG'if19~. ind ;m.!mium AAIO<~t>t d aductib!e plu~ RJt deductible p!us R)( deductible no Rx deductible plu:s Rx 

Gynemmast:ia 

Hashimoto's Thyroiditis.~ See Hypothymidism 

!~tartbmn ·see Add Reflux 

HN~rt Murmur 

St:rgi~~yr:paira-::1 

Hil'tpeS 

H~rpe:;; Zoster {shingles) 

Y.3WW\"I·i!:{,l<;. 

11ct' &'CH 

S;:Jm!.ndcJB!der 

1 

orflhi~ 

'H,;:::n:,l(JI~rr,~­

KY f..OH. 

Si<:r:dart. or?:id!1! 

f---··~pr:::"":::-":::'-----,--,--------lc''='ac:"::".::d.::c'..:.R:::at.::c ":::Pc._t-S=c~~"rd or P.11te up St~"'dar~ 

((!11\plele retovmy, !EJ rmdK,6JtL S:.:;niJ.nd S;nud3!d S!&d-mi 

Star.r:la.-tf 

Sta:-tlilf-' ----l 

Hiatal Hernia· see Add Reflux/GERO 

Hi!Jh lllood t'ress.ure!Hypl'lrtension 

Underwritten b:ase:d on age {Jf<mset. stability 

and comorbldily --··--:--:-··-----·-'"";---------t--------- ------ S'(.lbil!', .aw:tagc re31)ir.g.', lS0/90 ~r ~~~. no uth~r S!H!lrl¥d Qf .ll.are up 5!<mdar~ or RatP.: JJP $tar\dilt.C 51<lr.dmri m il.ale up 

~~iacrisk factors, cont:olfed\\olthrr.~'f.t.un __ -·-----,------------J·------1-----·-·-- High Slood Pres.1ourr;~ -6- Sa% Rhl:.ilb!.ol Bultd 

Dec~rle 

--·-- tllgh 61oo(f Prts)'>ure t RatabiP. Build+ Tobacco Uter 

C.'P.dme 

High Slood Pr~ssure -1 High Cf'lol-cs1efoi contr'(llled 

r-w_lr_h_m_od_lc_•_tlo_n ________________ .~--~--f7-,--~--~--,----~~~-------

}~il~l(lil'il 1:r llittln.(J S:J.ndpro m P.otmq StamJa:u St~d.mi 01 RatlnlJ 

l(t&CH. l'!'teOB. K'I'&OH: 

Hypet:l~m.Hor,· Hypert~P~;.)f':. Hyi>f!llfft!.lon 

~:a:10Md 1:t R;ntr,!J S.~~ndwn ,n H.'\tmu St.:v:dml m i<:<~:i:"ltJ 

(h¢1~tJ::r~: (hn.l!::stero!· ChG!esterr.! SH!Hldld (a Rilil~l Sr.anil:~~l5 or Ri-'.k• Sti'fiti<'Jf; o: ~!tim 

17 
146 

18 

A'tions for common medkal conditions-rider states 

..-·-----·c:;;;;;jitlo;;-··-·---·-- ----·--r·-------r-··-·---·---r---------- We •e-Je-rr.w !hi! fl9flr w r;llq (OJ t/'!e conrJJf/{J/t ou•dl~ ~.::Mian 

~~~ »'i'IM '"PP'"fll~te-. A modlfu~:d r•!i"9 i1 drt"mfMd b;"Pd on 

thewventr ot lk <onlirt•orr iUJd tfeotrmenr t~rvilorpreJmprllln 

~~~age;il!ll!pi'l!rniumam!Hinr .• 

High Blood Presstrre- +High Choli!'Sterol.,. 

flatabte Build 

S.1S<JO or lower S2500 • SSi)OO SZO(I<J w 55200 S600ll or higher 

deductlb_lo plus Rx deductible plus Rx deductible no Rx dt>ductib)Q plus Rx 

Ded·riE" Deciir:E to';i;;;---- o;nn-, ---

--------------·-·1-------t-·----- 0-~~~iin-,-----+~D,-.d~;n-,----··--

Hlgh Blood f'ressure +High Cholesterol+ Toba!Co USN 

High 010lu1r:rot 

·-De<-1;-.,,-··----··· D;ii~~----- -D~-,"-.,---·---1·-r,-,d-,,.------

lipid fl<JE~I l-:-5lhS w!Jhin nc-rmal ~~ll\i, compb<r~t w1~h Src:na~d 'J"r Rotting 

k.'ilrJ'.'I up, t:l!rr;mile-d \'\l!il mOC!(o3:oo KY & CH Sl<ndarC!)J"R11iiflg 

KY & OH. 

Swnd,ml (!( FHd~t 

StMdi:IH)\l!ilating 

!:::'T'&OW 

S.ta!c.lardorflidet" 

High Cholesterol-+ Ratablo Build+ TobMco User 

Cud in<? 

Dedme 

Stim!liUd Standi!•!! St<~nda•c Star;dart:! 

Rid;!r g!def JlJ(!ff Ridf'J 

CO&K,'f;Ra\e1DD% LO&KY;Rate 100% co.~r.v:ttate1PO% CO & KY: Ri!te lUO% 

UT:R<li!! SS':'o · ncn UT!~iH!55%-aor. UT:RrtteSS% •J)Jil liT:IM~;SS'%-no•• 

tcW.wuser· tr-..bact:Q;.~'!<'ll' ~ wba~O;.!S<!r· ;ni:WXOV'.>€.1'·· 

i!idi\1lt1Jei con~der.::tlCn lr.(;iv!C~:al.::w.!.itl~dtlcn inriividuo! Cf.m~·r.;J~raticn ku:ilvidu-Jlcansld~albn 

iiid~r fLd:r HWt:! P.ir.-.:r 

CO & KY. Dedme co & f~·r Dedr~e CO & KY; D2d:M: CO & r..Y: De<.l1ne 

tiT; R:ltC55%·f!OCl LIT: fl..,Jl~ 55%·ncm UT:!lm.e-55%-non lJT:P.cHt:5S%-nun 

mb,xc;)u:>er. !01')3((.CU~r. :oiJacca l's~r. !cba::<:auser, 

Dedf'!!<·:ol:<~co u~er Dr:clinP·Tft.liltCtJ w~r Dfo.:!in~-tvb.im• u:e: D~dllle·!CJb.iicr~ user 

eot ·male <:~nd female 

l·l$1 lre.l:rr·NI' 'Mlh ;vc ZlrT, GifT m ·J:h£>fs, Ia~~~~;~, Ded>r-F. • ent1fE• i;unily Dl"CliPe ·l!'n!:rf' Jmnily De~:linP • ent;n;• tt>~rcily Dedim~ · t!ntirt- l~mily 

pl<>1~r~~~q IS.:"Ic: :O..'llp~:e 

SunCard .::r fl:a1ir.g "S:i!nd3n:i Of Rlting St.:;rrti~rG Stand:ird o~ Rawu; 

KY &OH :<Y&Oil: KY & OH: 

r----------------+S.:;_l<lflthmlcr_l!i __ D;_(~r-+S-""'-'n<lil_c,';_ti:::.or--Ri.:.o<c_'_+-----+Sr.c'".:.d_«_ri oc_._~::::.dN_-j 

~able Bowl!! Syndrome --~------J_ ______ _L _______ ~--------
147 

Actions for common medical conditions--rider states 

--------~di~-----,--------,-----------"-r- ------·r-··----~--~-

w.. fi!Sfnll.' rMe rlgM fo r~t11 (or thl! condftiQI'I ;mdlot mll'dtC~IItll'l 

uu- wh~n o~ppropril!ttf'. A m.Qdiro«J r .. ri"9 •~ d .. termJn~ l'lllsed Ol1 s.1SOO or 1 ower tho!' J~enty of tile ronetitioo ~d trutrnent Mld!orprMUJPt!Ol"i S2SOD ~ SSOOO 52000 • S.S200 $60{]0 or higher 

~ir.ltiorl toJr. dOJ.ilg<!, ;,nd p¥enuum amount. deducti':!.e. plus Rx dt>ductlbte plus Rx deductible no RJI deductible plus Rx 

lfN:l"d w:th OTC medica:ion Swndan:: St,;miarc· ---~;;;d;.;----

Con!rolleO:wfprescripMn G! medt.at!Of'l R1de:- Stand~ or n.ating St.!!nda:d St~nd¥d t)l ?.3ttnq 

n&~ n&w Sia.1dir-<! nr Hider Stanoiaro V! Rlller 

~~1~-w-li>-,-,.c-'l-~-,.-,,-ip-t~--m-,•-.,-~oo-,-,-------~~--d-~,-.m-.d-R-vu-,-q-~-,-+~~a~n-d~-c-o-rR-,-,,-~--~st-&-,d-,,~-.-------rS-lM-,d-a-Hlo:~a:ing 

n011·Gtmcds • 

11P (blood dlsordor) 

Chilo brm, coll"f,lle!2 recrmry, p!a:-elet (Ount rervrn~ S!ilfld~rrj 

iUn-Jimal 

Ad!.~lt lcrm or chrU"l:c, mare ;han & ')'l:'<VS :S!I"\CE 

::1e<wn~m .¥~::1 a cornp!ete m<crv(-ry, ~o c:.m~nt 

lfe.:t~mNll, nllrm<~ platelet cour.! 

Joint rep1atemen1 

Hi>rep!:l<1J<I f>1;f111,mcm Rim;t f'nrmammt Rtd~r 

KY & NM: Decline KY & NM: Dedine 

P!:rm;lnent Ridt:l ?Nman~nt P.ider 

~---------------------·----·-----1---'K\~'&~Nf~·:~D~~~-iin~o---rK~\'~o~N._Mc~:~Wne 

$hould~t rl!p~Jn•d P!~m.Jnl"'"tl 1\j(i(:r f'mm~ro..nl P..l(!ef 

KY & NM. !la;~ 100% KY & NM: /i.iit::! 100% 

~ {)e(Hr;E :obJcca u~¥ • Oediut! !\Jba(!.O liSe' 

Pt'flrlrill>:-ntmmr 

KY Oechn-e 

$ti:!.ndard 

Prr.'Hl<ill~tR.idtor 

KY.Da::1r1e 

Pf'nnilnent"llder f'O'mnn.:otRidf!' 

t:Y ~ NM ·;;_[".:.:';_hf'.:''-+'KY_&:;.'c."'.._'--=O.:.:•d::_".:.'---

PcrrTl,lllr.?-nt :rdf:'~ St.-:lidiltd 

KV & NM.I!alt! IOO'J"., 

• D~d1m! :;Jbol<LO U!>l!l 

Kidney !nf~ctlon/?yelonephritis/P~:_:_:II:::tis:_ ___ +-:-:-----+,-------- ----- 1 -f".;u~.m:e, ',.,ith:n tl-:3 ~1i!fS Rjtler St,mdarc' SnYJd,m:; 

ur: 2~% :at1t..g, non 

tobactc u~.~ · l:Jil<1W~tl<;,1fS, 

··-··---·----··---.. ~-·----·-----.--.... ~~~~.::.:-.::::.::..::::~.t------·-·-·-.. ··-· .. - -··--·----~-- ;..,._ ____ , _____ _ 1 f'P!SiJn\~ > 3 )it~~r~ a.go ~ Sr;mda~c S!an;!aro :lwndml! 

2 t'tJ!Sorie~. < 1 yt!i>r~~go D~!u~ Drfl<n~ Stand~rd ···--

2 tplSOI:re5, 2-S years aljO S::i!n~i\-'"t:! Stand,),'d Standdrd 

~· .. ~-':.~:: . .:F"~::~::Jard!ess.~~~~-~·-~---···- -~~~-·------·-- Oedir.e De dine 

Kidney StonRs 

~~::::;;.;;~;,~tlt~~;w;----- (:;;;,;------ Ot<!ini; -·--~- D;d';~;----~-;;;;;;;----­

;-~:-~~~;~~;;;;;~~·~~-----~~--~;;6;-d-···--··-- St~~~~-----~ ~;;;----s;;~-;;;;--·- ··-·--

Macular Degeneration 

19 
148 

20 

Actions for common medical conditions-rider states 

Condition 

Oce<.~ondl (,.; 3 (!pisode-~ yearl'j/ tre.;!ed whh OTC Sti!ndard St~nd~rd S;andud 

meC~mi'Jn 

.-: 11 ep1scdes in the last 12 mon:h£, or 5:!\IE!:e. Work.op flider S:and3rd tll R.3';ir:g S;anC,ud S;_atHHrd m R~tir.g 

complr.te<i, symp;om~ ,;:ontrol!c-d with current tr~iitment KY&OH: KY&OH: 

Stanci;r;Jor !ijQEf Standard cr Rid~r 

l--,4-~-"-o~~-~-,~~,~~-,.-,,-~~--,~~-.-No-·,-~-,,-,p-,~--pi-;;J·-~-,-Iin-,-------+~Doo~tn~~-~~---+-D,-d-ine--------+D~,=,!:=n,~-~~-4 

,,, 

1·2, oounderlyir.gcause Sta;.d<ird 

>2,no fun term deliveries !lidr:r 

UJ: NOll >obacco user rati!. SO%, toh<lcco 

user individual 

S:andard 

Rider 

UT: f'.'on tob:Y:(o liS~r 

r<~te5D%,;abacco 

u~rindividua! 

ilidef 

UT: IIJon toba-::(o user 

rale50%,tobaa.:o 

userindNidual 

nider 

U1: Ncn totwcco u~r 

rate 50%., roba(tC 

user lnd~,,idua: 

!---------------·--·-·--~-·-·-- .,::"':::'"::·id:.::"':;;<'~tic:'".:._ __ -+:'":::;"'::.oo:::;'::<~ti:.::":...' ----t'.::"':::"':::ide::'"::ti2on:.... ----+'.::"::::"::::icier::::. ':.:"::."'-----! His wry c! with fwl! te; m delivery St.<!rd;;:rd St<mOarti St<m:ri<lrii St.lrtdart.l 

Present m o::ompletfl t;K~ry < 1 yt!ill Ridt-r : S~<mdarrl Sronr';Otd Standard 

Curr:p!ete t!KOWry > I ye2r St.arxlard Srnndard 5:andd!d Snmc:;m:! 

~u~;~; Mothldll'':-ln-'::R'.:.e';'siS!:;.a_~:-t s=ta7p

7

h-:y!o7c-.oc-ct

7

_;,..,.---f-'l:= ,.:c:_ ...• ----r=.:....,:-----r-"=<.--:·--.:-•. --1,•.=• . .:. •.;.:::·:.::::, ·····•<..,.-··· .T L'-,.-• _o-J, ··•· 

Pre:i~;ll\, currently ,.mda- treatmem 

1-- Complt:ot~ treutn-,:m<:, lolkrN-up p~dir:g 

1reate<l, ftJH recrr.·e-ry ot o;<t~r fill days 

De dine 

··. .· ...... · .. 

1 episod~ ::. 3 years il;j.O, nmmal b!ooa & urir.r: m~~~~~ Standard 

Ded~e Oedine 

.··· ·.·• 

Stannard S:alidard 

Af other SC!!fmrio:i Rating, !mir;idu-31 Rating, indivicu.)! Rati"'9, indi.,.;c~;a! Haling, :ndividu~i 

c:o:1sideraton ;:;r -cons;dNatlr.l"' ar col't';im,rariol'1 ar cr..nsid()riltllln or 

deciin~ decline ciec~r'le decline 0.~!;;;----.-. --,~---~-- ---,--~.~~-·-- --------·-·-- ---~..,.-'7'-:- ::-:-~:--:----:--

Present, only arc rn~s. no PT mOT, no shouk!er, h:p, Stcr.darri 

r..eMs. bi1ckorspine,kneecrmklein\•::.~~t!mr:r:; 

Fr~nt, ali treatment i!li.CEP< DTC m~ds., no .s.hct.:l~er, fli~er 

hip,pelvis,tluckorspme,kneeorar:k!eirr-lcl.,..:mgm 

Present, rt>gardless o! tr"'atmem. wlth shouldet, hip, RiCer 

pel.,;s., bild: or spine. kntl~ cr ml::le irrXJ~OI!m~m am:! no 

jointrepla(emem 

osf.eopor~is/O.ste:Op~riia ·.' 

Stdtlc!crd S;andard 

Rid"'r 

Rider R:\}er 

C:\ment uset:~l Prophylac!k: mr.!kCJtlon, due to ilgr:,/ Sta11dC!rd 0! il.a:~ 11p Standard or Rate up S:andard 

I menopause, no diagnosis of os1eO!JCrosis cr D!iteopeni.~. 

no fractwesnrDe:Q scan~dO/IfJ 

Standard or Rating 
149 

Actions for common medical conditions-rider states 

,-------·---·-·----·--.. --··--- -------·--------- ·---·--- --·-- Condition We rv~~ rht tigllf rc r,:;,te fr;>t' tht (r;mdil>'cm ar><J/gr rnrdlf<lfiOII 

tnt' ...,.,en- llpprQ;Jrial£', A mDdlf1~ t.>rfn·g i1 d.e-tNmin...:l bo!w(/nn 

lh~ tevt:rity of t.he cortdltton 11od treiltml!'lll ~ndlor .ortscnuM•r• 

~~dJnt/Qil con, <fOil!IJ~. Mid pti:'mium ~mQttnt. 

Ov.ariao Cy:st 

S1SOO or low@r S2500- $5000 S2000 • S.5200 S6000 or higher 

do~tdudib!e no Rx deductible plus R:!C -:--1-:--·------ ~~{1!~[ (pl'ft:'ii'!t!l:1} swmlmtl cr. Ra:e up 

~- ~=-;,~;.~=~:-~--·-·--·----- ~;d~--- Sti:lndarr.' St<snda!d St<mddrd ";'" ___ .. _____ ';;;;;-,---- ,;;;---- VT· 0-ed:ne-- tJT: NOIHUbi!G:I? tl~ UT: Nan·lc.biKCO US~ Uf: t~O!'I·tc-b5<.:CO US!!f 

SO% r.~!lng, !Ob.J(co 50% rd1mg, tob:t~ro 50S filllnfl, tob;,cco 

us::! mdtv~:uu1l tJ'>I!f inriividuca: uSE:r iru~rvidura! 

P'afl(reatitis 

:,·,d:\old--Jil: lCtlSIOCr.t~uon, lnc\'..·:1:..~::;1 cotdda-atiCfl, tooi<d"'l '""""'"'"· loar<d""l com,d.~ met5;!.!lret~'rr.l;. Jl'ol:!di::alle<~vi r;x:<;kd reconis ml!dical re<::o~ds 

-::---------------~ :eq,irect n-q;.J:_-e-G 

Cl"wcmc or r~urrent OE:dtr.e Oedu-::e 

req.mo?G --1-""'-'-'ir'-et. ___ --l 

Ot!chm:: Ol!din!! 

ftap Smear~ Ahnonmrl 

A5CUS, n~ high nsk H;>V. CliiS'> H n• CliJ'J.:, Ill k'§t•\v~d 'J!..:-1:io•d Stand<laJ St;,n(l.'lW Sl.;:r.danl 

by one normal pap, Cla<;s l'/, ~f<:!o!;~d. !o!k··wl:!d hf c1vet? 

~~~~~~=~-------··-~---·--···· ··-~~-~·~--- --··---·-----·------- PI'tlebitls. 

One t>prsode, < 3 rr.orrtr..s. <ompl~~e r.ocm:ery, ro 'o'<Jfi-:.d~~:M (ll ~!!Wh. 

One q..iwd~ 3 momh; · 2 year:;. complete r2-:c~y. no 

v.i~Y.:aSI! veJrrs·:>l" ooerna 

Prostalltls 

ProstllesislProsthetks Device 

See Amputation 

Pn.»tate • En.larqed 

Soe B~tnign Prostatic: HypertrophyiBPH 

\1-:"ncldrC 

Rmc: 

------1f---------- --------- ·------

?-iO!h!ll( o.\:-llm:i~ (So!j! P:,~'l!di:<. Arl11>l\:s) ____ f:--:-:----+:-:-----+:-:-----f-::--::-----j U~l! cl tdnr-mq ()eo of"iy ~t,onCan;l Slimdatl) $tllfld.:w:; S-:2Jldard 

t'u;-;tr;;JPW~i;~-;;;;;~;it;i;~------ ··;:;;-~---- n~;-·-·---·-r-;;~·1;;-----·~ 'D7.uTn;-·--·-

P.sori"'ti[Arthritis 

21 
150 

22 

Actions for common medical conditions-rider states 

Respiratory Syncytial Vlru.s (RSV)/Brondlkllitls 

Pre'\E'!n •:r histo-y o!,.; 2 }1!dr~ d ag~. 'Syf' .. ll;iS.' 

Pali'.'i!l.lmabu~ 

> 2 }'B:lr'Sd<t(j!~ lit'>\ O<cmm"'(e< 1 J'ei!t ago .;r;d $yr~g.siP;~ivmnn,m 11-% 

> Zye.trsc-la~w~ la>t OWHft>.n<e> 1 )'e·H ;:,.yo, No 

niL"\oiGJti<lns lor> 1 ~e¥. (Gfl¥lk:te rec'J'Iff'f, No .uohcr 

St~d3rci 

Dt!dl~l~ 

Decli:Ht 

St;:r:dau~ 

St.mdud s •. m-car;:l 

Ded1!'1e iJwJ'i'1e L':.!d:ne 

Oechr1~ :::l1~d;nt> 

Starniad S;.i)t'Hiilr·:l 

~'~~~~-~t~e<~yc~a~c.d~i:~~·m~'----------------+-----------+-----------f---·----·---------------­ "t!~tless Leg Syndrome 

(om:oned \'lith n·:ecl(iHiotl or !reatme~n or f!!J meds lr:~r 

.:;1;? motiihS 

ft,llo.o;-up !let mn'IOJie,.eU, or rtl'>!lfl'J pem~mg or 

ro:-cornmr:ndr.l"! 

Retinal Delathment 

S!i!r\r:l3r.:! 

SW:d.:ird(I!R5:mg 

t::r &OH· 

Stc::~d~m ill' R:der 

D<!dt'le 

Stam.'ard 

Stantiar!lorR.GMg 

r..Y & ott Sl,md.JrQ m li!cer 

D~'ht1e 

Standard 

Si<lnd..1!.d 

Dedn1e 

51(lf1CiiJf,jcrP.dting 

KY &OH. 

Strl!ld,ud ~:f f:uier 

f'lt;"'>C'I' D-edirJr. Decl1ne Ued1rw Ddtnc 

~~,~~:~;:;,-ro-,-•• -<-~-~-~~-,------------1-,-~c~---------t-,,-.m-,.-,d-------+~~,-,,-,,-,,~-----+~$,-.,,-c,l-,d--------1 

.:.:Rh.::•:::":::""':::':::"i::d.~A::<<h:.:;<:::lti:::s ________________ f-::-.,-------J--:-~----·-~- ·-----~-ff-:--.-··---------1 C...."CCit1e Dt'i:li1e [ledne --~wJ:rx> 

~tar:d<lnl ~(ilf'/JQI"'J S\ilnt;<~m )ti1110illd 

-·-- Svmdarci Stanc~rd )~i\l'lt!ilfd ~:andari.l 

Ot:d!ilP. De:hnt~ Deduv~ Oedin.! 

Sleep Apnea 
151 

Actions for common medical conditions-rider states 

11. 15Y:sllsper)£<lt 

TMhyt:ardia 

No olt!ad:s w, pd~! ll n':Or.ths, ma:rll<lmeri ilflci well 

t.'On,!Ol!<!dOI'Jtr.!'Gica!IOnsto<.u:-mdat!>Hks,:md 

~'tml)',r;r:J~ rlO othr.1 (i!rdt;;VilSClP.Pr Ot:;..;rd'!r~ 

l

l':is.;:dtt!stl.;derl!"d Aas<.atesStar-dare 

elO::E!pl: e:o:(f~j.ll: 

.~z. (0, Nl\'l &-WI· NV· ~iGf'f P\mraf;: 

Rdte 25% p!iin & Al!!Q~h;u~ 8!1 

p.'mRXnniy(illi otll'.!! 

p!ans>t;>nc;¥d) 

~XCE'[.lt 

t\Z, CO, NM & WL 

Ril1f~50% 

A!i s-tatesfl.:dered 

eX<t.>pt. 

A2, c:t'J, NM f, W1· 

Rate'/S% 

Ail !.':~~~~ fM~1ed 

i!:<cep:: 

,\Z. CO, Nhl & W<: 

nate !QO% 

N! <.~ate!. !'!~dere1 

!UCept 

M,CO,NM&WL 

P.<~lt;11:S% 

!A:l~.<itH21tlHt!O 

:1Xt"epr 

t\1., LO, NM & WI 

P~tei50% 

A;l !..UIW~ R:dO'~<l 

.~.(( ~ pt 

M. CO, N~f. & WI 

~·.1:·~1:" 

;ndMJu..tl 

i.:::-r!~rll?la~icm 

A11: ~tatesStar.dani 

t:?l(!!pt: 

N\'-,q:df:IP0Wi:l11 

p!dn t'1 At!;mhMe 80 

~U) HX only (~ll oth-er 

plap~ st.FtC.!I"':f) 

A~ ~ates RtWed 

e:<ti!pt 

Al:. (0, Nl>l. !",WI: 

!".ate 15':'; 

A~ ~::ares Rtcered 

EXCf!il!' 

Al. CO, I~M aWl: 

?.J:e25% 

.ll.~ ~~ate~ Rn:erd 

E-'(P.fll 

Al. CO. NM & Wi. 

n<l:e 4{!~., 

..:O,'.j '.~i.Jll~~ liu:et t:'(j 

Exn!m 

Al. Cc. NM ~ ·wt· :ta:.eSCl% 

M S1Gtt:.~ Ru;-ered 

f:~t"t!p1 

hZ. CO. NM & IN! 

R;J:t 7)•\.(. 

H1Uer + Riit!ng for R:do;?; .-. Ha,)ntl kr~ 

tn~Js rn<:d~ · 

t.JT" wtrd(;Q-;.r·>N • tJl i<,h;xcc IJ'iff · 

----·-·---·--------·-+~-"·"lc:'~.c"c;:_,:;l.":.:'c."·'=''c"c::..l'j'.'~on_j-rr.?~':~?!::2.':"::.:'.'.~ ~ 3 ~:!.Kk~ pm 'jen:, < 1J"!a !ii:'ltt! la51 a:tatk Dtdir:fl D«.littt: 

:;; 3 c:ta(;.:; ~~~ yt!!lr, !-} y.:~rs S:n(l;! lds; a>l-'(k. ;::ron"f•: 

H'\f.tXI'V:l!l:r;•;;;ro~llt. fiJHlthforrartii\'d\(UiJf cit'>erdl:•f<, 

fl:1df'f 

UT 1C'h<K:1)~'rt~! • 

:r.cil•'tt!ti<:le:;r:s!C.:r;;;~em 

~,j,;:r 

UT !d}ii\"W t:<;~ -

ir.Cf-'lo't.:a! ~;<::n~io'er;;.!:D.'l 

S2.000 w .S52.00 SMOO or higher 

deductible no Ax deductible plw Rx 

St<IIElaiC All:;:tmf'!sS!ilm;;;r.j 

~;..cept: 

fl<V. Rrci;;r .tiUl'J~Id~E 

80 ph::; ~X ooly (all 

Q:.hec pldn~ stJr:dar{l} 

Stan.dc1rc! ,\llstolti''>Stanriard 

All S!"J~e~ Rld~r.:...,j 

EXC~t-Jt. 

f>.!..W.NM&\.\'1· 

R.;;relS% 

loJl ~::,:;:ts 1\!d!:!rtJ 

~:t<:i!!lt 

Al, CO, f~M .'\: W!· 

l'.;:e25')!; 

MJ ~t.'l!f!S r<Jt~ered 

I~X(tlflf 

M. (0, NM & Y\'!. 

Ril:t! 4f!~i, 

~=oil ~:.:.:f'"'i ii1t:~rt'd 

r•:K<~!lt" 

llZ. i::O,NM&'.,..,Jl· 

fl<;;j•5(1% 

~.!1 ~!a:P.S ll.ulered 

t~)t,•!PI 

.'\l (C.NM&WL 

Ra:!•75% 

lr.cwicl:.r"' 

rcmsderat:o:'l 

except: 

NV - ~n::er t\u~mh:1re 

81) plus ii.X only(J~! 

o:her p~m!. ~t.~r.dam) 

J.JI sta:€S Standafd 

e~<t:P1· 

{';'~- Rider ,'\u~osl1a1e 

IW plus RXnnly{all 

v:-her pi.Jns :>Und.<itd) 

fJI states :;.MnCi!Jd 

eteep1. 

NV· Ritl!:f AU!·Js!'W~f.· 

ao plus BX only (<~II 

u:h~<r;:»an-.w:r·dil'd) 

/•ll'.>t..,t~ StdnC.::td 

(:1((~1 

NV-Iliner 1\u;-n~!vtt~ 

SO j.ilu~ ?.X onty(al! 

G!h!?l plan~ .~tcwdarc:t 

"'ll st~:es Stdnc!erd 

·~"«t'!pf 

NV- Rider Aufos.1..:Jrt! 

SO rlus::!.X-Jnlf(<!H 

u;hm ;Jlan~.,!a·d,m·fl 

lnclrvtr;'tJal 

to:-r;idr.~atitJn 

H'ci':"• S!-3/'J.lartJvr ~w:·'J(i 

lJT· 1cb.i:w:: u~cr UT: ;obdcco u~r • 

rnmw'lt1;,l rorrs .. ~ri\>:Ofl l:"lf~'l,dr~at rQ:'\SidP.r~tron 

-·-·---- ·---1-------·-- ~dtrrf: Dr!"dim: 

1\K.~( ftiC::ff 

IH :;;haw.: u<;(;r- \iT· ~olwrm es::rrr~ou,ll ~~~~r~t!.oJ!"l i:1c!'>tdtJaico~~ 

S:andt~rt:' '.it.mdiue 

23 
152 

24 

Actions for common medical conditions-rider states 

-------~t!;;~.. -- ----,-·-·---·-·---,---·----

Vlit'r('wr..,.thftigllflor/ltefflft/>.!o(ondi!iCll1.:mdlormedu.alion 

IIR' wh11ro ilflJ>MpNah'. A """'Jf~ ril!iflo9 i! d~ll'rmin~ f:wu~d on 

!lr~ )~t'l'ltyof I flo! condrtroo 411d [n,llfrnll'M aOO/or pri!IctJp!ICI'! 

~:r;;·:~,;~·S:~~::~~;ritlmil~vnt 

$1500 .:55000 51000 ~ ss:wo S60QO or higher 

deductib~~ plus Rx ~.ductible ptus~ de-du<_tlb_l• .. __ no_R_<-+_do_d--uct----lb-'le.::p._lu_,_Rx 

S15(10 or rower 

~~scyn~vltl:i. SEE au~ms 

Tonsillr.is 

< 3 e~i:;oc~ per year 

3 - 5 ~.:pi~e~ per yet~r 

lourettes Syndrorne 

C0!1trdled with merii:ilt:<".("l 

S.;ancard 

R!der 

rt1dP.r 

Stanr:i.uc1 

S:a.'lcii!rd or Rot'.! up 

D!!dmr. 

-----·-·-·----!----·---

St;~:\d,ud St<ml!ard 

S;~ndard S!3nd;rrd 

IM11 Rode~ 

-·- S:,md;mj S.iamlarQ Slrtmlatd 

S!i!mi<m!L!tRare-up 5tamiarQ ':t.:mdt~tdOt'A.a!eup 

De-:Jne O,!el'r.'!' 

Tuherculosis 

1Hinl~~.,~,~n-M~!h-~·-,~.~-.,-,.-.• -s~o-n-,.,-,,~N-~-~-.-.---rs~:~-,~.,~,-------r,-8-,,~,,~,-------r,-:a.-,~~.~,-------t:,-,.,~d~ato~.------4 

ba~~t·ri::-1~~~-ic ~tud1e:;, Negati~-e-ch~~l r.·r.ry, No e~il.l'1!t1C,: 

ni .ac~!Vi! d~ra.>c, ?wphj•liKilc:drug thr.rr:py :'IJrnr!eu~ > 

-~-~~~~~? ____________________________ _ 

T6 lnf.;.:t!On "'•'dlout d:se<1ie. + ~k111 !rS-1, f.lr.y<1twe rw.ch~e 

ba;:;,er,;:,;og!c -studies, Negat1ve ch~st x-::ay, NQ <'-~idence 

ol31:<~ve diS:..>il!.l!. C1ner:t li!.e ol < 6 m~r;;hs ol 

proph~.KtirdP:g'i 

_:::~ epi~de. {l-..mpl=tP. reC!N-?.r<J 

> l fp~ude, ','.'l!li .;:~mro!!ed ·M:!l mt2dico!1ar1-s I"'"'"' 

I ~;~~r~~.1\lic'ui!l ;:mOlCl!liiUOf: 

'H:St>':fy ol ble~irY,J or perfvro::li\ < l yO:cliSillter epl':oc(Je, Dechr1e 

\!fi m.Jinpl!! tV.<UIIef)(t>S o! b!e~lin~ or poc>rbrillkm 

?.ide: 

\JT-:ndlvh:;itl<ll 

-:cr::su.:!~a!mn 

Dedni" 

St3nCJrd Standa!d Bid;----·--- s;~--;;;-··----

UT · ~-,,j,v;>luJt 

l.t:·J:~II!e/,~!J{)rl 

~~~~~~~~~~~~~~~~;t:r;:~,o~~H~~~:~:(;~~~~g~~ ,_1,Jf)'> 5,,W<?r~ ! ~:<~V)<l'f; ';:;r-1':<<!~ ;ti<ro'J.,,·r; 

dn-wmin(.?-!i,l.'<>gOI:ornyJ=:-~:~rh~d>3yearsas<l,Ni) 

~~~;~----·--·-··-·-~~-----~~-- ---· .. ·-·-·~~O .... H_, ___ , ___ , ___ ~--~ 

Po5t·fflenoo<Hr!.-a:, ~~ H?.T. ~symp<Oil~l;( c:r 

~W)'Ont1~.:::cm·f a h~'$lln1?<.tomy <ai"P:e~ed 

S!:mc,ird St&IC<!I.:I 

S.~a!rciard ~~.'I:'!O<lfl:! 

5tal1d,lrd ),a.'ldMd 

-~~~!~~~~=~='~=-~=·~ry ______ ~"="~'da~n~l ______ ,~~~-----~~~------~~~~·n~da="~-----1 > i Jcwrrence, <1 year 1.;nce las;occt.nent:e R:lier S!andarc 

Varito5C Veins of the lower 

utremities • UT only 

lr~!ed vmr. iazi'r, :;tupoping or ~d!N~;herap-1, ftdl R.oer 

ti..'COYery r:o :,ymptom:; (3 tre<ltlll'21!1 .;: lyt iHjO 

\tamiard S:ar~card 

Dt!<:l:ne D~l11e 

s~ancwd :·.~<l:"lO<ltd 

rr:Mted vmr. iott:r, S.UJ?plrog,.,; sc!erc;herapy, !d! S;.1nC:ar!:t Sta-1tlMd ~-~N1d.lid St;mdarc 

r--::.:.o•E:~yr.o.-;ym;•ton~'ior t~e<J\rll':nt :> :,-:n~JO __ ------1--·-·------ ___. ........ -~ 

VaricosQ V'!ins 

~t:ey~;;;z;~o-;~~;;;;;;- ~~---- s~~d----- S:~~d·---- 5-;;~;-·---
153 

Actions for common medical conditions- Non-rider states (LA & Ml) 

Below are underwtiting actions for conditions for which Human<~ does not place exdusion riders. 

These guidelines rnay vary due to state· specific lam and regulations but can be followed as a ge-neral outline. This 

io; ~'Jt all inclusive. Final decision is based on underwriting review. Underwriting assessments in the below grid are 

based on customary and usual treatment seen for the conditions noted. Below are ex&rnples onfy; Humana will be 

solely responsible for the final underwriting decision, Vllhic.h is based on the wmpleted application and the 

applicanes health history. Guidelines are ~ubject to change without prior notice. 

Condition 

Wr r~rw lhC' rlgllt to r~fC' for !hr: ro!Witl!;>.'J Mc!fflt m.edr,owor. 

UiG w~ ;apptoprliH•. Amodili~ ra1i-19;, dl'!terroined b.ul'!d an 

the se~ity t:Jf tl'H! coWrkm JJnri IYNim~nl ~ndJariJfff(liptJon 

~.roH, dosa(J*, lf'ld~tmiumotmoum. 

Tm-at-at w::h l.,wr. Str:f~>lWI or sclr·Hllh~<;:J}'. full 

recovery nCI symptcrn<J cr ue.:tr~r:: :-ly' ago 

Ventricular Septal Defect • APS HEQlHRED 

P.epi!:red ::> I year dt;D, wrnp!e!e recoy,;ry, r.IJrRol 

ca~t!iuc a.am 

Pres.ern or tl!p.dVed 'lYI!h symplvm~ ot Qbrmrm.;t (ilrtliilCC1.:l!T1 

Weight los~ medication use 

$1500 or lower 

deductible plus Rx ---···~ 

>ww.ard 

Stil1ld~·d 

O€:<Hne 

$2SDD • $5000 S2QOO • SS200 S6000 or highe-r 

~eductible p~~- deductible no Rx deductible plus Rx --- StandarG St~m:!;J.rd ~tatld:)Ui 

----·-~·~ .. ·~~· 

~t.anda1c )t~n;f.a;~ ~ta;,darC 

Dt<?ifl"! DtXl1He Dt!dlnl:: 

tlse o! ilfl'r' ~"'~<Q"htlo~~ ~T"'!CtGl\tOrl (ot!H~r ;ha·t .X.-!lwd! imh•tdual lm/!Vtdtm! lndt~·,cba: !nmw~u~t 

m tombma~on Witlt hyp~:B!ISIOII Of tdfvtilt !~~lite~ -\.~fi$l(j~fQ~l(JfS • r.11:'1J'Kii1 ((lfl'>JC~J,i;~a)!! • !ni!Cl;:;;l COl\SJtli!'d\IOfo • •!lo!IJJ(iii (CJttSiiJ<!Ili\ICm ~ 'llet:lkCI 

:E::on?'. rN11iin;r; rf'~OHI'> rtqu~r~o ~~~~rds.rcq•11~eti rec:mds req:.hmi 

Cuntinuo-.. "i u~e ol dny w~yk lost mf:dJCdtJOn'i for 9t>tlir1~ Df<li~~ De~.:~1ne fll;!dine 

lllcre tha:: ..meyt:tH 

A~ o:;her ;:::~natiQS or Xo;·ni~al~,o-:s.: ir: (Cr~lb:n.;,;oon wnh ~ttJ'ld<lrJ Staf'I<Jm! Standarc: ~tondard 

hyperter:sion m !Md:.l.c ~<;~>a.se 

Weight foss surgery · Gastric banding 

25 
154 

26 

Actions for common medical conditions - Non-rider states (LA & Ml} 

----·----------·-·-·-·-,-----------r-------·T----··---- ---- Condition 

P1~se:1t f)IJ hkltal ~nia, non prt:st.npti~ medilJ;IO!l !QTC unty), rm fKOO'Vli!..'Otlml nm5dM!rOrl."i ·':If re~tlnr; 

_ _:::~ent..,pr~ptk.:nmeckoti.:m. ~lo~~<:~;:ll l'oeHlilfr~n; ~!.l;r,O-"ni or it~=~~~~ m R,:,ti!ly_ ~~:'ldafC ----~~o.!:L__ 

f.'.lr.~ri;nioo Mt'dir,,;t>Oii lm wuenlly, hi.ilallH:fniil pn:w.nt D10<.hfle Dl'<~ine D\.'Cine S:andanl Qr Raung 

Acne/Rosat£:'a .. _ St:nded 5tsn1:m:l Sra.o;Oard St;~~riard 

l'resc:ip[i(Jll rr.e¢>, 'Jr < 6 r:~o~rth~ sitK~ rr.E:H v~e, rm 

t.cnltrtn:!orE"qlll11i:liefl! 

S\.~ndarlim !ia:iny $ra00c!~n m P..1:1~119 St.afn:lar(! Stcrtdill'di::rRating 

/>r('.SCrifi!Ut mC~.K u:om,:~mt!':l ~ 6 f!Xtn~'i ago, 

::ornr.letr! r;:.:~r~. no ACCillil!'l;~ or .equwJ~t 

~cut.me {r;~;m@n! ~~i equl\·,;de~t • .or 

Star:d.mi 

Dt:du'lo! 

Stdf'ldam 

Oedine 

Statl()<.~ru Star11iard 

O;!Cl1ne D~'(i:ne 

Starut.oatd Stafl(l<)rc Standarc; S:anriatd 

:~: 1 'f~r ~r-c~ ltr.i!m'lnmcornplr.:lec --;--:-:-:-:-:-:-t-;:--;-:----t=-::-----+:-::-;-::-----t-;-;:-:--:-----1 i\tG.Jt~ne (r~a:ctr.t:!nt ~i ~quiv<ilem, ;>r > ! ye<lf agrJ ~ln(e 

treatm~n;, {on!plnt!:!rqr;I)Jf!ry 

~ Alletqies 

---.,,"'.r.oc;m.cm_<e_.r,_e(l-.p-en-c-mg-c-,-.,,->!d-o-!<-d-tr:s-t>-og---!-""-'e-10.-%----+,-a;~,~-~--~~;~----

S~a:iO!l,J! pr~srtipti<ln Jr.e<:S (3 reb!!~ or 16~ per )'fMr, 

cr OK. rw tmm,;noth"';1p)' lre-.;'t:nent 

Ptr,~!ipt:{ll) mem., tmln! than 3J~!m~ per ye¥, M! 

!;nrrun(HiE~fdp)':ft'•lttllf!ni 

\'\li1h -.r .. • .. nho:.rt preRribf.U IT'.<l:liicii~J>li'!.'., c~r,m-,-to-,--1-lnd-,,-..,,-,-C-,Jt'.ll-. -,.-il!!-.,-+-,,...-,--:dii-,-,,-,r...,-;.,-,-,.,-,,+,-,,-i,.iwc-~-C·-"-~~-.w-tio-a-+,-,.- . ...,-U:.ra!cors~ll!!'a!ion 

t--,-:.:'~;:C•:rl;:;':.:'mm="::.:"':;:'":::~:c:"""=' ----------1;:;":::''::.}~.:::''"::"-':::~:::~'--J t-\,,h i\t;:.: Rari!'l') ·~·,th M.;x P.-xfno~ .... .-ilh M~xl\a;jng 

Atupu talionfProsthesls 

}-.~::~~~~;£;~:~~~.:~~."-'."''-"'-'"-''-'-~--tl-L> __ ",."'"-----------·---t!- '"'':-"''-----·----+f·~:-c:-----::----·-t·~.::-:',--:,", ·-·,,:------ .. ;u~~~:!J.~:~tf!~. 'i€verc artr.ry dl'if!a~ I Der.lirte rx.-cim•~ l .. ,_~...... :J ~ 

!;;;;;;;.!;:-;ti;;;-tJ-;;;;;-;-;;;;;;;;;-,;;t,dinth;---- --·-+-------- ---------- ·-·-----

~;-~.~~~oru lirt ------· ~;;~;;;;-~---· j-1;-,-""-·-,,,·-·---·--j-5-:w-q,-M;~-:---w---- rs-;;:;.;d----

~~~~-------~-----·-·------·-··- ---·-···~·-·-- ---·----··--·-· ... _, _________ ·----·-·-···-- Pr~n; D!'chn~ Oet ime O;~iim~ :,:~,~,J'l~ 

Anxiety 

lr;d-\'ldll<i! 

cor:~irr~r;,;nm 

V'.'~ll ccnrro!led ·,.,o;!h pr~;::-ripticn meciCilll().'\ ~ Sti:?JHbrC o~ H<>!e ur -;1;;fldarrJ m fline up $:<>nd3rd 

~c~.~s-eJn9. r.o 1T11Xt: tll<rt 2 (R Vl:lf:S tn the ld:i\ 12mon'l-o 

.A..sthma 

StanOMd 

MediC;mon ur.c, St-t>WIO Ht't!Hllen\ \nl:''\ II'Kl\jdlr.a St~lldaro ry :t.s-~e up S1artd.:u-r; nr ~iflE up St&ndarG 

A!bu~ero! i:t!;,;!er) h;~s !'l.i!l 3 {1/f,e) ur.c'/w 110 ri;m~ :tw~~ 

1-~ erner~er;(y room \.o;sr.; m ~.t,e p.w 11. mc.:1.ths 

Ora: 5tE'fH)(l~ reqw.-cd::: 3 t:mr~ m IJ't'm :~~art .2 u~ ¥1H\ n.,xhne 

1!1 ~1e r.<~st 1l1T1U:1\hs 

~ A1tention Dcrfi<it Disordet/AOD/ADHD 

Dedr:e 

S:andardorRate:uu 
155 

Actions for common medical conditions- Non-rider states {LA & Ml) 

------·--·--··-··-··-··--·-·--··r--·--·----T'--------· ----- ----·--- Condition W.. res~~ til~ tight to t~te for tht coodiriwr ~nd!OT mftf''"IIP"' 

ut• when appropniltt" A modifif:d t<lt.inQ /{ detnminl'd bdwd an 

!/lt"lC"V!'f1tyofrll~cond;ti'On"'ndtf~tmt"ntl!r.c//orptC'Jcnpt!e(l 

m~.:tl,.!li0/1 con, dOi~. ;md plttlmUm ~mount. 

Atrial Fibrill.ation 

S1500 or lowl<!r 

di!ductibfe plus Rx 

S2500 ~ S51lll0 

deductible plus .. ~ 

Single ever.;, nr~re :hi!n 2 years ago 

~~~r:H or er:qoin9 trc-.ltmm\ 

-- 2~~~---· s~_,, __ _ £Jed!tl-J Oedirm 

Sin~!~ ~ve11; li!!i.i th211 2 ye.ars tlgQ Of 1tuJh1ple ~lief'C~ t'! Oi.'i.l~l-i! 

pncrmaker/tmiibri!ii!;nr 

Sack Sprain/Strain/Whiplash 

S2DOC- S5200 S6000 or higl1er 

deductible no Rx .~~~~~ 

StllnC.ard 

Stan~rd 

S1a.ndarti 

Baker·s~"-----------·---+--------f---------4~--------~---------- ?rf"$o.!'flt or.Q ~rnptomau: [\:!·~:hnl:' DP.cline Standm6 

Stant'.ard Stcmd.3ro 

S::mrlard St.3r:dard 

B11sal Cell Carcinoma 

~~~~~~~~~~~"~~-~--~;_Rd-~~;_~-:-~-:~;...'-~--·-P~"~"'-.-,-,-.,--_,~:-~-:-'I-~-h":'~-:-,~'-::-.-p~e<-.rn-.--,-,-.-.,-.-,-f·-:-r:-'-~-·-f::-,-~:~:-·-~-= <:~!a~lefta~: 

---------------------- ·-----~-------j-----"-- ___ , __ "_ Benign Prostatic Hypirttrophy/B?H 

lr:c1dE!.11al 1:nrfi1g, no )'Jmptom~. no ;:t'.~lmertt<J~ 

mf'du:,nion u~~ 

~;d~-R-"-'"_? __ ~an~rd~Ra;:-p"-lf-1-"-'"-~-d-or~R-~e-u-p--~s:-,~-d-,-,,-o-r~-.,-:e-ut-,-t 

Oedr:e 

?ramtt(!-.\ill'ny, TURP, TUNA, TUlP. TUMT. m ~.w!f S~atldard 

~t::j;~:ry ;::r:lfl~i::,?il. f!Cl !oib·, up ne~er::, (r.r.lp!f!'~£" I --·~::':~;::_L~::.:::~~.~~::.:::?..i:~:~~:::.~::.:::.•~::~:~.::~ .J Bladc::Wr lnfe(ti.aM (Cystrtis) .. r··-.. ···-····-··--·-·-·· .. St~r:Uar:J ~tandord 

-- Srar~cad Stancbn:i 

MomthdllOpetyear Dt~dim~ Dedme 

·------·---.. ------ R<I(i':2:.% S.tilfa~bp; 

f're~rrt, :ratho!ogy·Jnkrm•,o,r:_ ________ 1_n:.:'c..'h:.:'"'.:..· ----f.:.D"'c..··l..,".:.~-------4r-'D-'-er...,ll!-'"'-----tl-''-''-"-----j 

llreast Implants 

?resent 

1 • 3 :psod~-;~~~ tht ;.>.ls: f'2'd1, nort '.dJrJ<co "~'-"1. 

G}o~etr.t<~TfftY\j 

Stdnd~cl St.-.m.lm.i ------·- -~----

Stilmlard 

-------"·---+-----+-----+-·.....,.-- --t-::-,.----- 3 ephtli!C'> a y;:Jr, :PhiE~Q ;.JS~• . ..:o:11)!h~te rti..IJJ<:f'/ in-d1v~Jucll lndionCI.:~! btJii'ICucl lrmi\':l!u.il 

COn)irJ.era\l~,r; {(V.I~~dt'r.aticr; 

27 
156 

28 

Actions for common medical conditions- Non-rider states (LA & Ml) 

r·----Condltlon ------------··--·-· r------·-··-- ·-··-·-·-·-·-··- werl'lNII!'t~~<e-rf9tut.:~rir•fcurhecQ/tdlrH,njl(ldJormed.~e~tkln 

~~::::;~,:~;;:,;~:;;:/:::':;;:.a~:!~~(:;~~:::S<br:;~cnOfl S1500 or lowtr S250o ~ SSOOO S20DO • S5100 S:600D or higher me<if.:".on<ou, dc;~t. >Jr.d pr~mlumamounr. ·----·- deductible ~~_!_.X ~~~~~~~~ .!.;duct.!._bl_o_n_o_R_x+d:-e-,:d_u<t_l_bl_ec.p.t_u,_>, R_x 

:-. .3 11~tiE~ J :f.!ill 01 (hrornr B~fl!.1d1iti~ ~<kte 01!dm1! Dedm: DeDit!€ 

Bundle Bra.nch Blodc (right) 

-c-;:-~-.,-:,;.·,-~e-,:-,>rt-.·,'"o r--,ob'-oc"'co-,"',"-,·.,--,,-st_U_m-.o-nt-1<>-. -i-s:·a-,-,,-,d·------~ -~,-.,-,,-,-~~--- ~¥--,-,· ----+-s,-.,-,,-,-, ------ ~)f!'lp!oms anQ <r.oatme!ll iree !cor last l1 n"~C-~!f1s, t;;J~C 

:11.n r.l~ilt.ll~ 

CarpafTunncl 

f':CSC!tl Oed)ll~ 

W.o:'.: ;han l ~rttnign p•J\yp removed with:r. the ::MS.! S Mao:.: RJ~!ng o 

CedJl~ !>;(:mt> 

MtaR<J:bgm M<!~"l"'!illl)IY 

-t=CC:,,.----------t:.:De:::dt':-oe'-:-.. _ 1d<t~Ratin!lm 

ye;o:;. d:.mr;g wlonvs::upy, f(l1!o-w \.J;J $(iledull'd eve:ry lnCr.iL'tla! 

Hl 1\?<lfS (QlHit"~!lii;!D;t 

-~ore lha'l 1 j:iCI-.'P rM"!Q'.o~~l WTthm \1~ p<;-;1 

yt:~r.s.S'J!ybHyretr:~'e.l(no!duauyco!o:r.()SC.:.opJ)01· 

lat"i l:lt cnl:.m ~III}Ci'lly h~n.:lV~d or blbw ~1p ;.chedtileC 

Mil.'<P.c·.inu~:wlncii,.,Dt:.:·! 

ComuX•tl\;i:rfl 

Dr.dmrt 

, lnCP .. -il;inill hlCIV!~uai . 

· (;:t!~t•efi,\l\m c,,rr;Jum.;:tv.n 

St.::wJ~ro St.:roU.:n.i 

M·r(R.-t:i•lgo: M,ll(lt11111\j("r. 

lncii~ICU.:!l lnr.:h·,:I!J..-: 

Cn1:s.a .. ~r.~;Jot1 C.L•n~e,;r.a-:1cm 

OedtM D,,c:mr! 

, __ ::~L-~I.:.~.:. _____ ~-..-~-~·-- .. ·---·--- __ ,. _____ , ______ -· .. --·--·-.. ---·-·-.!.. .... -.... --·-·-·-·-· : · Z polyp'i :t:rro:r~~.."J w11tm11hr pa~t Sy1:;;r~ durmg 

(~jcj·,uy,:op-f, ~r:!)' l c-aln.'lt.~fCJP'J(Orni)e;ed .,..,tth.l< lhe 

~st '5 years. rukJwup <.£heiluled 1!\-e"Pf 3- 5 years. 

More :hon 2 polyp~ remm·.OO Wi!hl"~ the past S years, 

loncw up s<·t-~1!.11!!1 ~·~'/ J - J ~a:1s 

Condyloma 

P:F~!!l! or hi'.it{ll~ nf · fJo KP\' 

Ftt:'>t!i"ll ol ill~Wiy ,;t · .,..11h HPV 

~~hxRa;:m;or 

lndMOt:<!l 

Con~i~rt~;ll~t' 

Dt!dme 

Rarf'lOO% 

L4.:34% 

Rat!'. 100~<1' 

L'\: Ril~P. 84% 

HPV undeh'Wf'~ten 

~<.:par,lt€iy 

M·JXfl.tl,EHJIY. Md~!ltllll'tl1<J! 

lnd!I'!C:u.a! l!lGh':d~; 

Dechne 

~,;;.;! Hlt% 

l.A:f!,ltf!8t:% 

HfV ..:ndE:-N.ltl:~r: 

~PdLJ:e~/ 

li.rt1i-!l00% 

I.A:R,ne8.1% 

H;;Vun~er;rnilttrt 

~ep.J.td:~:J' 

P.t:IJrr.;r:' Dech .,e O~d!:"h! i DE'duw 

lr:d:'.rldt!dl 

ComltJ~,jticr: 

Standa:ci 

Mdt.R':Ilingnt 

lr:div(l~31 

CunsaJE:ratk;.r; 

\1d>:R:Jtll1\l or !ndi1.>~!.1.:1l 

Cun.s:derari~f'l 

~il:H lOO% lA:R.lt<?B-1% 

:<PVunti~:rwritterl 

~p.~ratEJy 

Lo_e~p-~~u_;o_n ___ .. ________________ -J ______ ~---~------.. ----~----------~------ ~----
157 

Actions for common medical conditions- Non-rider states (LA & Ml) 

----~~ditj;;;;------·-·-------- ·-·-----,-----------r-·--------, 

01s( Okort=let {hemiat&d, bulging, rup1umd} 

?r~nt, •;urgic<lll'{ lt!pa~M le5-:: \tlo!!l ~ yP.<tr J9o m 

'Hith H:!~IC'ual,;; 

RatelOO% 

f..;.;: R.1l~A4% 

D~?ClinE' 

~.at~ 11)0% 

!A: ?.mP.gt•"t, 

Decli-1e f,'edine 

A.\ymptomati< lor morl]- di<ln I yew Wliheu: ~L'I'qe;y or St<I-'Htard ~~iliWiird Sianu;ord srandiJrd 

~~ly ~t?llilec! r:'>«e tha'l I p1a1 rl<;p_:::~tiUi ~~.:~.L. 

Divt!rtkulitn 

E.:~r lnfec'tion (Otitis Medill} 

-~~~~ Lht: pa~t 12 n:on:hs 

3 cr mme in thP. past 12 month.; 

, _ _:luttes.~;::£.7:E::'.:2::.:.:~:.~;~;.~.~~ ... -...... Erz.em<t 

Endometriosis. 

5:am.i.:~rcJ 

D:!dine 

---r-----4---------~--------

Dtdin~ 

D~dnlt: 

S:ilmiard 

S:;;miard 

Ded111e 

Dedine 

Dedme 

St.1nliiltd 

Star.ciard 

Decline 

Stond<JI[j 

St.::~.:ud 

Star.dard 

~riind3fd Standard Stlr.G.ord '.it.;rT(!.c~rc 

-·········-··-·-·-···-····-·---···--···--·· r-------·-·-----~-----·--

St~ndard Of ~!e up 

i'resent or wi'!lm S "~rs u! ·reatm"':l' D.:dine ~dlle De~line Dedtne 

-·-::5·y;;~~~~~u;~·~71;;;;;;;.-·- -~~;;~d------· ~---·--- -st:mz;d--·-·-·-- sta~----

-~~~-----------~;;;;1-----~---- ~~;~-----~~~;;----

Et\targed Prostate· S~e Ben!gn 

Prostat~. Hypertrophy ~-·-----+---~~-.. -·---·~---1------1-------- ;:;f)Uepsy, Gtalid Mal (Gent!ral!zed) -------

Gcdine 

De din~ 

·-,---------~------!-:--::-. ----- D<~drh! Oi~!i:11~ Derhne 

--~~~~-~-~~_:.::_~-----·---·-- --···-·--- s~~~:~~-~~-- .~.:~~::!.~~~~.!:._ __ ~~~!~----·--·-··· s_:~~-(1( Ra::_:P.. __ Epilep.!i.y, TMJporaf lob~ (Partial} 

29 
158 

30 

Actions for common medical conditions - Non-rider states (LA & Ml) 

Fractures 

R,uei5% S1ar.dard Stendarri 

Ret:o~r~ri R. !,e-!~~("ti iwm (,ili"e ~<Jith 110 l:!.i!!":Ofr df\';(~ Sc<JnMrd Stard.¥d 

o: perma~eot hxvtt(•n de\oi(.e 

Re..:nver~o. r~t!a~l from <<re Wilb !Efl'j)O!'<!ry OedFH! 

fi~Jt:O.'i!W";':(i! 

Gastric bandln~ • wefght loss :S-Urgery 

LiiP biHitll!!tilo:.."'Ve<l, 110 t.~teahll! ~JiiL", Wl!lght mmn;a:ruw 

fcr1~ey1W 

:..<~p IJ;:na !l!iTICVI!£!, H{e:~h!E !'ulkl. m w-::.igtn I:::J~s !ILJt 

rna:r.:air.i?'Ck:<mP.yea: 

Surt)iiOIIt,_orre(<t!d tJClth,ff£";. vlllhClr 'l't::l'o•;t 

me-Cicm:o.1s 

)Utl!icallycotrr.::;el:lm an~ F!'J~·w11n ()l.,..Jthout 

m•Mkil\'0!11;$1~ 

Rate2S% ':;tand"ln: St;:;ndari! 

S.;anc.:td $ti:r:d;;;rC StandMd 

So.<11eJrd St~danl Sund(l•d 

ONkli! Dl!dme i D1:<tine 

0fO:!it)j~ Di!di11e DP.t~m~ 

ll<lte '15% f<)(iXI!"'(:I:t;o;.., fiate:IS% k" (ondtiJCtl li.ate15% h:-tcQnDI\1011 i\are 25% lorcar)(]!I!CI~ 

~ul adt:,:i<:r.di 1.1tmg ~1u.! ,Jdtil\iord r.::hr.s dllG .~d!!:cn~l r.~tr.g .}rx: ddd·:=C<'I~I rating 

b- b- b- bR.!tir:g fi.Jt:ng St.J:::_nd<l='"----+"::::'::.'~ocg ___ --1 01?{h~e SU-75% 1tt!mq lo1 li.a(e 50%, !10 acl!~ :ta:e 50% .;nd 

(OIH!>11lll\ ;mu ~or !llt!~)S i!•~d::ICJnid r,!i'n'J !or 

r~d-~ 

···--·-·---- ~~=-:~_~=.....~-- -··------- t----~~~~- !1 ncl r.Jt'dit,,;lr.r.~ I! no med:(:~tlr.w.. Sti<ll<Lirri I! oo rnPrii:alion~. 

S:anc.:;rcL St,:;r.daal S:.;m."iarl! 

P.1edH11¢r. uS1!: n.;mng M~dk,mcn u~e Ra:JHy -\o!€t;l:.3tl0rl H~e. nanng 
159 

Actions for common medical conditions- Non-rider states (LA & Ml) 

Condition 'n\> f~t'fW I~ ri9h1 J(J f~Ci' for tlo .. cur.d1tion ;;mdlor m~i{fll/()tl 

~~~~;,";:;:;':!~r:':dr,'e:~:!:r::;::;i;::Ut;'lp~~~~~ S1500 or lower S2500 · SSOOO 52000 · S5200 S6000 or higher 

d~uctible plus Rx 

10 

mNliationroll,<k~~<g~."ndJ>F~i!fm4rnovnt. _ -~eductibJe plus- Rx deductible plus Rx deductible noRw 

S!d StG 

Gout 

Guillain-Barre Syndrome 

i'rewnt or < 3 )1".3!5 !.I~Ci! reco..,ewc OT !i!!'ic'~l De dine D.edine 

~~b1hty/pcn"an~~~ impairmel'11 ~- f-:-- -:--:· __ > 3JI~a;;.~~ncr:ecO'If!fW, :'I>J d.!wlbf':y. minirrwrl P.<rtl:! lS% ---·~;j--~--· Sr;;;;:,;~--- $J..(ld;;---

w~hum .. no_.,,_,P'o.....' --------+-------+------ r-----~---------­ Gyne(omastia 

i'r4;!~nr 

Hashimoto's Thyroiditis· See Hypothyroidism 

Funnooatllnrm:ent Gr.adelur!i·Sys~alk: 

f'lrQ\'H'Iic, Gm-c'P.Ill r.r gm<1!er. 

COP!;n:JOU<,· DEtstoiiC 

Decline Dedhe Dedinl!" 

S.tandard JtanGa~d 

·----·--·-----------·1-·--···----···--·l-·-----.. ·---·-·-·-!-·--·-----lf--~--·--·-·-l , HollK'rrhoids 

5t;md.;rr.i 

Star.darcor Ra:e up 

Hepatitis A -·-~·-·--··--MH--•-~~~-·-··•-m•-·••---+·•-·•·--•- > Fj rncifdl~ \ifl(:~ lll;'.,~mt:no -.-.1:h ~::,vuj..:J•ti 

-·-.. ··-.. --·--··--·+:-·-.. ·---.. ·-·-+-.... ,-.. --.--.. -·--1 "7-l!WM~(! ~tM~J:!):(c1 <iTM1li,Utl' 

norm3< h·P.r u~;s 

-;:;~;;;;;-a~.---·--- .. -·-·-·-----·-.. --·---------·----· - .. -·--·-·-.. ·-·-.. r----

SurgicaUy repu~. wHh (Un"!Pie;e re(IJ\Ie.'Y and 

nor~cu<ll':i 

Hiatal Hernia· see Add Reflux/GERO 

Sri!nCard 

~-;:;;;p-;;--· _________ .. _ ·--·-·----

Herpes Zo:otcr (s-hingles} 

IDe:Jine 

~--------·----·-·-

?re-5ent ~!am:ia.11:l 01 flilt~ up ):antwd or ~<He up --------·-·-·----·---·-M----------~ ---···-·---··-·------- -·---------------· St,Jr.r\Md ··--·---·----j.~~~~~------------- St,rt!(!.lrd JS!.!nd<HI: 

Higrt BfMd Ptfl'SS.Ut<!IH:y~rtanslon __ -·-------- ---·----.. ·----------·---.. L""Ilderw"rltten based on llQ<' of nnset, stakdlity 

~~~morbidity ___________ ,_ ----.--------·-··-

Stilbie, t~rage H!i!Otn!)s 15\l/90 01 lt!:i5, no other ~tilnr:Jid ~r fi.Jtl.:' up --------.. --. ·-.. -.-... --.. ·--·-+--.... ·---·---·--1 

t:.ardrac :'lSi: factors, ccmtm!k!d \'"'th n~e<:!ICO:'WI 

--------·-·---·-----.. --·--------+---·----.. -··l-·-·-·--·-·---1-·----·---

High Bloud Prl!ss.ure. +SO% Ratiible Build 

D~d:nt '---------------......... . Dcthf<!': Dt!d!tl!! Dedme -·-'------'---------'---------- 31 
160 

32 

Actions for common medical conditions- Non-rider states (LA & Ml) 

r--·-----c;;;;ditio.-----·---------- wero!!'~l'r>'i!fheflghltanltffrurhiiCOIIdi!>olt;mdiOI:mi'dH:i>tJOI> 

~::::~;::;;::;;:~~t~~:~r::~:~~~:::;;~~u~~:~'7:' S150D or tow~r 52500 ~ 55000 $2000 • S520Q 

rm:;:"''-;"--:":;-iot~_:<;m~::'·•:.;•;.:."':.:'.:'""_;;::"'.c'""":7';'mC:'m:;.:•:;_~;::'·-::-:-----f-"dC:ed::u;.:.ct;:;ibl:::e~lus Rx ~~uctihh:1 plus~ .. dedu~!=-~~~ 

High Blood Prl!ssure +Ratable Build +Tobacco 

User 

SGODO or higher 

deductlbfo plus Rx ----'---

f---------------- O;;J;;;-~----~----- ~~-··---- D-ed-lra:-··-

~.-~-od-P-~-,-u,-,~~H71g~h~Ch-ru~e,-M-ro~l<-~-,-,d~lm~~~2_--~~~----+===---·-+~~-----~ 

with meditation 

High Blor>d Ptessur.ft' +High Chol.l!!stErQI +Ratable 

Build !-----·----------""-.,,-, ·----~o,;;;:;---- o-,, .. ;-,,-_ ----t-o,-.d,.;;,------1 

High Blood Pressure+ High Chotr.~stero1 + 'foba(co 

US&r 

I-Hc:lg-:h-:O:-:-Io_o_d-Pr-.,-,-u,-.-.-:.,-,,-:bc-I,-B-ui-ld-.-,-:o,.-«-.,-1"-'•:.;c_ll:!.:c'-----~---~-~~r ---- ~P-· ---

~·-------------------~~---~----·-- Dedi:~e 

High Slaod Pressur:.~.:':.:.'"::'P:.:A.:cP.::."'::•c ______ +,,.·,C',,-_,----- lc,-::-----+~- -----!--,.--------! v.::~ , , Oedine DKhm: lleci#le 

High OlDiesrerol 

Lipid p.artelles~i;; ·~;hni norm~ bm!ts. corr.pliunt with 'S•.anc.:rd or fl.aH! up Star:.:la:ro' IJf ~<m; up Stcrrd'Jrd 

follr,;wu;J 

High dlolesterol +Rateable Build+ Tobacco User 

!--""-'--==.;_:=cc..;=;;;;.c_;.;::=:..::::;_+:D--e<,-hn-~. -----c;;;---·- C~~l!-. --~~-- ~;;;------

High Cholesterol+ Rateable Build+ Hy~u;!rtensWn ---:----- !----:------- --·---·-· ·---·--~--

OP.dme Cedme CI!'C~nt: 1 Dedir'-1 

_ H~1man Papilloma Vina (HPV) 

f'rese:m,crhis!<lycf,dle: controlled, 

nololkm·Hnre<:clll".rnendf'd 

f'r~rortu:i10ry~! 

~:<JliG¥:;1 

Dedme 

Dr.>:: 1m~ 

Ra.t~> 25% 11' h:g:~e~ 

D!'dlm! 

S~andarcl 

Dedme 

~~~r:('l;:tt: 

Dl?di~ll' 

~alfll!: 'ltitr'l;li;!JI! 

Cit'thtif~ 

SlaMi.'lr{l 

Dedi."W 

~;,;~)';;·.•·.:: S;,::r,dit~C 

Dfflint> Oe-dn>e 

-- -- G1:<:~n1J 0<.-<Jir:e 

Starl'.lcui! S:art~arl! 

CnduH! Cmhr.Q 

Siand<Jra Stand.arc 

Dde!ine :-------· l)edir.e ---'--'------

Infertility Trt~illtm<'nt ·male and f~ma!e 

f---(,J-,.e-n-'-tl-:,,,-',.-~~~~.:.1y;_d'-'"9-l.._rea:r.:.•_,-. __ r;.:.c:::.::.::._ __ -I-D-~\:-I•-e -,-,.,-·re-la-m-l!y-1-D<-cl-n·,-, _-,-,!t,-,.-,,-,.-c,~y-+-""'-.~-,.-.-,.-.11.1-,,-,,-,.-,;,·-+-D"-'-in .. -. -"-l!:-1~-:-fa;:~ 

las: ue.:~u;...::r,:: with irden~::y drugs :fa ye::sr y.,.i1h0l..<t a Ded1'1e · ~ntu~ la'Tlii)' ~cln1e" e.'lllfe ~lmt'\' Decine "!ntlll! 1amily Dedm~ · eniirl.' f~rni!y 

]!V~;blcttl 

t<l~l r.rea1rnf:f:! wiih inh:rtik;•drugs wil~ iJlr.;,~ !JW;h, ~rant!&d ~,r;:r:;!,l!r; S1cndar1i S:N1rhtri 

i<lmilyplannulgccrr.plff.e 

t,m uemm~;: with inlertiky drugs with a l:v.~ nir-;h, O~ch:1e- ,,-nir{' !a:-ni:~ Di!diar. • !!!lhre fam~·; DfXi111l! • !"..llrire li1nHJy DE"G'IIIf! • ~n:<n1 l<tn'll]y 

~-::::1l~::::::~~~~;:~~lFT ~~-~~ -- ·;wnr~:rd ·----~i;d~~---·-~- $t;~--w-- ~;;·----· 

'~7:~~~::;~:~w~. r:;n~GiF~J.;;;-- o~di~e ·t!nl!~ 1ri~- L;~~~;;·;~it;-~~e~·~-;,; !;~:!;- r;;;;;:~T,;;:;~· ~!'l!flqi~~~.::~~~~----~---- ·------- _ .. _ .. ____ .. -f---··-----... -·--.. ------- Insomnia 
161 

Actions for common medical conditions- Non-rider states (LA & Ml) 

Condition ·----·- -·---·----.--------·---- ·----·-·- We rew~ r!'ll' ru1hf to,.,,... for rh;:o col!drtioo ar>dl.or medtnt1on 

'-''f! wt>e11 l'ppr<Jf>ri'ltf!, A mtxf•fi~ r.!Cir>g •I de~mtf1f"d b.alf'd on 

rhtftverityoftheronct>ltonllndffNimer~tand!orp;e!crfP!Ion $1500 or lower szsoo. ssooo 

m . .c.'~;._Q;.;f..;.~_;';;o~::._'· d;.c:";;;''::'_:_'""..c.::."'.:.:'"_;'":..:m.::•mcc"::_"'::_'·----·f-'d:•.:d:cu:.:ct.:.C:;b:l.•:;Po;lu:Cs:..:;R:X w~~le plus R• 

Tr:~m~l Y',•it~ :-n~dkJt:Ort S;,mCz:rtl tt R.a:e uP StJr.dard or P.a~ up 

S2DOO- 552.00 S6000 or higher 

Jrrltable Bowel Syndrome 

Tre~ted with OTC rr.l;'ciG;;,-.,-----·-- ~··--·--+;~,~,;,------ ~----- ~~--

S;,mt'an:.lorRa:eup Stcndnaorfl..at2up Standaro St.:mda:Co! RiltE'I.iP 

S!and<!rdarRatetlp Stan4J.-Jro or !VJteup Srandarc 5t-:1ndarcml\ate~;p 

ITP {bbad disorder) 

Chi~ IQrm. (ul'!lllete rr:c~ery, pl,1te-!e: covnr r~;urne.;l ~.;.,mcard SumdarG St<JndarC 

tom:rmCI! 

(h:lc form, p:esen; Oedi:,e De(Jine Oe-::inl! D~1:1r.t: 

1--,,..,-d"-lt-lc-.,n"". ,-,'-h-.c'-,"-. -._-, --.h,·.,--,.-, ,.-,-,.,-o-! ~-g,-.. -~,-,.-, -+R·o~'',--',-%-----·- -,-,.-,->'-, ----~;e 15:;--·-· 1-!a;:e 25% -----

lh~: 3 )'l?aJS OJnce !!E!ai:IT'Ifflt er..::l 3{0!11ple!e recc'Oiri' 

1-.;:.Ad::;":.:lt:!lo::.:,m:.:.o..::«:.:h:..c:.:,,:::, ":::":::;r~:.:t:::h.,::..:::5 ,:::,.,2,,_:.:,::"'.::'::;:::.o._+S-;.·l-"C-.J·r·dc-----·- 5:-;,d;;ti"------- Sbndcffl --- S!.andam ______ _ 

treatme~tano a Wl~e!e. N!I).)';'Wy. no cuuo:r.t 

tl'~a;:rnentm'rn~ pldteli:!tG::I.mt ______ f------+------f------+------i ~n_t,.:epJatement 

!lip fepiaced 

Y.nee~~--------------­

:.houlcir.: ~t!plii o:~o 

·--·~2:-~~~-:'Ei.:~~::-::.:_~~~1-:.~~::~::::~.~:-~~:~ 

Kidney S1ane"S 

~!poma 

Pre:;ent, asymp!Dil"lil,it, 11'-l StUijery Jntldpa!~i 

' ·· i'1e"1;"€rit or tr~a:n1em wmpleteti les~ ;h,m 

5rnonths Olg!.l 

~~:o Dt:dt:t(~ 

!""'"" Dedtne 

['l~:"hfo!; ··-·-·-·-·--·!-··-···--····- ··-···- ··-··--·-··· 

DECii!l!! Cedn12 

Sta~Q.:!m Stanck1ra 

D·~li~a: Oeo:::~ne 

S:.andard 

r!l!~r.t, conlirn-.e-d tiiagno!.lS, ~~ahfj!, :t.:r;,;ont or hi\:my ~l,l'~<JJrd 01 R~t:ng 

!-~''.:.:m~''~·~~"~-"~"...:'~~~~i~n~~~l~oll~""_~-~~'~"~"~~~·~~·~~'----·4----·----------------·---+-----------+~~------~ Dr~ lim! D~:t h:·~ D1:< :llh~ )!.'ll'ldetnJ 

33 
162 

34 

Actions for common medical conditions- Non-rider states (LA & Ml) 

------------c;.;-.;Wo"n ______ ----------,-------,-------------,--------- W~ real~ llll! ri9h1 to ani!' rrx the coml'm011 <~rodtormedic~(ion 

U!~ w~n iJPPf'O/>Wtfe. A mt>rlififfi r.roting "rfrllrtmi~ b~d 011 

rhtli!'W'nlyofU!etQildmor~andtrl!'"lml!'/l!l!r!dlor~~JCfTpfi'Cn 

~~~0$'.'1~e.andpremlum~a.unr. 

51500 or lower S2500 • SSODO S2000 • S5200 $6(]00 or higher 

Migriiiflii'S 

deductible '--pl_u<_R_x __ j-d_e_du_<t_lbl_e '--pl_u•_R_x_

1 

__ d•_d_ud_l_bl_e no Rx ~~plus Rx 

[--, ~;::~~~:;~ (s 3 ep!~b ye<:dy) lr~a;e>l with OK S.tandd•C 

z o.l epis-:xte!. :r. the tilst 1/ rmnth>. c_"_"'_"_, __ w_o,-k,-p-+-,,-,ir-,,----+-,,-tin-,--

mrr:ple;e.}. symp1orm CO!ltrc.ol~ wch <tmo:nt b"<Mlrr.ent 

~ !l episc;r.!<.>s m t!'.ii' ldM 12 montl'ls. No workt.:p D,;,.;!m:: 

Ci)mpl~lt?-11 

> 2. n~ lull :f'rm C~l:verieo; 

~lr.;tory !ll \ .. ith tv·l :erm Jdi~<ff\" 

St<!n<!md 

Soand<!l1 

Vedne 

S~Mdard 

S;andiln! 

P.iltc50% 

S!.Jm~ilrd 

Miid Sjmpm'11:\. cor:ll\lll~•l ~M\h \me rned.nc othef h~art Sti!ndard or Ratt> up Sta:nl!<Hd :::r JlrJ{<! up 5tanc.ard 

•l-~m·!<!J 

Nephtitis:/Giomeru!OtH!phri1is 

S!iJ!ld,mJ 

Stanc:~d 

Rdtr~g 

De:di:w. 

StdnCardorR.i!re~ 

--------'----

Sldnd.rnJ 

1\a.tc;S!J% 

'St.JflC.Ud 

___ ::t_e_~~~-~-.:_~~.::.:!!.~ .. --------·-- DK:me' Uechoe :Jedin~ Oedtne ------------- --------- Osteo-<~orthritis 

Pri:!\en!.. '.l"llft)T( rnwJ:;, m I'T QJ OT, no simuhJet, tup, $(-:JII-d<l'\J 

J.ll~iVI~.lr.d <;T ~UH/,hle!!llf nfll<.!e lll'.-i)~~·C-':lt;__::lli __ +------+------+-------+---------1 

i•t~><.t.-n:, i'·l !le;n1't-l1: t'>f"'p! ('·T( :necJ\. r•o <;IYJvtder, R-:ni119 

bp.. pe~a· •. t•tl! k a~ ~p:r~E'. i:nP-t or ~nk!E> uMJ:'t!!!lll~lt 

fE:>~l~. r~i'lrr.!~$~ ul ;reatme!'lt. ·Nit11 ;.h:::uld~: hif•, O.:...:Jsr.<; 

pelvl'.. tooc~. •:r ~1!11?, 1-r.ee Qr ankle n-.oc!vt:mem and flO 

F'llltf€-PIM.Pmo.'n: 

R'llin~ 

Osteoparo'>ls/Osteopen!i\ 

--···c;·,;;;;~·~:;;·;;r.;·;.~:;;::~-:;~:;,::;~~-~~;··;;·;~;~;-·-- ~;,;-,;~:~-R~~~-;,- .. - -~;;;;;d·;R:;;-~;---

f':'\l"nopat.~se. f.') tii-!I'J·'lC~!~ u! <:-~:eoppcws ex rn:ec;p<;'r·lil, 

noh!!c;uresoi-Ji:!l:".i!S~:a~d< •. H: 

Dta~!XI.iiS .:.f (lst<!Gparo5ls or tn;eo~enlil WJ!h or Mirwnum :at~ of ZS% Minimum rate ol 2.5% llllte l5'!'<a $t.anc,;rd m A.::~ up 

'<'>~it1'10U' mecn:,;;;km L:Se, 0~~:1 ;rJr.-; stable or imprc-o..'e'C + philfrr.J~i' nting ~f + p~anrk'l..:Y r;:~nng d 

o~ me-d<i. or '30% ~a;e on meds. or 50% ~:-r. 

-·-;~.~~;;;;;;:.~~~~;7~i;·;;;;;;;i~:;~--- ~s;~~~--~1:~:, rr.~ -·-· r)~~------~------ c;;~;-----·--

~<ipph'lg.l~~~~-~---·H·~~---f---------r-------·~- ••-•--•--··~- -·-·---·- Ovarian Cyst 

!11ci\iJ-J<J1c(ll"l~dL'r;t\im, !11d1viciua; CO!tSi!jr.raL~m. indt'.icit~ii tm:~rn·rd!rJ11, lndw•t\HJI <Or&:lie!JIM:n. 

m!!d.~al reccrt:'s m2::1iral f€!:etds. medwiH!~OI~i rr.£OIC<I! recOlds 

f--::C,-",-,-: 0-,-rP.-<>,-,~-,-, ---------F~.::::-'"::cii~C{j::..(:. ::;: :;:u:: :~~:: ~~~~~------------~~--­ "Pap Smear • Abnormal 
163 

Actions for common medical conditions- Non-rider states (LA & Ml) 

-·-···-··---(;.;dit;co ------------,.----------

l"''i!" re1~rvt' t~ ugh! !o r"lll' for lllr ccno'itioll and!.ar ml'di(<JI/on 

~:=:::~:;:;r::..;··:~~~~~~~::'::~~t~::_:;:;;':;~:;,;;~:;n S1500 or 1ower S2500- SSOr:tO S2DOO- $5200 S6GDO Qr higher t-"-'-&-,-~,-:':-::""':-'-~.,.'· "":-:'-''"''-:-"-:c'-""'-:'":-"-"::-'~----::"",-' -::-:-::----:-!-"-ed-"-"-'b_I•...;Pc.I"-'-R.-x+-d-•d_"_ct.,..ib_I•:;.;Pc_lus--'R'-x+-dc;•c:d;c""='ble no R)j . deductibh:~ plu$ Rx 

A)(\J~- no i1kl_i1 r:'ik >1?\.•, <twill nr Class m fu!lowmi S:unCard S1&r.d<ud St!mdM(l !i!and;mi 

by IJ-'le n<J;ma! pap, (li!SS !V, \fCJ\1;;!, i¢lluwcc by tlm:e ocmwlpnpstl~Qr:; 

Phlebftls 

DnE-eplsode. d ~tns. tompleieiK~'!'!Iy. 

!IG \'ali(ose \'!~H!> or ~dema 

OnE er.6oo'e. 3 nn1rh\ • 2 yetlf'i. mmpl<"t~ r-em~~ry. 

•mvat"ic.o~ve:r.:srvel!emn 

~~cutr<?r.'i: efJ!sOOes w!thm 0-2 years 

Hbtt<lyc;f-~2 F-t:r><Jgo 

Pneumonia 

Pres.P.ilt 

LOmpret~ rec~Wery 

PtO".stat<tis 

Dt:hrli! 

tlate2S% 

$::¥ICard 

flate25% 

$:am!r.r:J 

Dl!d!fl~ 

S:t~nc2!d 

S~anr.ar-d 

Dedme Dt,:<inl! Dct.:ir-e 

Ra:e15% R.a::e ~5% S;~,nl"lilrd 

Staf'ldaro Sr.andanl S1;mdar~ 

Ra;e25% Rare15% S;and~H~ 

Stm:diu!l Standard S;.Jmlnrc 

Decline Oeciirte Dt:Oir.e 

Sla:d:!rd $tindMd $;;;nd3!d 

Star--:larll Stand;va ~;;.ndme! -- -- ------ r--------- Ratc2S% 

ProsthesisfPr.osthe1ics Devh:e Se'l Amputadon 

Ptol"tale ·Enlarged SEe Benign Pro.statk 

Hypertrophy"/BPH 

Psorlasl.s 

Rate25t.":: P..tW:2S% flilte25% 

t---;;;;;;-;;;;:;,;;;;:QTC~;;;;-,;;;;------ ~M·-·- ;;;;;;;;;,---- -;:;;;;;;;;;;----·--fs;;;;;,;;;---

~~~:::::;;;~~;mf)t~S. (Oil~f!!"Ja;~~ :<h~(;;f!nr~~- S,:~:;;;-;;·R.:r.E- -~~- ~~41m u~;:;:p-- s;;;;;;;------.--~~Rat~ 1,!"1-

~i~~~~7;~7:~:~~;·?rr:?;i~~i·~~-;t-·-· 0~~--·-ff· ..... ··-···· 'D;ii~;··---·--·-··- r;;~;----------~;~~~-----------~j· fnbrel. R~O'!tCiX!'.!. Su:!,lS<!oatlrJe, 90l;j lh~fapy or 

~f..::tha:ml(<J:!' 

~!_to_!!.~tytlaiVirus(RS~~~ '-:-----·----------::--:--------.-------

·;',<:.\tl\1! 'u hiStory d. < l }~:'> al,;~qe. Si'"'-Jr,;s/ Ot!dm~ DefT~f! r::c.-<.imt: Dm.i1n~ 

~al:vrrumito u!-l' 

:;. i ye.~-o!-,g-~. ·L;;~~-.C"!:_<_1 -\'~~~-,-,"-. --· o~-;;;~-·-·-----+Gc-Ncl:Y-~~---.. ·---f:0-0<-,:m-,---·-

S'f~_2~·~~~~---···----·---'"-t--·-··-·-·----f--------·--~:·-------- :> £ ~e,Jr~ u1.agf', Los; OC\tlrrer.ce > ! ~"C-.ll ago, H!l 5\.11\C,m.l Sltnd<lru St~r:o~rtJ 

11lelll\:a~:Qi'l".i 11Jr > 1 yEar. (::~mpie!e r~O~P.I). r.o uthg: 

r:-~:es~·p~<J~M~y~w~·w~it~=a~m ________ ,_ _____ ,_ _________ ,_ _______ ,_ _______ ___ 

Restless leg Syndrome 

~:,:rc!!ed w1l~~~~------. --·- ~~?.~~~:_~!:_ __ ..:sr"-~c_;l·,~.:~',';:.' ;:."' ... '·;.;:~•e::"~P---If-'1 __ :::,"_."-",.:,.;.,",c".-·-----·--1!= ~::=~c:."' • "'.:..'= P."e:.. ":::.P-l i))((Jihl5iS not tortlirrl'll!d, SH.O:'l<i<ll)' f('ln(;iiiOil no; fiJ!ed ~din<! '" ,, n l '""""'" "' 

ou~ !--'-'--------------·----·- ---- --·---- -·---- 1------- ~~a;_I;:_O•;.;:UK~hm~·~";:_'--------~-----~-----J------J------.... --

35 
164 

36 

Actions for common medical conditions - Non-rider states (LA & Ml) 

Condition We ""!t'rO<II fiN' right to rJJie for !he- umditi"'l ,fncJ/or medf(~lilll1 

use wh~ltllPflMI)fl>ll!l'. A m.gdiftNI r<JtltJg 1.1 ddtrmifltd baJ-t:c! o, tl'>eseo.oerityaf!lu.>rondHKm,mdtrealm~nr;mdkJtprt.tcriptJI'n 

mniil~t>on <<nl, dCllag<.". and p!Y!mi<.Jm .j'JmOt/r>f. 

l~r,;.s<;r<:; 

Rheumat:otd Arthritis 

S1500 or lower S250o • ssooo $2000 • S520D 56000 or higher 

deductib!e plu!O Rx -~-ed_u_«_lbi_•_:P_h-'"-"-'-t-d_e_du_ct_l_bl_• _no_R_x-+_de_d_uc;ct_;_lb_le plus Rx 

Dedm~ 0Eclir~ D~~l'!e !.ledtne .:._ 

;;~;~----- ~-;;---~-

De::line [ledifle 

t'''"'"' Sl<.~!l<iJrcl 

is""'"" Sta11iiMd 

io.nh D&!ine 

Swnd,m:i Stamiat<l 

3-6 rt<.te25% Standatd ~pr:.orlei1n !1,~ pa:.t 12 mw'..c'h..c'-----+__:..:.-"-'----+==---·+s-'"-"';.."..:.''-----+s'c."::.lt.iat=-o=----1 :-. E rp:-,.odes or. th,;< fJ":::"c.:':;hcc"::_";;c*s:_ ____ f-":::.= il:a~e Z'!'% Rme1S~ Rate 2'i% St.:m~uJ 

Sleep Apno~ 

~..1te l5U% k<Jt~ 15(1'¥1 f!atel5Wf, ~ta11C;rd 

LA Dl!'dm~ ;.A Uedme LA: [l\!dim~ 

'5ti!nd3tG Sr:t~nar.; S!anOard S1andard 

~-~r.J;~ l\xl'm DP.CF:ne 

Decitr:e D~d=ne Dedm;t 

Dc<ilrw f>eflit'i'L: Dedlne 

0\.>t:hr.e i.~r.l:fl! Ot.>i:l:n~ 

Spfnal Manipulations 

~-~',---~~n:-.. ~~._.'-'-.~'~.- .... ~~-" .. -.'.--.---------------+c5:_~_n~d~_'C ______ -+I~oa_no_·a_,, ______ ~~:.:--,",~~~~',,',-------r',~:-',",·-.,',-,m~,------~ · ''-'~',"""lr." ,,,,.. S:.and<:m St<~r•!lard • "...., .,. 

~-cll: __ ·c "15::.:..: ''":.':'=-:: p~·-- 'c:".:_·--·------·------F~~.~:a .. :.::,o,-__ ~------ ~,:::.,~~.-:~----·· ~-~~-~------ ~n_c._d ________ _ lf:.- ?Q vtw~:'--"'--''-"'-------------F"-=-----c-" ", ,- , -... !htr !<;•;:-, --+~-"-"'-·am _______ _ 21 • 25 •~tt> ;:ll;!r ~ear R.J~e 75%- Rat!: 15% Batt! 15% Staru:;onl 

i:«•!p!: LA: Ra:e B4% £x(t.>p:: tA P-<JtE15% hcep;: LA P.l!!~25% 

Ra:e 75% Rare !S% Rill!.! IS% StarrGc.·rd i:«ep~.LA. lt<i!i!E4% E:O:l'lll. LA. P.dle-1~% Extept LA Riltt;-10% 

?..o!t75% Ratt!S% Ril1,.15% Stilrl!iat{i 

f:<<ep1· t:.· i13!1." 8-!~<i b::-ep:: !A RiM· '30% . .c[.::."::::'ll.::.~:.::.lA_.:_fliJ;::!t!_:_IO:c"-.:_--1-------j 

Ra:e 1S1

'/o RatP.t'-f.:;;;., R3te- 1~% !tat~ 15.:;:, 

btl!r,t. LA: Oe:.!•ne Ex,t>J}t: I.A. D'..!(bne- f:ccep:: LA P.ilh~ 7:5% 

~~~s~----·---------~----.. ------ -n~------ s;;:;-;--------- ·;;;~----- 0;~-,.,.---- ·--+=-'=-:.-- ·- lrH.!h.-itiLOnl 

(rJnl<d~,Jllcr. 

--------1---·----·----"-

f<niel~% \td·l=kH:! 
165 

Actions for common medical conditions- Non-rider states (LA & Ml) 

Sv~gica! .eblat11X> '" 6 ;"1101~ih~ ego -----·---------- ,.':' __ d'-"-------~--- ~~---.. ··~-+1.: '':"::".c:.''---·----1 S:am:.,rd St.Hrltrd Stnmlil"d I Sldml.1td 

Tendonitis· SEE BURSITIS 

Tonsillitis 

Still;cl,tH! Sttmd.:ft~ 

St<md.imi Sta110ard 

Dedi!'lP. GL:.c:ine 

St<tr\oilarr. Stiimliltrl 

r~ mle-.::t11:m 'll!~ho;l d'>('C~~·--. s~h te~l. ne:pth"e S:nnc.::f!l Srand.mi 

!Jat 't~trioi{:yif stu0~5. nl!l)itn."!~ ( ltf~1 ~-<i:ly, no dhk<tl 

£-flde~Ke o! .:ctnl(' Te l)~,;se-. ilJOphykl<tiC dr>.~~ :nerap)' 

c;;mph~it!d > 6 momr!!. .ayo 

V<~ginitls 

f--..:O'_:'!!c::o::nu::."..:;;!:::'-t:..·..:'":.."'..:l!;_:lcl..:<..:'":.:':ve:.:-..:''-----+.:s·..:·&.::"=-:"d:,-----j-':S•=·"'=d::.'":..· ---+.S"'::."::d'::.''":... ----1-'-S:c::.::n..:d':..'":...· ----! > I oct<Jrrt'nce,..; 1 J'I.."<Jr !".Inc~ las; U(rurrt:11<:t:! flat<! 2S?.oi S!afld·ml Stand.:uo St<Jndal!: 

V<!ricasc Veins 

lriMirr:er.t 

P:-~sa'110'r.:h ulcer Dedme Dedina D~cln~ i:lec;ll'!"' ----·--·--·--------·-1--·--------t=-=------t-'--'----·-------- lH!ol':!<l ,.,,lth i~~u. !dnppr:~~ or sc~JIG:hl'rapy, llill fi,J\o!' 2')% St.and-lrti (_jf-Jnd.::rC1 S-:.anda:C 

_:,:;~cr~:y r.o 5jfTlptoms IJ' \r~i!IITY!fll d~r ilgn -:---- __ 

Trhlted vA-thi.t;er. ~.::~w~ngor !lk"o::l('lufrf. !ul· rt!w~-,-.,-o +~;-.,-~<;_J_w·,·· -----+5,·.-.,-,-.~u-, ------- .~t.mda;;----- 5:an;~ 

_T1PP.1l:>« :~P.,..)1JY>£!tl; '~>lYI' cg;; ----------------·-·- Vi!ntriculaf Sqptal Dcfi:!Ct • APS. Rli.QUlREO 

R~p<~•l{"d:;.1 ye,...~u W!TI?Ie;e-r~.a.,.ery,l"l(,rm(ll 'l.:&Jt<illd Sti:lndarf! 

O::illd:atexcllr: 

Pr<:se.1t 01 re-pa·r~ W1!h s.ymptorr.j U! ~rmunil! Cilrd,i!c Oed1ne O~hne 

~fl 

37 
166 

38 

Actions for common medical conditions- Non-rider states (LA & Ml) 

!

·-··-·-------·-· Conditlon Wr tP5efw !1>6 right to folie for tlt.fl condition ~'0: med'iuliPr! 

- "u:' "'""' ~proprial.fl. A mflrllfitd roltillg n df"t~rm~~>l'd b.tJ!ffi'"" 

til~ l.,....('f,ly~f ~~ o:anc:lmar> lmd rre.l~t llndlorllr5ef!p11ort 

~~n con, dOUfll!, <lodP'trmium amoon!, 

Wotght loss medicatt.:Jn U$lt 

USE()\ art] 'M!!qbr !os~ lf:-t:Oi:;-.o:io."l \Oii:E-1 lh<in Xen~cil:j 

1n <cr.tbina:ion ·""ilh hyfw.C:t!rrs!on ;y ca:'fii{l~ !SS1;1.":!1 

Cnntim;ou~ use ;;1 ilny Wi!igln !tJS!> mrcfKalioll$ for rnllff' 

;nilr•iduel 

wr:~im:rwi;lnf'tl('d.oJi 

r~orG~reo:t.iire-:1 

!ndf.iuJ;<;I 

rornic...:mli~nmedic.al 

rl!tllrd'srt:Q.:i•li:!d 

Occbne 

kldlvi;;w;! 

;on;id·:!'filtir.n meoi~~~ 

ll!tOldS /Et;U!n~! 

!n.:!lv;uua! 

.tO:"'S1dP.r~t\.:w1 l'fil!fil;JI 

r,_-ord~ reqwred 

-~:hantFI~~ ·----~----------·~~~-·----!cc---~----~-----··- All Cl\~J \(.tli'WIIOS M .'<eric.;! \£Stm cr.mbin1.1~on with Stanoc1rd ~;:andaril '.itilm!,1Ul St;mdilrl! .2:!f~1fen~oo 01 card:ac o·!SI!aS<! 

---·---r-· -·--·-- Weigttt los~ 1-urgary • G<Js1ric b.andiflg 

Lap-t"tand fCITIO>il'C, f!Cf<lte-:ll.JI-:! Uui1d, \'lo'ei(Jht Sla•lllard ll1<3im<~imrltrn (\l"leye.!lr • 

S;.dnCdtd Sldllt1C!td St~nd,;rd 

Lap Band remo>Jed, t.MP.Ohle bwi-J, or ·.o.~i!;Jh"! IC!ss nl'll Of: diP<! ~~ne Ded11~ Dedint" 

De din'! Dedin<! Dedi:~e Dl:dnh~ 

I'Tiil!f-~a:ned far oX~e y:._ar;;._ _________ !-:--::------!-:--::------!-:--::--------if---·-----j l..<~p B,;nrJ ~rei':!nl 

Actions for cancer 

Th~ following grid includes possible underwriting actions for appiicants with cancer history. This is not an 

all-inclusive list. Medical records are required' for all cancer history, regardle~s of the original diagnosis date. 

Eligibility is determined based on the underwriter .assessment of complel~ medical records, confirmation of 

,compliilnc~ with a!! physician recommended fol!ow·up, a current physician assessment of the condition, 

supporting stability and no recurrence of the condition. Treatment for cancer may be defined as: office visits, 

preventive maintenance medication, screenings, monitoring, diagnostics, and lab work. 

---------Co~d~---------·· -··-------- ,-·----~-··---,-··-----·---·r--~-·---l 

We rerene chi! m;ht to fl'iit let~~ c<md,I!OI"I.olndlar m~d"MiOo" 

U~Whl'n~pprafl<"t/!!f'. A ,.,..,dlfflo.J .... tinp II ri1!!11!!rm1(1f/J b~k-dun §1500 Of lOW@( tl>r- ~C"\I('fl{f of~~ GOI'IdlfKII"l ;md tte~tll't;"nt /lind/or rmeurip!IOn 

~~.=.t:.:!.'::~·...:_OOpt"emi~---- df.lductible- plus Rx 

fl.;nal Cell C<1rdnoma 

~.it;h1ph; {X"...\'H!'I(f:~, iJ' I~C\ilren:, l~itlOif""d 

{!ewad;~~~ ol ;i:n1~i1 Y.ne! 

Dedif1!': 

St.;r;d,;,rd 

1\.~te 25% !Je!l t:\~r.er:: 

/1.11 stdtes~,o;cep:: Fl 

<lll~lli"Riltt:ZS% 

UI:TQb,l((Oil\eri:"lrir,.,P.u.:!cQ!ls:Ot.'i"e;:on 

rt:S-f.l,~lm·· 

Rmly.j;'.;ltln9,•1ca•J.tet 

frK?kr~2!Nl"'i 

AllS!.iJ"t<!S 

fi..r.e25·Sf:% 

f-l only R.'ltmyJca.;~: 

!r~!w :._2re~rs 

S2500- Ssooo §2000 • $5200 S6000 or higher 

ded':.~~ plus Rx ~duct~~~ ~~= pfu~~ 

D-<!dme De-:!:ne De<:~me 

S-:<'lmli!rd $:and;ud S:ilrdil.•d 

·-- fl,l.l~lS% ·F1ttrr.,l!lent R~~e J.S% fH~IIl'd'll~'l\ s·,H.i.~d 

Ali-stat~ e~teptft .<\II ~att!:!.fU£'p.t~1. AHs:.atP.s.;:v:.;:ptil 

<l'l.C' UT: Ra~-1:! 15~f> cul'jlJT: ~a:e 25% andur· f~il(t! ZS% ur: roh¥.:ro ~~~<!r. Ul' lobi!~fJ !.IS~ · Ul: rc,h<Kc<: u~,~ 

lndrvidl!CILcr.:ideriltlnn :ndlvidual (Gtm::lewtJCO ind:'lldu<1.JCJmnjera:IQI1 

fl: ~eilBow n.s~tJ~low F:...Sl"be!cr"'' 

firy.oiy: Raltngdc<nc~r FL~;~li~. F..>!.:!,y 1f ,,1nr.:E.1 Fi..IJf'.!)' Rill:mgifcal'-<:.;t 

tree for z:2~eal"'> i~•!t.lr ;:;2yt'>ll:; lrfl!f~r to2y.!:lff 

AH'itil\o::s. Ms:.w:~· f'i!s;.3ret 

R<~h,•1S·50% R-lte2'i·SO% >t;at,!lS·5f1Cv, 

fi.<;1;'li)' • .!l<'l!lf<gli(<YJ(-:!f flonty.~t:l~ilGriY.ti 

··-·--c- H<?r~f R<1!111gr!C-3rv.;rl 

tr~kt ~ ~','(.~1~ (rt>e jQr ""lyea;s lr!!~ fer "'2 )":!il:~ 

Dedine (}e::hn~ f;e<!:n~ De<:llrn;; 

fL vniy: Ex{l!PHVf' FL cr.ly. E ... c~p1ion Fl onlr. h(Efl:ion fl o:11¥: Extepr:m1 

?: 2 jt:Jr~ (clll(·:J I:N·~ ;! ?- f!!Qrs ClrK(i !tN'. -:: 2 ye.m. O:'"lf.N lrer, ~! ycJr~ ~<JflC<'f l~rc. II 

Si;dd-;r--------·-·--·-·-+''-'50...;%ccr",~~ .:pplt:.S ... ~-~_2~119 <l!~fes ~~~::;~~~-- -~~~:2.:~?£::?_""i 
167 

Actions for cancer 

Condition 

111o!reH•rwl/leti9hll('lt•fl!"foc!he<ondllioll~t'ld!orrn:~i'ollron 

I.J5(: whtt~ .l/1PIOVi~f~. t\ modi(~ fatfo.g If d~IUmiM;d b.lS~d On 

!he tl'~e!"lry o/ rM tQr>dft/M and /TNfmenl •nrtlor pr<Mcoplrot> 

!>!OidiUfir;n cc11. riofllr;P, .tod prt!mltJrt> .J~IJtlt, 

Stt~ge 0 (o:amnon;a in ~lu), > 3 yeA!S. bom ·.Je.nrn~nt 

Si3ge.l, IA1, IA2, ltll. 1ti2 {t,.mrtl nod~ f8~10'1'e0). > hJ 

s 150{) or Jowef 

deducti_~:~ plus Rx 

P..;:eZ5'i': 

Ra:e25 ·50% 

S2500 - 55000 $2000- 55200 S6000 at higher 

deductible plus RX dcdllctible no Rx dedunl.ble plus Rx 

~· .. ~25% R<IW2:S% nate.25% 

R«!i!lS·"::O% Rart- 25 · 50~'(.1 11.<!11!.25-50% 

ye,ws!row tr~_mm_. "'-' -..-------+------+-------f---- S:ageiA, IIA, iliA. ltl:~iB.. >-~~~~-a_qo ___ lnCi~<id!i<!I<:Ct!s.ideration lrul\'n:lua! cornrli!ra:~~·--··~-'-~-'~-"'_d_.,_.a!fl:l_'.+'nd_l\~-a_coo_. -''-~-"--'o-"-1 

Colon 

S!Jge C 01 (<;f(lflOrno in ~1!t1, 3+ years irorn t.re:~tment fl.a:e 25 50% Rat<! 15 ·SO% Rare 25% Rate 25% 

Stag<!! nt Duke''•·"'• >:;yeas fmrn cre:>.tr..mt Rr.:~ 25 • SO% R;1;~ 2S ~ 5-J% R<lt<; .. ~5. SO% !!.ate ?.5. 50'}1, 

SHge 1 & !J. iib:)ormal t:.£'n.;y iun<ticr: 

;. i (1 ~d!~ !rom !Wiltfll~tll 

Prostate 

~t _m or Gl~~l!l Sc.:v.t! S · 10, > 10 yM'S P..atelS·SG% 

r:-:-''..o''>'-'_rv_o_r R_'"-"-'"_n.;_t' ._> _:o_~Y-"-''-------- .!_~:::l\:JC::.;'•,::·ai::.;<'::.":::";:"':::.;"::.;'ccr.. th::.;':::'l«l=u'::! '::.;'"'::.;~::.;·e::.;racl:""::. ~--m;_,._·l_co.~~ .:_nd_•_•e<J_u~-~!!er:~ 

Skin, Sarcoma 

Ac.Jult 

Stage l, Gl Ot Gl, fi, ~ 3 "r~i!rS 

---·.....,-·-.. - .... - ---·--·-·- ftcltl~ 7.S%· R.:11e 25% 

Under age l(]: 

J-· "='"".c:"'-'':''·-; ,., __.l ''-'-1'""·--··-·--·--·-----·-----1-"-' .. '•_,l_,_., ____ .. ___ +R<. .._,._l_>·_.l, __ -·- .!:.':!:'.3~"----·- GrO:lP u.;. 5 rear~ H<3-;:{: Z5. 1

Jtl% i\.J~e Z;l- 50% ~,)\f:' 2'5 SO% 

G!u:Jp !l, IV or ~ec:.mtnt, :> Hl ~'f!<lr:> 

Skin, Squamous Cell 

Sincle IJ((Vth?n<:~. tomple;e r~raverv f""'i!f9'1> 

lrciot ;urr,ur · ··-·---·-J__ ____ _j_ ____ ,_j_ ___ __t_ ___ __J 

39 
168 

40 

Actions for cancer 

Deep Tun¥:11: !fl}'iiiled r.liJS.::l~ :artilage ur i:Q..,e, 

Mm«astast'i 

Stomach 

o~hr.e 

1-------·------------- ;;;;;;;;;;;;;;-;;;;~;;;;;;~-;;- ,;;;;;;;~;.-;;:;;,;-;;;;-~ ,;;;;:;.;;i·,~;;;:;;;;:;;-.;- ;;;d;~;;;i;;;,~-;;;;~;;-

Testkular 

l\b!'l:;£!mirroma & Seminoma crrnbin"lioo. Sl.l~e-1, 

::-3 }'e:Zir~ agu 

t<Jort'!.e'lli:lO!rl<l, ~age~~-"'-;':;.:.., >_l_:_D:;.Y':.:".:..' -----I.:Cim_lr;lelual (OilStdera:km l!1di~d:Jcd o::r1s.ilera:~on 

Sen~inom.:: 5~3t~ I, -.. .:i ye<~~S 

Tonqua ·oropharyngeal 

~f!Ui'l:du.;! (<Yt:Jct?rG;;vn 1r,di'lldu~l ;:oos~!Jeralion 

R3t~ 2':i')!', ...:..:_ fl..at~ ~<,;% 

·-:-·----- -·----,--·- illdivio'ua! r.<n~rjer~~'Dfl !ndrv;co.l! wmt!ki.JIHJn 

.~':i.~; ~~~~~~:~~~~:~~ t;~~:O~!>Il witf1:n tlv~ IH~t l 

Stag~:, wrri'~~ akoiY....d or lobac;:o \JSe-, ---+----4-------~-----4----~ 

··1C:yCM\ hwr. ::t~.;~:nJ,:f\1 

~1.:~r~ ''· f'l;l dkt;hul or !IJQ~W u~e v ... tthf; th: po~st 2 

y:!iir:r. > lfr r,~.n~ tmm tfe:lirnt'm 

rT~h~y,o~1d.:..,~..:.·~Pl~lla~•Y~----------~-~~----~~~~----~~~~----~~~~-··--- Ut:r~::~~~-~~:~_"_a'_'"-w-~nt __________ -+-'"'_h~_::_I·_S_D'_·'---t-"-'-"-)S_·::_·o_·>o:. __ +H-"-''-2;_._so_% ___ +'-'"-~:_ .. S_·_?J_% ___ _, 

--~~~~-~:-~- !::?"_ 5: R.lte 25 • Soro -- Role 25 ·SO% R:!le 15 · s.G% R.-ne lS- )>:)% --

--~~:21: .. ::..:?_!.:~~~;~:~~~::_~-----------· ~~~:_2~:?~~-- ·---- ~!~:_~~.:-~~!'.----·t-~~~-:~~---,·-·-·· .. :~-~~:.-~2!: ___ .. __ _ Stagf' :•1. > !C ~us lnom!fum cons!cli!r,!1k1n ~"\d,1MI-:J:i' f'\).'l'>ld.Y<ltl•lll-f;nd:-·,ru,ual consli!Hril!i()fl rr:dMnuc.l ~orr;u1~wt1011 

U;erine ~c~'~'::..:>_I:.:.O!..:y':::".:..' __________ -L:::fn_u:c"::.'du=d: w;mdefatkm !:ldiv;d~.:l C<J:l5:6i,..l!lon lrdvHJua1 w:lSH~t:r;l:!iOI"l lndMOWl WIIS1fl~Jd1100 
169 

HumanaOne Short Term Medical Plans 

HumanaOne's Short Term Medical Plans are not subject to complete underwriting like other HumanaOne plans. Instead, 

applicants will be asked four or five eligibility and health qu~stlons to determine their eligibility. The following questions 

must be answered fully and truthfully; including information related to spouse and/or dependents applying for coverage: 

> ·:J No 0 Yes Are you or is, any immediate family member {whether or not named in this application) pregnant. an 

expectant parent. in the process of adopting a child, or undergoing infertility treatment? 

> :I No 0 Yes Have/Are you. yout spouse, or any person applying for <:overage resided in the U.S. for less than 6 months?" 

> :l No a Yes Are you, your spouse, or any person applying for coverage over 300 pounds if male, or ovEI' 250 pounds 

if female? 

> 0 No DYes For any of the following conditions. has. any person to be imured received, in the past 5 years, any abnormal 

test results; medical or surgic.al consultation, treatment, or advice; consulted a hea[th care professional; or taken medication 

for: diabetes, emphysema, cancer or tumor, stroke, heart disorder induding but not limited to heart attack or chest pain. AIDS 

or tested positive for HIV. kidney disorder (excluding kidney stones). alcoholism, chemical dependency, drug or alcohol abuse'? 

!n Colorc1do, an additional question will bE asked of thE applicants: 

) D No 0 Yes Have you or any other person to be insured been covered under two or more non~renewable short term pJans 

during the past 12 months? 

Eligibility 

Jf "'no" is imswered to all of-th~ fotlowing qu~stions. yollr client will be eligible for coverc'lg(!.lf "yes" is <'mswered to any of the 

following questions, your client will ne-ed to provide the name of the person the answer app!les to. The person{s} named will not be 

wvered under the polky.lf your d!cnt is ncrt eligible for (Overage, they rnay choost to up ply for a different Humar'l(l0tte plan that is 

fully underwritten. 

If yo'u have any question:s about HumanaOne's. Short Term Me-dical plans, please contact your local sales representative. 

41 
170 

We agreed to provide Senator Heitkamp details about whether there is appropriate civil 

penalties for fraud, waste, and abuse to provide a substantial deterrent (on page 41 (lines 

20-24) of transcript). 

The authority of federal agencies to assess and collect civil monetary penalties (CMP) can be a 

powerful method for enforcing regulatory policies and deterring violations. In 2017. federal 

agencies assessed millions of dollars in CMP for violations of statutory requirements, such as 

phone calls that violated federal telemarketing law and failure to report suspicious orders for 

controlled substances. GAO has not examined specifically whether these civil penalties are 

sufficient to deter fraud, waste, or abuse. However, according to the HHS Office of the Inspector 

General (OIG) website, "The OIG has the authority to seek CMP, assessments, and exclusion 

against an individual or entity based on a wide variety of prohibited conduct" OIG lists its CMP 

authorities on the CM P Authorities page and its exclusion authorities on the Exclusion 

Authorities page. 
171 

We agreed to provide Senator McCaskill details about priority open Medicaid 

recommendations (on page 65 (lines 21-23) oftranscript). 

Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks. GA0-18-

528 (Washington, D.C.: July 26, 2018). 

Recommendation: The Administrator of CMS should expedite the planned efforts to 

communicate guidance, such as its compendium on Medicaid managed care program integrity, 

to state stakeholders related to Medicaid managed care program integrity. 

Recommendation: The Administrator of CMS should eliminate impediments to collaborative 

audits in managed care conducted by audit contractors and states, by ensuring that managed 

care audits are conducted regardless of which entity-the state or the managed care 

organization--recoups any identified overpayments. 

Recommendation: The Administrator of CMS should require states to report and document the 

amount of MCO overpayments to providers and how they are accounted for in capitation ratesetting. 

Action Needed: HHS agreed with our recommendations. We will continue to monitor the 

implementation of these recommendations. 

Medicaid: CMS Should Take Steps to Mitigate Program Risks in Managed Care, GA0-18-291 

(Washington, D.C.: May 7, 2018). 

Recommendation: The Administrator of CMS should consider and take steps to mitigate the 

program risks that are not measured in the Payment Error Rate Measurement (PERM); such an 

effort could include actions such as revising the PERM methodology or focusing additional audit 

resources on managed care. 

Action Needed: HHS agreed with our recommendation. We will continue to monitor the 

implementation of this recommendation. 

Medicaid Assisted Living Services: Improved Federal Oversight of Beneficiary Health and 

Welfare Is Needed, GA0-18-179 (Washington, D.C.: January 5, 2018). 

Recommendation: The Administrator of CMS should establish standard Medicaid reporting 

requirements for all states to annually report key information on critical incidents, considering, at 

a minimum, the type of critical incidents involving Medicaid beneficiaries, and the type of 

residential facilities, including assisted living facilities, where critical incidents occurred. 

Action Needed: As of August 2018, HHS concurs with this recommendation. According to 

CMS, throughout calendar year 2018, the agency will be releasing a series of three 

informational bulletins on home and community based service waiver beneficiary health and 

welfare that are based on feedback solicited from a workgroup consisting of states and state 

associations. We will continue to monitor the implementation of this recommendation. 
172 

Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight, 

GA0-18-70 (Washington, D.C.: December 8, 2017). 

Recommendation: The Administrator of CMS, in partnership with the states, should take 

additionai steps to expedite the use ofT-MSIS data for program oversight Such steps should 

include, but are not limited to, efforts to (1) obtain complete information from all states on 

unreported T-MSIS data elements and their plans to report applicable data elements; (2) identify 

and share information across states on known T-MSIS data limitations to improve data 

comparability; and (3) implement mechanisms, such as the Learning Collaborative, by which 

states can collaborate on an ongoing basis to improve the completeness, comparability, and 

1utility ofT-MSIS data. 

Action Needed: HHS concurred with this recommendation. In March 2018, HHS stated that it 

developed a database on data quality findings, which could be used to identify solutions for 

common problems across states, and has begun to develop a data quality scorecard forT-MSIS 

users, which aggregates data quality findings in a user-friendly tooL HHS stated that it will (1) 

continue to work to obtain complete T-MSIS information from all states; (2) take additional steps 

to share information across states on T-MSIS data limitations; and (3) implement ways for 

states to collaborate regarding T-MSIS. We will assess HHS's actions once completed. 

Recommendation: The Administrator of CMS should articulate a specific plan and associated 

time frames for using T-MSIS data for oversight 

Action Needed: HHS concurred with the recommendation, but as of April2018, HHS had not 

yet informed us of any actions taken. 

Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Efforts with the Fraud Risk 

Framework. GA0-18-88 (Washington, D.C.: December 5, 2017). 

Recommendation: The Administrator of CMS should provide fraud-awareness training relevant 

to risks facing CMS programs and require new hires to undergo such training and all employees 

to undergo training on a recurring basis. 

Recommendation: The Administrator of CMS should conduct fraud risk assessments for 

Medicare and Medicaid that include respective fraud risk profiles and plans for regularly 

updating the assessments and profiles. 

Recommendation: The Administrator of CMS should create, document, implement, and 

communicate an antifraud strategy that is aligned with and responsive to regularly assessed 

fraud risks. This strategy should include an approach for monitoring and evaluation. 

Action Needed: HHS agreed with our recommendations. CMS reported that, as of August 

2018, the agency is developing annual fraud, waste, abuse training for all CMS employees. 

Additionally, CMS is working to apply the fraud risk framework to the Medicaid program more 

broadly. We will continue to monitor the implementation of these recommendations. 

Medicaid Program Integrity: CMS Should Build on Current Oversight Efforts by Further 

Enhancing Collaboration with States, GA0-17-277 (Washington, D.C.: March 15, 2017). 

Page 2 
173 

Recommendation: To build upon CMS's collaborative audit efforts and help enhance future 

collaboration, CMS should identify opportunities to address barriers that limit states' participation 

in collaborative audits. Such opportunities could include improving communication with states 

before, during, and after audits are completed; and ensuring that audits align with states' 

program integrity needs, including the need for oversight of services provided in managed care 

delivery systems. 

Action Needed: HHS concurred with this recommendation. CMS has taken steps to identify 

opportunities to improve state participation in collaborative audits. Notably, as of January 2018, 

CMS is in the process of awarding and implementing contracts for five regional Unified Program 

Integrity Contractors (UPIC) with the purpose of coordinating provider investigations across 

Medicare and Medicaid; improving collaboration with states; and increasing contractor 

accountability through coordinated oversight. CMS is also meeting with groups of states to 

clarify roles and responsibilities and discuss topics for new collaborative audits with the UPICs. 

CMS also held sessions at the Medicaid Integrity Institute in 2017 to work with states on 

potential topics for new collaborative audits, including personal care services and managed care 

delivery systems. We will continue to monitor CMS's progress as it initiates and implements 

UPIC audits nationwide. 

Medicaid: CMS Needs Better Data to Monitor the Provision of and Spending on Personal Care 

Services, GA0-17-169 (Washington, D.C.: Jan. 12, 2017). 

Recommendation: To improve the collection of complete and consistent personal care services 

data and better ensure CMS can effectively monitor the states' provision of and spending on 

Medicaid personal care services, CMS should better ensure that personal care services data 

collected from states through T-MSIS and Medicaid Budget and Expenditure System (MBES) 

comply with CMS reporting requirements. 

Action Needed: HHS concurred with this recommendation. In December 2017, CMS cited 

efforts related to claims data submitted by states through T-MSIS. Efforts included validation 

checks of person care service claims to ensure that key data are not missing or incorrect. In 

addition, CMS stated it was working with the states to address concerns that are identified with 

the quality of claims data submitted. However, as of August 2018, CMS had not addressed 

inaccurate state reporting through MBES; the agency stated that it is a priority for 2018. 

Complete implementation of our recommendation will better ensure state reporting of claims 

and expenditures is accurate and will allow CMS to effectively perform key management 

functions. 

Recommendation: To improve the collection of complete and consistent personal care 

services data and better ensure CMS can effectively monitor the states' provision of and 

spending on Medicaid personal care services, CMS should develop plans for analyzing and 

using personal care services data for program management and oversight. 

Action Needed: HHS concurred with this recommendation. As of August 2018, CMS stated that 

it is working with states to implement Electronic Visit Verification (EW) that will ensure the core 

elements of personal care service delivery in the home are being tracked. CMS has developed 

a process for states to submit data on their EW compliance by the January 1, 2020 deadline or 

to request a good faith exemption from the requirement until January 1, 2021. We will continue 

to monitor the implementation of this recommendation. 

Page 3 
174 

Medicaid: Program Oversight Hampered by Data Challenges, Underscoring Need for Continued 

Improvements, GA0-17-173 (Washington, D.C.: January 6, 2017). 

Recommendation: The Administrator of CMS should take immedi'ate steps to assess and 

improve the data available for Medicaid program oversight, including, but not limited to, T-MSIS. 

Such steps could include (1) refining the overall data priority areas in T-MSIS to better identify 

those variables that are most critical for reducing improper payments, and (2) expediting efforts 

to assess and ensure the quality of these T-MSIS data. 

Action Needed: HHS concurred with the recommendation. In July 2018, CMS noted that it had 

shifted its T-MSIS efforts to assessing and improving the quality of T-MSIS data, and expressed 

its commitment to working with states on improving their data submissions. As part of this 

effort, CMS identified 12 Top Priority Items for post-production data quality that all states should 

address. CMS told GAO that it reviews a state's data quality issues in these 12 areas and then 

works with the state on addressing them. The agency plans to expand its data quality 

monitoring review to be more comprehensive following discussions with a Technical Evaluation 

Panel to be held this summer. We will continue to monitor CMS's progress as it initiates these 

new data quality improvement activities. 

Medicaid Program Integrity: Improved Guidance Needed to Better Support Efforts to Screen 

Managed Care Providers, GA0-16-402 (Washington, D.C.: Apri122, 2016). 

Recommendation: The Acting Administrator of CMS should coordinate with other federal 

agencies, as necessary, to explore the use of an identifier that is relevant for the screening of 

MMC plan providers and common across databases used to screen MMC plan providers. 

Action Needed: HHS concurred with the recommendation. In the final Medicaid Managed Care 

Rule 2390-F, CMS added a requirement that states and managed care plans add the National 

Plan and Provider Enumeration System (NPPES) to the list of databases required to be 

checked when enrolling providers. Individuals or organizations are identified in NPPES through 

the use of a National Provider Identifier (NPI). However, this NPI applies only to NPPES and is 

not used in other databases that states and managed care plans check when enrolling 

providers. To fully implement the recommendation, CMS should continue to explore the use of 

an identifier common across all relevant databases. 

Medicaid: Federal Guidance Needed to Address Concerns About Distribution of Supplemental 

Payments, GA0-16-108 (Washington, D.C.: February 5, 2016). 

Recommendation: To promote consistency in the distribution of supplemental payments 

among states and with CMS policy, the Administrator of CMS should issue written guidance 

clarifying its policy that requires a link between the distribution of supplemental payments and 

the provision of Medicaid-covered services. 

Action Needed: HHS concurred with this recommendation. CMS has issued clarifying letters to 

some states, but has not issued written clarification to all states explaining that the distribution of 

supplemental payments be linked to the provision of Medicaid-covered services. CMS indicated 

Page4 
175 

that it anticipates issuing a proposed rule in October 2018 that would establish new reporting 

requirements for supplemental payments that may address this recommendation. 

Recommendation: To promote consistency in the distribution of supplemental payments 

among states and with CMS policy, the Administrator of CMS should issue written guidance 

clarifying its policy that payments should not be made contingent on the availability of local 

funding. 

Action Needed: HHS did not concur with this recommendation, although it did agree that the 

issue is a concern and stated it was considering additional options to address the issue. As of 

April2018, CMS has not taken action. In light of our finding that, among selected states 

reviewed, supplemental payments were often contingent on availability of local funding; we 

maintain that HHS should issue written guidance to all states communicating its policy 

prohibiting Medicaid payments contingent on the availability of local funding. To implement this 

recommendation, CMS should issue written guidance clarifying its policy. 

Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched 

with Federal Funds, GA0-16-53 (Washington, D.C.: October 16, 2015). 

Recommendation: To improve the effectiveness of its oversight of eligibility determinations, the 

Administrator of CMS should conduct reviews of federal Medicaid eligibility determinations to 

ascertain the accuracy of these determinations and institute corrective action plans where 

necessary. 

Action Needed: HHS concurred with this recommendation. In July 2017, HHS issued its final 

rule on the Payment Error Rate Measurement (PERM) program, and stated that it would include 

reviews of federal eligibility determinations in states that have delegated that authority. In 

December 2017, HHS provided information noting that the first cycle of the revised PERM 

includes two states where there were federal eligibility determinations. The results will be 

reported in 2019. We will continue to monitor HHS's implementation of the revised PERM to 

determine if HHS is ascertaining the accuracy of federal eligibility determinations and taking 

corrective action where necessary. 

Recommendation: To increase assurances that states receive an appropriate amount of 

federal matching funds, the Administrator of CMS should use the information obtained from 

state and federal eligibility reviews to inform the agency's review of expenditures for different 

eligibility groups in order to ensure that expenditures are reported correctly and matched 

appropriately. 

Action Needed: HHS did not concur with this recommendation. As of August 2018, CMS 

indicated that it is establishing a process for sharing information between the eligibility and 

expenditure reviews. Once this process is established, we will determine whether these actions 

address the recommendation. 

Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and Unclear 

Policy, GA0-15-322 (Washington, D.C.: April10, 2015). 

Page 5 
176 

Recommendation: To improve CMS's oversight of Medicaid payments, the Administrator of 

CMS should develop a policy establishing criteria for when such payments at the provider level 

are economical and efficient 

Recommendation: To improve CMS's oversight of Medicaid payments, the Administrator of 

CMS should, once criteria are developed, develop a process for identifying and reviewing 

payments to individual providers in order to determine whether they are economical and 

efficient 

Action Needed: HHS concurred with these recommendations. To fully address these 

recommendations, CMS would need to develop a policy establishing criteria for when Medicaid 

payments at the provider level are economical and efficient, and once criteria are developed, 

develop a process for identifying and reviewing payments to individual providers in order to 

determine whether they are economical and efficient CMS indicated that it anticipates issuing a 

proposed rule in October 2018 that would establish new reporting requirements for 

supplemental payments that may address these recommendations. 

Medicaid Information Technology: CMS Supports Use of Program Integrity Systems but Should 

Require States to Determine Effectiveness, GA0-15-207 (Washington, D.C.: January 30, 2015). 

Recommendation: To ensure that the federal government's and states' investments in 

information systems result in outcomes that are effective in supporting efforts to save funds 

through the prevention and detection of improper payments in the Medicaid program, the 

Secretary of Health and Human Services should direct the Administrator of CMS to require 

states to measure quantifiable benefits, such as cost reductions or avoidance, achieved as a 

result of operating information systems to help prevent and detect improper payments. Such 

measurement of benefits should reflect a consistent and repeatable approach and should be 

reported when requesting approval for matching federal funds to support ongoing operation and 

maintenance of systems that were implemented to support Medicaid program integrity 

purposes. 

Action Needed: HHS initially concurred with this recommendation. However, in December 

2017, CMS officials stated that they no longer concur with this recommendation. CMS noted 

that the agency is taking steps to reduce the regulatory and reporting burden for states and that 

requiring states to measure benefits achieved as a result of implementing systems for program 

integrity and other purposes is not feasible. 

Unless CMS requires states to measure such benefits, it cannot determine whether the billions 

of dollars of federal funds spent to support the maintenance of the systems used by the states 

for program integrity purposes result in savings for the Medicaid program. As such, we continue 

to believe that steps should be taken by CMS to ensure financial benefits are achieved as a 

result of federal IT investment in states' continuing operation and maintenance of systems to 

support Medicaid program integrity efforts. In order to fully address this recommendation, HHS 

should direct the Administrator of CMS to require states to measure quantifiable benefits 

achieved as a result of operating information systems to help prevent and detect improper 

payments. 

Page 6 
177 

Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local 

Governments Warrants Improved CMS Data Collection [Reissued on March 13, 2015], GA0-14-

627 (Washington, D.C.: July 29, 2014). 

Recommendation: The Administrator of CMS should develop a data collection strategy that 

ensures that states report accurate and complete data on all sources of funds used to finance 

the nonfederal share of Medicaid payments. There are short- and long-term possibilities for 

pursuing the data collection strategy, including (1) in the short-term, as part of its ongoing 

initiative to annually collect data on Medicaid payments made to hospitals, nursing facilities, and 

other institutional providers, CMS could collect accurate and complete facility-specific data on 

the sources of funds used to finance the nonfederal share of the Medicaid payments, and (2) in 

the long-term, as part of its ongoing initiative to develop an enhanced Medicaid claims data 

system (T-MSIS), CMS could ensure that T-MSIS will be capable of capturing information on all 

sources of funds used to finance the nonfederal share of Medicaid payments, and, once the 

system becomes operational, ensure that states report this information for supplemental 

Medicaid payments and other high-risk Medicaid payments. 

Action Needed: CMS did not initially concur with this recommendation. In April 2018, CMS 

officials told us that the agency has started to collect information about the source of funds used 

to finance the nonfederal share of Medicaid payments through T-MSIS. However, the agency 

has not yet planned how it will use the data it is collecting and T-MSIS limits states to reporting 

one source of the nonfederal share per payment. CMS also indicated that as part of its program 

integrity strategy released in June 2018, it will begin to conduct program audits focused on 

states' improper claiming of the federal match. Once CMS develops a plan for using the T -MSIS 

data it collects, begins conducting its planned audits, and prepares and releases a final rule on 

supplemental payment and financing oversight, GAO will be in a position to consider closing this 

recommendation. 

Medicaid Demonstration Waivers: Approval Process Raises Cost Concerns and Lacks 

Transparency, GA0-13-384 (Washington, D.C.: June 25, 2013). 

Recommendation: To improve the transparency of the process for reviewing and approving 

spending limits for comprehensive section 1115 demonstrations, the Secretary of Health and 

Human Services should update the agency's written budget neutrality policy to reflect actual 

criteria and processes used to develop and approve demonstration spending limits, and ensure 

the policy is readily available to state Medicaid directors and others. 

Action Needed: HHS did not agree with this recommendation; however, the agency has 

recently taken some steps to establish spending limits and clarify approval criteria. For example, 

in 2017, GAO described how states have been allowed to accrue, in the context of inflated 

spending limits, unused spending authority and use it to finance expansions of demonstrations. 

One state that GAO reviewed was allowed to convert $8 billion in unspent federal spending 

authority into an incentive payment pool within its demonstration.1 Under a policy implemented 

in 2016, HHS restricted the amount of unspent funds states can accrue for each year of a 

demonstration, and has also reduced the amount of unspent funds that states can carry forward 

to new demonstrations. For 10 demonstrations it has recently approved, HHS estimated that the 

1 See GAO, Medicaid Demonstrations: Federal Action Needed to Improve Oversight of Spending, GA0-17 -312 

(Washington, D.C.: Apr. 3, 2017). 

Page? 
178 

new policy has reduced total demonstration spending limits by $109 billion for 2016 through 

2018, the federal share of which is $62.9 billion. These limits reduce the effect, but do not 

specifically address all, of the questionable methods and assumptions that we have identified 

regarding how HHS sets demonstration spending limits. 

Additionally, in a November 2017 informational bulletin released on CMS's website, CMS 

indicated that the agency will clarify expectations regarding its budget neutrality policy and may 

provide additional written guidance to states on both policy and methodology for demonstrating 

budget neutrality. In April 2018, CMS told us that it estimates that additional guidance will be 

issued by the end of calendar year 2018 that may address this recommendation. 

Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver Projects Raise 

Concerns, GA0-02-817 (Washington, D.C.: July 12, 2002). 

Recommendation: To meet its fiduciary responsibility of ensuring that section 1115 waivers are 

budget neutral, we recommended that the Secretary of HHS better ensure that valid methods 

are used to demonstrate budget neutrality, by developing and implementing consistent criteria 

for consideration of section 1115 demonstration waiver proposals. 

Action Needed: HHS disagreed with this recommendation. However, we have reiterated the 

need for increased attention to fiscal responsibility in the approval of the section 1115 Medicaid 

demonstrations in subsequent 2008 and 2013 reports (GA0-08-87 and GA0-13-384).2 HHS has 

taken steps to change some aspects of methods used to determine budget neutrality and 

demonstration spending limits. In May 2016, HHS communicated four key changes to its 

budget neutrality policy. These changes addressed some, but not all of the questionable 

methods GAO identified in its reports. 

In addition, in a November 20171nformational Bulletin, CMS communicated plans to clarify 

expectations regarding budget neutrality and to provide additional guidance on methodologies 

for demonstrating budget neutrality. In April 2018, CMS told us that it estimates that additional 

guidance will be issued by the end of calendar year 2018 that may address this 

recommendation. 

2

See GAO, Me.dicaid Demonstration Waivem: Recent HHS Approvals Continue to Raise Cost and Ovemight 

Concerns. GA0-08-87 (Washington, D.C.: Jan. 31, 2008) and Medicaid Demonstration Waivers: Approval Process 

Raises Cost Concerns and Lacks Transparency, GA0-13-384 (Washington, D.C.: June 25. 2013). 

Page 8 
179 

We agreed to provide Senator McCaskill details about the data we used in a 2011 report 

on application coverage denials (on page 68 (lines 16-23) oftranscript). 

In our 2011 report, data from six select states, the American Medical Association, and the 

National Association of Insurance Commissioners were our primary sources to describe the 

data available on coverage denials-that is, denial of coverage for a medical service before it is 

provided or denial of payment for a service after it is provided. 1 We also reviewed information on 

the outcomes of complaints and appeals submitted by 35 states and the District of Columbia to 

HHS in their applications for Consumer Assistance Program grants, as well as data from the 

Department of Labor on complaints related to coverage denials for those with employersponsored coverage. 

To describe the data available on denials of enrollment applications for individuals seeking to 

purchase insurance coverage, we reviewed data that HHS collected from 459 state-licensed 

insurers that offered coverage in the individual market on the number of applications received 

and denied. The data included application denial rates by insurer for a 3-month period-January 

through March-in 2010, which was the only quarter of data that HHS had collected as of 

December 2010. To supplement the single calendar quarter of HHS data, we also collected data 

from insurance department officials in the six selected states. Additionally, we reviewed data 

from America's Health Insurance Plans on application denial rates. 

1

See GAO, Private Health Insurance: Data on Application and Coverage Denials, GA0-11-268 (Washington, D.C.: 

Mar. 16, 2011) 
180 

We agreed to provide Senator McCaskill coverage denial detail from 2011 report (on page 

71 (lines 4-5) of transcript). 

In our 2011 report, coverage denial rates varied significantly across states, with aggregate rates 

of claim denials ranging from 11 percent to 24 percent across the three states that collected 

such data. 2 In addition, rates varied significantly across insurers, with data from one state 

indicating a range in claim denial rates from 6 percent to 40 percent across six large insurers 

operating in the state. There are several factors that may have contributed to the variation in 

rates across states and insurers, such as states varying in the types of denials they require 

insurers to report. Data also indicated that 

Coverage denials occurred for a variety of reasons, frequently for billing errors, such as 

duplicate claims or missing information on the claim, and eligibility issues, such as services 

being provided before coverage was initiated, and less often for judgments about the 

appropriateness of a service. 

Coverage denials, if appealed, were frequently reversed in the consumer's favor. For 

example, data from four of the six states on the outcomes of appeals filed with insurers 

indicated that 39 percent to 59 percent of appeals resulted in the insurer reversing its original 

coverage denial. 

2See GAO, Private Health Insurance: Data on Application and Coverage Denials, GA0-11-268 (Washington, D.C.: 

Mar. 16, 2011). 
181 

GAO u.s. GOVERNMENT ACCOUNTABILITY OFFICE 

441 G St. N.W. 

Washington, DC 20548 

August17, 2018 

The Honorable Ron Johnson 

Chairman 

Committee on Homeland Security and Governmental Affairs 

U.S. Senate 

340 Dirksen Senate Office Building 

Washington, DC, 20510 

Dear Chairman Johnson: 

Comptroller General 

of the United States 

This letter is in reference to the hearing of the U.S. Senate Committee on Homeland Security 

and Governmental Affairs entitled "Medicaid Fraud and Overpayments: Problems and Solutions" 

at which I testified on June 27, 2018. Enclosed is GAO's response to the question for the record 

that you submitted to us after the hearing. Should the Committee have further questions on this 

topic, please contact Carolyn Yocom, Director, Health Care, at (202) 512-7114, or at 

yocomc@gao.gov. 

Enclosure 

cc: The Honorable Claire McCaskill, Ranking Minority Member 
182 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

1. The threat regarding rollback of protections on preexisting conditions is real. Has 

the Government Accountability Office begun any analysis of the impact of 

eliminating these protections? 

In March 2011, GAO reported on health insurance application denial rates prior to the 

Patient Protection and Affordable Care Act (ACA) prohibition on denying coverage on 

the basis of preexisting conditions. GAO has not conducted any work relating to 

preexisting conditions, including reviewing any policy changes relating to preexisting 

conditions, since this time. 

2. If the challenges against the ACA are successful, is it likely that we would return 

to a time when 25 percent of the health insurance companies in this country had 

denial rates of 40 percent or higher? 

GAO issued a report in March 2011, which looked at health insurance application denial 

rates prior to the ACA prohibition on denying coverage on the basis of a preexisting 

condition. 1 GAO reported that the aggregate rate of application denials nationally was 19 

percent, with 25 percent of insurance companies denying 40 percent or more of 

applications for individual coverage. Given those rates, if such a prohibition were 

eliminated, insurers could return to using application denials as a strategy to manage 

risk. It is important to note that the denial rates cited in GAO's report were for one 

calendar quarter and may have limited utility in providing a sufficiently complete 

benchmark for projecting any changes to denial rates. 

It is also important to note that other aspects of ACA-as well as state laws and 

regulations-could affect application denial rates. For example, ACA included other 

provisions that reformed the individual market by introducing premium tax credits for 

those with low-incomes and providing federal risk adjustment payments. These policies 

change the financial incentives for health insurance companies and for individuals 

applying for coverage, and could affect the extent to which companies deny applications. 

State laws and regulations could also affect denial rates. For example, GAO's report 

noted that prior to the enactment of ACA six states prohibited insurers from denying 

applications on the basis of health status as of January 2010. 

3. It has been over seven years since the provider screening and enrollment 

requirements took effect in March 2011. Why are states still failing to properly 

screen and enroll Medicaid providers? 

States need to make significant changes to their provider enrollment and screening 

systems in order to come into compliance with the March 2011 requirements. The 

1 See GAO, Private Health Insurance: Data on Application and Coverage Denials, GA0-11-268 (Washington, D.C.: 

Mar. 16, 2011). 
183 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

Centers for Medicare & Medicaid Services (CMS) has taken a variety of actions-such 

as issuing guidance and regulations, and offering assistance in screening providers 

using federal databases-to support states' efforts to improve provider screening and 

enrollment processes. However, GAO's work has identified various factors, such as 

fragmented information, lack of data sharing across states, and inconsistent practices 

that have affected CMS's and states' oversight of providers. For example, in April2016, 

GAO found that two selected states and 16 selected Medicaid managed care plans used 

information that was fragmented across 22 databases by 15 different federal agencies to 

screen providers, including databases that CMS did not identify for use for screening 

providers. To improve the effectiveness of states' and plans' Medicaid managed care 

plan provider screening efforts, GAO recommended that CMS consider additional 

databases used to screen providers and assess whether any of these databases should 

be added to the list of databases identified by CMS for screening purposes, in order to 

ensure that they are not paying providers determined to be ineligible to do business with 

the federal government.2 HHS agreed with this recommendation, and in August 2018, 

implemented this recommendation. CMS provided GAO with its analysis of 22 

databases that were reported to GAO as being used by Medicaid managed care plans to 

screen providers. It determined that several of the 22 databases were already in use by 

states and managed care plans and mentioned in CMS guidance. In its analysis, CMS 

concluded that 

6 of the databases should be used for provider screening and 3 more contained 

information that was available from other databases. 

12 of the databases should not be implemented into the screening process and is 

still considering one of the databases for inclusion in the screening process. 

GAO is beginning work examining CMS's oversight of state efforts to implement and 

comply with Medicaid provider screening and enrollment requirements in ACA and the 

21st Century Cures Act (Cures Act). GAO anticipates this work witt be completed in 

2019. 

4. Would proper screening and enrollment of Medicaid Providers prevent improper 

payments and reduce the incidence of fraud in the Medicaid program? 

Yes. Providers who are not appropriately enrolled in Medicaid are one of the largest 

causes of improper payments in the Medicaid program. Because provider actions can be 

a major factor behind improper payments, the integrity of the Medicaid program 

depends, in large part, on ensuring that only eligible providers participate in the program. 

Consequently, screening providers is important in preventing improper payments, 

including potential fraud and abuse. 

2

See GAO, Medicaid Program Integrity: Improved Guidance Needed to Better Support Efforts to Screen Managed 

Care Providers, GA0-16-402 (Washington, D.C.: April22, 2016). 

2 
184 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

In its fiscal year 2017 Agency Financial Report, the Department of Health and Human 

Services (HHS) stated that errors due to state non-compliance with provider screening, 

enrollment, and National Provider Identifier requirements, have been the main cause of 

improper payments in Medicaid fee-for-service since fiscal year 2014. Further, CMS 

does not assess provider eligibility as a part of estimating the improper payment rate in 

managed care; so the impact of ineligible providers in managed care on improper 

payments is unknown. 

GAO's work in Medicaid has also identified potential program risks-including fraudassociated with how CMS and states have enrolled providers in Medicaid. In May 2015, 

GAO reported that hundreds of the approximately 881 ,000 Medicaid providers in four 

states were ineligible or potentially ineligible. These providers had suspended or revoked 

medical licenses, had invalid addresses, were identified as deceased in federal death 

files, or had been excluded from federal health care programs, including Medicaid-' 

Comprehensive state screening and enrollment processes that prevent fraudulent 

providers from billing Medicaid are more efficient at protecting Medicaid funds than 

attempting to recover these funds once payments have been made. 

5. Is CMS implementing methods to conduct proper screening and enrollment of 

Medicaid providers? 

CMS has taken steps to enhance Medicaid provider screening and enrollment, in some 

cases addressing GAO's recommendations, including 

Issuing regulations. For example, in May 2016, CMS issued regulations that required 

states to screen and enroll providers under contract to managed care organizations 

(MCO), and terminate network providers upon notification' 

Issuing guidance. Consistent with GAO's recommendations, CMS updated and 

issued its Medicare Provider Enrollment Compendium-eMS's manual on how state 

Medicaid agencies are expected to comply with federal regulations for screening 

providers. 5 Also, CMS issued a toolkit for sharing provider data, which includes 

information on how to access systems and retrieve CMS data from multiple sources.6 

3See GAO, Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls, GA0-15-

313 (Washington, D.C.: May 14, 2015). 

4

These screening and enrollment requirements were later codified by the Cures Act and took effect January 1, 2018. 

5

See GA0-16-402. 

6See GA0-15-313. 

3 
185 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

Providing access to federal databases. CMS has taken steps to increase state 

access to federal databases to implement GAO's recommendations. For example, 

CMS provides full access to all pertinent information needed for screening Medicaid 

providers in Medicare's provider enrollment database-the Provider Enrollment, 

Chain and Ownership System (PECOS)-and, according to CMS officials, offers 

trainings on using this information. 7 Also, CMS signed an interagency agreement 

that provides states with access to the Social Security Administration's (SSA) Death 

Master File, made this file available to state officials, and provided assistance to 

states in accessing this file8 

Offering states an optional data compare service. States may submit their Medicaid 

provider enrollment information to CMS and receive results about how that 

information compares to related data sources, such as Medicare enrollment records 

and HHS's Office of Inspector General (HHS-OIG) information on excluded 

providers. 

Conducting site visits, outreach, and education. According to CMS, the agency has 

conducted site visits to assist states with implementing Medicaid provider screening 

and enrollment requirements. Also, CMS reported providing education, outreach, and 

assistance to support and oversee state efforts. 

In June 2018, CMS provided information on a new Medicaid program integrity strategy. 

This planned strategy includes many of the aforementioned steps, such as providing 

states with access to federal databases, and other steps, such as monitoring states' 

implementation of and compliance with Medicaid managed care final rules, including 

program integrity safeguards such as screening and enrolling Medicaid managed care 

providers. Additionally, as part of this new strategy, CMS plans to pilot a process to 

screen Medicaid providers on behalf of states beginning in summer 2018. CMS officials 

told us that part of this pilot process will involve leveraging the existing data and process 

CMS uses to screen Medicare providers. According to agency officials, CMS plans to 

begin implementing this pilot process in a few states and then expand it to additional 

states. GAO plans to monitor the implementation of the strategy. 

Finally, GAO is beginning work examining CMS's oversight of state efforts to implement 

and comply with Medicaid provider screening and enrollment requirements in ACA and 

the Cures Act. GAO anticipates this work will be completed in 2019. 

7PECOS is CMS's centralized database for Medicare enrollment information. PECOS maintains data from Medicare 

provider and supplier applications, including name, address, specialty area, licensure, and accreditations. PECOS 

also maintains information on the number of approved, denied, and rejected new enrollment applications, the number 

of deactivated or revoked existing enrollment records, and the number of enrollment records associated with 

providers and suppliers eligible to bill Medicare. See GA0-15-313. 

8See GA0-16-402. CMS issued regulations designating four federal databases that states must use to screen 

providers, including SSA's Master Death File. 

4 
186 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

6. What steps should CMS take to ensure that states comply with federal regulations 

requiring screening and enrollment of Medicaid providers? 

CMS could improve its oversight of state compliance with federal regulations requiring 

screening and enrollment of Medicaid providers, and aid state program integrity 

generally by implementing a number of GAO recommendations, such as the following. 

To ensure that only eligible providers are enrolled in Medicaid, GAO made four 

recommendations in its April2016 report on provider screening in managed care. 9 

One recommendation remains open, which HHS concurred with. To address this 

recommendation, CMS will need to explore the use of a common identifier for 

screening providers across databases. 

To ensure appropriate program integrity oversight in the territories including 

protecting territories' Medicaid programs from fraud, waste, and abuse, CMS should 

examine and select from a broad array of activities-such as establishing program 

oversight mechanisms, assisting in improving program information, and conducting 

program assessments-and develop cost-effective approaches. 10 HHS concurred 

with GAO's recommendation. In 2016, CMS communicated plans to review program 

integrity activities in the territories, and as of July 2018, the agency had conducted 

and issued a report for Puerto Rico. It has not released reports for other territories, 

nor has it implemented new program integrity activities and approaches for the 

territories, as GAO recommended. 

• To better support states' efforts to reduce improper payments and communicate 

effective program integrity practices across the states, CMS should collaborate with 

states and take additional steps to collect and share promising state program 

integrity practices, among other actionsn Although HHS agreed with these 

recommendations, as of July 2018, CMS had not fully addressed these 

recommendations. 

To fully align its fraud risk management efforts with the four components of the Fraud 

Risk Framework, CMS should (1) require and provide fraud-awareness training to its 

employees, (2) conduct fraud risk assessments, and (3) create an antifraud strategy 

for Medicaid, including an approach for evaluation. 12 HHS agreed with these 

9

See GA0-16-402. 

10See GAO, Medicaid and CHIP: Increased Funding in U.S. Tenitories Merits Improved Progrem Integrity Efforts, 

GA0-16-324 (Washington, D.C.: AprilS, 2016). 

11 See GAO, Medicaid Program Integrity: CMS Should Build on Current Oversight Efforts by Further Enhancing 

Collaboration with States. GA0-17-277 (Washington, D.C.: March 15, 2017). 

12See GAO, Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Efforts with the Fraud Risk Framework. 

GA0-18-88 (Washington, D.C.: Dec. 5, 2017). 

5 
187 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

recommendations. As of August 2018, CMS is developing annual fraud, waste, 

abuse training for all CMS employees. Additionally, CMS is working to apply the 

fraud risk framework to the Medicaid program more broadly. 

7. What steps should CMS take to ensure that states are using Medicaid funds 

efficiently? 

GAO's work on supplemental payments and Medicaid demonstrations offers insights on 

actions CMS-and in some cases, the Congress-could take to ensure more efficient 

use of Medicaid funds. 

Supplemental Payments. Since 2004, GAO has made recommendations to CMS to 

improve the transparency and accountability of supplemental payments. For example, 

GAO has recommended that 

CMS develop a policy establishing criteria for determining whether Medicaid 

payments are economical and efficient, as required by law, as well as require 

provider-specific payment data needed to assess total Medicaid payments, 

including supplemental payments. GAO has reported on cases in which states 

made total Medicaid payments to individual providers-after accounting for 

supplemental payments-that were greatly in excess of Medicaid costs and raise 

questions about whether federal Medicaid funds were used for non-Medicaid 

purposes. 13 HHS agreed with this recommendation. In August 2018, CMS 

indicated that it anticipates issuing a proposed rule in early 2019 that would 

establish new reporting requirements for supplemental payments that may 

address GAO's concerns. 14 

CMS take steps to ensure states report accurate and complete information on all 

sources of funds they use to finance the nonfederal share. GAO has reported on 

problematic financing and distribution methods that allow states to shift 

Medicaid program costs to the federal government and distort the distribution of 

supplemental payments. 15 HHS disagreed with and has not addressed GAO's 

recommendation, although the agency stated that it will examine efforts to 

improve data collection for oversight. Moreover, as part of its planned program 

13See GAO, Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and Unclear Policy, GA0-

15-322 (Washington, D.C.: Apr. 10, 2015). 

14See HHS, Medicaid Supplemental Payment and Accountability, Spring 2018 Unified Agenda of Federal Regulatory 

and Deregulatory Actions, (CMS-2392-P), RIN 0938-AT50, accessed on July 27, 2018. 

15See GAO, Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local 

Governments Warrants Improved CMS Data Collection (Reissued on March 13, 2015], GA0-14-627 (Washington, 

D.C.: July 29, 2014). 

6 
188 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June27,2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

integrity strategy released in June 2018, CMS indicated that it will begin to 

conduct program audits focused on states' improper claiming of the federal 

match. GAO will monitor CMS's audits to determine if they address the 

recommendation. 

CMS develop written guidance clarifying CMS's policies that nondisproportionate share hospital (OSH) supplemental payments should be linked 

to the provision of Medicaid services and not be contingent on the availability of 

local financing. 16 GAO has reported that distributing payments based on the 

ability of hospitals or their local governments to finance the nonfederal share may 

result in some hospitals with relatively low uncompensated care costs receiving 

large payments while other hospitals with larger uncompensated care costs, but 

less access to local funds, receiving smaller payments. 17 HHS agreed with this 

recommendation. In August 2018, CMS indicated that it anticipates issuing a 

proposed rule in early 2019 that would establish new reporting requirements for 

supplemental payments that may address GAO's concerns. 

Congressional action may also be needed to implement GAO's recommendations. For 

example, in 2012, CMS officials said legislation was needed to implement reporting and 

auditing requirements for non-DHS supplemental payments. According to officials, 

legislation would allow the agency to institute requirements similar to those for DSH 

payments, such as requiring annual facility-specific reporting of no n-OSH payment 

information, clarifying permissible methods for calculating non-DSH payment amounts, 

and requiring annual independent audits of state no n-OSH payment calculations. GAO 

suggested that Congress consider requiring CMS to improve state reporting of no n-OSH 

payments, including those made to individual facilities; provide guidance on permissible 

methods for calculating no n-OSH payments; and require state reports and audits." 

Medicaid demonstrations. Since 2002, GAO has also made recommendations to 

improve the transparency and accountability of states' demonstration spending. For 

example, GAO has recommended that the Secretary of HHS 

16Two types of supplemental payments exist in Medicaid: (1) disproportionate share hospital (DSH) payments, which 

states are required to make to hospitals serving low-income and Medicaid patients to offset those providers' 

uncompensated care costs; and (2) non-DSH supplemental payments that states may, but are not required, to make 

to hospitals and other providers that, for example, serve high-cost Medicaid beneficiaries. 

17 See GAO, Medicaid: Federal Guidance Needed to Address Concerns About Distribution of Supplemental 

Payments, GA0-16-108 (Washington, D.C.: Feb. 5, 2016). 

18See GAO, Medicaid: More Transparency of and Accountability for Supplemental Payments Are Needed, GA0-13-

4e (Washington. D.C.: Nov. 26, 2012). 

7 
189 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

ensure that valid methods are used to establish demonstration spending limits, 19 

and 

update written policy to reflect the approval criteria and processes used to 

develop and approve demonstration spending limits, so that states' use of this 

flexibility does not inappropriately increase federal costs20 

HHS did not agree with these recommendations; however, the agency has recently 

taken some steps to establish spending limits and clarify approval criteria. For example, 

under a policy implemented in 2016, HHS restricted the amount of unspent funds states 

can accrue for each year of a demonstration, and has also reduced the amount of 

unspent funds that states can carry forward to new demonstrations. For 10 

demonstrations it has recently approved, HHS estimated that the new policy has 

reduced total demonstration spending limits by $109 billion for 2016 through 2018, the 

federal share of which is $62.9 billion. These limits reduce the effect, but do not 

specifically address all, of the questionable methods and assumptions that GAO has 

identified regarding how HHS sets demonstration spending limits. To fully address the 

recommendations, HHS must update its written policy to reflect the criteria and 

processes used for determining spending limits. HHS expects to release additional 

guidance later in 2018 that may address GAO's concerns. 

8. What obligations do states have to collect and report data from managed care 

organizations (MCO)? 

Federal law requires states to collect and report to CMS managed care enrollee 

encounter data as specified by the Secretary of HHS. 21 In 2010, Congress added to this 

provision a requirement for states to report additional data elements that the Secretary 

deems necessary for program integrity oversight and administration, which states may 

report through CMS's new repository of national Medicaid data-the Transformed 

Medicaid Statistical Information System (T-MSIS). 22 

19See GAO, Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver Projects Raise Concerns, GA0-

02-817 (Washington, D.C.: July 12, 2002). 

20See GAO, Medicaid Demonstration Waivers: Approval Process Raises Cost Concerns and Lacks Transparency, 

GA0-13-384 (Washington, D.C.: June 25, 2013). 

21See 42 U.S.C. §§ 1396b(r)(1)(F) and 1396b(i)(25). 

22See Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 6504, 124 Stat. 119, 776 (2010). To enforce 

these requirements, CMS may wrthhold federal matching payments for the use, maintenance or modification of 

automated data systems from states that fail to report required data. See 42 C.F.R. § 433.120 (2017). Additionally, 

CMS may withhold federal matching payments for medical assistance to managed care enrollees for whom states fail 

to report required encounter data. See 42 U.S.C. § 1396b(i)(25) and 42 C.F.R. § 438.818 (2017). 

8 
190 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

T-MSIS is designed to capture significantly more data from states and MCOs than 

previously collected, which should provide CMS and states with information to enhance 

their oversight efforts. Specifically, among other new information, T-MSIS requires states 

to report a new data file on managed care. The managed care file includes more 

detailed information on MCOs, such as type and name of managed care plans, covered 

eligibility groups, service areas, and reimbursement arrangements. In addition to 

identifying which MCOs are reporting encounter data as required, this file could help 

CMS's oversight by allowing the agency to identify excess plan profits and volatility of 

expenditures for some beneficiary groups across states. 

CMS has issued guidance and other information to states on their data collection, 

validation, and reporting responsibilities. For example, CMS defines and periodically 

updates the required T-MSIS data elements and reporting formats through the T-MSIS 

data dictionary and provides supplementary guidance and best practices for states' 

encounter data activities on a website, the T-MSIS Coding Blog. Additionally, CMS 

announced specifications for reporting the expanded set of data through T-MSIS in a 

2013 state Medicaid Director letter. However, as of December 2017, GAO has reported 

that the data collected by states GAO reviewed was not complete or comparable across 

states.23 

In May 2016, CMS issued a managed care rule that included new reporting 

requirements, among other things. For example, states must validate that encounter 

data submitted by an MCO to the state are a complete and accurate representation of 

services provided to beneficiaries, and states must report to CMS after each MCO 

contract year an assessment of encounter data reporting by each MCO, among other 

topics. The rule also implements requirements that should improve the integrity of 

managed care data, such as independent audits of the encounter and financial data 

submitted by MCOs at least once every 3 years. However, the audits and annual 

assessments have not yet begun, and the validation requirement only became 

applicable recently-for contracts that began on or after July 1, 2017-so it is too early 

to know their actual impact on oversight. 

9. Are the current reporting requirements sufficient, or are further steps necessary 

to compel compliance with current reporting regulations? 

GAO has not conducted a systematic assessment of Medicaid program reporting 

requirements. However, GAO's work does show examples of areas where additional 

reporting would be beneficial to improving oversight. Some examples include the 

following: 

23See GAO, Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight, GA0-18-70 

(Washington, D.C.: Dec. 8, 2017). 

9 
191 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

GAO has reported on the need for CMS to take steps to ensure that states report 

accurate and complete information on all sources of funds they use to finance the 

nonfederal share. 24 HHS disagreed with and has not addressed GAO's 

recommendation. However, taking action is especially important because GAO's 

work has identified increased use of provider taxes and transfers from local 

government to finance the states' share of supplemental payments, which, 

although allowed under federal law, effectively shift Medicaid costs from the 

states to the federal government. 

GAO has made four recommendations to improve the reporting and use of data 

on the provision of personal care services-which are at a high risk for improper 

payments, including fraud. 25 CMS agreed with these recommendations and has 

implemented two. GAO maintains that taking action on the remaining two 

recommendations-ensuring state compliance with reporting requirements, and 

developing plans to use data for oversight-is important given that GAO's work 

has found that the data CMS collects to monitor the provision of these services 

were often not timely, complete, or consistent. 

GAO has begun work on a request that, in part, asks GAO to consider how program 

reporting requirements might be duplicative or outdated, and whether there are ways to 

streamline state reporting. GAO anticipates issuing the results of this work in 2019. 

10. Has CMS ever withheld any federal funding from states that failed to comply with 

their obligation to collect and report MCO data to CMS? 

GAO is not aware of any cases where CMS has withheld federal funds for these 

reasons; however, it has not been a focus of GAO's audit work. 

11. What efforts, if any, is CMS undertaking to increase transparency and ensure that 

MCOs are spending taxpayer dollars properly and efficiently? 

24See GAO, Medicaid Financing: States' Increased Reliance on Funds from Health Care Providers and Local 

Governments Warrants Improved CMS Data Collection [Reissued on March 13, 2015], GA0-14-627 (Washington, 

D.C.: July 29, 2014). 

25See GAO, Medicaid: CMS Needs Better Data to Monitor the Provision of and Spending on Personal Care Services, 

GA0-17-169 (Washington, D.C.: Jan. 12, 2017). 

10 
192 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

In July 2018, GAO reported that while CMS has initiated efforts to assist states with 

program integrity oversight for managed care, some efforts have been delayed and GAO 

identified gaps in oversight. 26 In that report, GAO reported the following: 

CMS established a new approach for conducting managed care audits; however, 

only a few audits have been conducted, with none initiated in the past 2 years. In 

part, this was due to impediments identified by states such as the lack of needed 

provisions in MCO contracts. 

CMS has updated standards for its periodic review of state capitation rates set for 

MCOs; however, overpayments to providers by MCOs were not consistently 

accounted for when determining future state payments to MCOs, which can result in 

states' payments to MCO's being too high. 

GAO also has recommended actions CMS could take to ensure transparency and 

oversight of MCOs. GAO recommended that CMS (1) expedite issuing planned 

guidance on Medicaid managed care program integrity, (2) address impediments to 

managed care audits, and (3) ensure states account for overpayments in setting future 

MCO payment rates. 27 HHS agreed with GAO's recommendations; GAO will monitor the 

department's efforts to address them. 

In June 2018, CMS announced its new planned Medicaid program integrity strategy. The 

information about this new strategy briefly describes several new and enhanced 

initiatives intended to create greater transparency in and accountability for Medicaid 

program integrity and reduce improper payments. Some of the new initiatives CMS plans 

to undertake include 

implementing targeted audits of some states' MCO financial reporting to include a 

review of high-risk vulnerabilities; 

optimizing T-MSIS data to allow it to be used for advanced analytics; and 

centralizing provider screening on a voluntary basis. 

GAO will continue to monitor the agency's current, ongoing, and future efforts to oversee 

MCOs. 

12. Administrator Verma has expressed an interest in rolling back the managed care 

rule announced in May 2016. What impact would this roll back have on CMS's 

ability to collect data from managed care organizations? 

26See GAO, Medicaid Managed Care: Improvements Needed to Better Oversee Payment Risks, GA0-18-528 

(Washington, D.C.: July 26, 2018). 

27See GA0-18-528. 

11 
193 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

The Managed Care Rule, issued in May 2016, updated existing provisions and added 

new requirements that could strengthen the integrity of managed care payments. The 

following are examples of the updated provisions and new requirements under the rule: 

States must arrange for an independent audit of the accuracy, truthfulness, and 

completeness of the encounter and financial data submitted by MCOs, at least once 

every 3 years. 

Through contracts with MCOs, states must require MCOs to have a mechanism 

through which providers report and return overpayments to the MCOs. States must 

also require MCOs to promptly report any identified or recovered overpaymentsspecifying those that are potentially fraudulent-and submit an annual report on 

recovered overpayments to their state. States must use this information when setting 

actuarially sound capitation rates. 

Through contracts with MCOs, states must also require MCOs to report specific data, 

information, and documentation. In addition, the MCO's chief executive officer or 

authorized representative must certify the accuracy and completeness of the 

reported data, information, and documentation. 

State agencies must have monitoring systems that address all aspects of the 

managed care program, including information systems for encounter data reporting 

and program integrity, among other things. States must submit to CMS no later than 

180 days after each contract year a report assessing a range of areas including 

encounter data reporting by each MCO, financial performance, and availability of 

services. 

It is too early to know whether the rule will assure better oversight of MCO payments to 

providers and the data used to set future capitation rates, as the above requirements 

only recently became applicable-for contracts starting on or after July 1, 2017. That 

said, GAO's work has shown that oversight of managed care is currently lacking, which 

is concerning given the growth in managed care spending. The data collection and 

verification requirements in the rule are a promising step, especially since GAO and 

others have found that the data states are required to submit to CMS have, at times, 

been incomplete or have not been reported at all, particularly managed care encounter 

data. 28 If fully implemented, the rule may help with the identification and removal of 

overpayments and unallowable costs from the data used to set future capitation rates. 

28See GAO, Medicaid: Program Oversight Hampered by Data Challenges, Underscoring Need for Continued 

Improvements, GA0-17-173 (Washington D.C.: Jan. 6, 2017); and HHS-OIG, NotAl/ States Reported Medicaid 

Managed Care Encounter Data as Required, OEI-07-13-00120 (Washington, D.C.: July 2015). 

12 
194 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

13. In the event that the managed care rule is rolled back, how might CMS move 

forward with ensuring the integrity of Medicaid? 

CMS needs to take fundamental actions in three key areas to strengthen Medicaid 

oversight and better manage program risks: 

1. Improve data. CMS needs to make sustained efforts to ensure that the data collected 

through T-MSIS are timely, complete, and comparable from all states, and useful for 

program oversight. This is particularly relevant to managed care as the managed 

care file in T-MSIS includes detailed information on MCOs, such as type and name 

of managed care plans, covered eligibility groups, service areas, and reimbursement 

arrangements. In addition to identifying which MCOs are reporting encounter data as 

required, this file could help CMS's oversight by allowing the agency to identify 

excess plan profits and volatility of expenditures for some beneficiary groups across 

states. Data are also needed for oversight of supplemental payments and ensuring 

that demonstrations are meeting their stated goals. 

2. Target fraud. CMS needs to conduct a fraud risk assessment for Medicaid, and 

design and implement a risk-based antifraud strategy for the program. A fraud risk 

assessment allows managers to fully consider fraud risks to their programs, analyze 

their likelihood and impact, and prioritize risks. Managers can then design and 

implement a strategy with specific control activities to mitigate these fraud risks, as 

well as design and implement an appropriate evaluation. Through these actions, 

CMS could better ensure that it is addressing the full portfolio of risks and 

strategically targeting the most-significant fraud risks facing Medicaid. 

3. Collaborate. Oversight of the Medicaid program could be further improved through 

leveraging and coordinating program integrity efforts with state agencies, state 

auditors, and the HHS Inspector General. Collaborative audits-in which CMS's 

contractors and states work in partnership to audit Medicaid providers-are one 

beneficial collaborative approach. CMS has expanded the federal-state collaborative 

audits beyond fee-for-service, and has begun to engage states to participate in 

collaborative audits of MCOs and providers under contract to MCOs. In May 2018, 

GAO reported that collaborative audits of providers under contract to MCOs in three 

states identified substantial potential overpayments. Expanding collaborative audits 

in managed care will require commitment from and coordination with states. GAO 

has also found that state auditors and the HHS Inspector General offer additional 

oversight and information that can help identify program risks. For example, state 

auditors have conducted program integrity reviews to identify improper payments 

and deficiencies in the states' processes used to identify them. GAO believes that 

these reviews could provide insights into program weaknesses that CMS could learn 

from and potentially address nationally. 

13 
195 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

14. What is the current state of the T-MSIS database? When will CMS be prepared to 

launch the database and grant access to states? 

As of June 2018, CMS reported that all states, the District of Columbia, and Puerto Rico 

were submitting T-MSIS data; however, the agency's efforts to ensure T-MSIS data 

comparability and quality are still evolving. Further, the agency has yet to articulate a 

specific plan and specific timeframes for using these data for program oversight. In a 

January 2017 report, GAO noted that without an improved focus on ensuring the 

accuracy of data-and setting priorities for the data that are most likely to improve 

program oversight-the effectiveness of T-MSIS could not be assured. GAO 

recommended that CMS take immediate steps to assess and improve the data available 

for Medicaid program oversight, including, but not limited to, T-MSIS data. 29 HHS agreed 

with this recommendation and noted in July 2018 that CMS has shifted its T-MSIS efforts 

to assessing and improving the quality of T-MSIS data, and expressed its commitment to 

working with states on improving their data submissions. These efforts are ongoing, and 

this recommendation remains open. 

In a subsequent December 2017 report, while acknowledging the progress made in 

states' reporting of T-MSIS data, GAO identified concerns regarding the completeness of 

T-MSIS data across states, as well as the absence of an agency plan and related 

timeframes for using these data for program oversight30 GAO recommended that CMS, 

in partnership with the states, take additional steps to expedite the use of T-MSIS data 

for program oversight. Such steps should include, but are not limited to 

obtaining complete information from all states on unreported T-MSIS data elements 

and their plans to report applicable data elements; 

identifying and sharing information across states on known T-MSIS data limitations 

to improve data comparability; and 

implementing mechanisms, such as the Learning Collaborative, by which states can 

collaborate on an ongoing basis to improve the completeness, comparability, and 

utility of T-MSIS data. 

GAO also recommended that CMS establish specific plans and associated time frames 

for using T-MSIS data for oversight. While HHS agreed with GAO's recommendations in 

these areas, and reported plans to outline a timeline for sharing T-MSIS data, CMS has 

not implemented the recommendations. GAO will continue to monitor CMS's progress 

and actions the agency takes to address them. 

"See GAO, Medicaid: Program Oversight Hampered by Data Challenges, Underscoring Need for Continued 

Improvements, GA0-17-173 (Washington, D.C.: Jan. 6, 2017). 

30See GA0-18-70. 

14 
196 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

15. How many states are reporting the required T -MSIS data? 

CMS noted that as of June 2018, all states, the District of Columbia, and Puerto Rico 

were submitting T-MSIS data. CMS added that it monitors ongoing monthly T-MSIS data 

submissions and works with the remaining U.S. territories not yet submitting data. 

However, as GAO reported in December 2017, concerns regarding the completeness 

and comparability of data across states remain. 31 In the 2017 report, GAO made several 

recommendations to CMS to improve the completeness and comparability of T-MSIS 

data; these recommendations remain open. Implementing the recommendations would 

help address the completeness and comparability concerns that GAO identified, which 

include the following. 

Completeness. GAO reported that six selected states in its review did not report 

80 to 260 of the nearly 1,400 T-MSIS elements. The selected states provided a 

range of reasons for not reporting T-MSIS data elements, including that certain 

elements were contingent on federal or state actions; were too costly to report; or 

in some cases, were not applicable to their Medicaid programs and therefore 

were not required. Although CMS requires states to report all T-MSIS data 

elements applicable to their program, CMS officials said they did not specify a 

reporting deadline for states, and selected states' documentation to CMS did not 

always include the reasons they did not report certain elements, or whether or 

when they planned to report them. 

Comparability. GAO also reported concerns about the comparability of T-MSIS 

data across states that may limit the data's usefulness for oversight. Officials 

from most selected states cited the benefit of a national repository of T-MSIS 

data. Such a repository would allow them to compare their Medicaid program 

data-such as spending or utilization rates-to other states and potentially 

improve their oversight. However, concerns about comparability of the data make 

some states hesitant to use the data in this manner. 

16. What is being done with that data now? Is it being used, or able to be used by 

CMS in its current form? 

in July 2018, CMS noted that it had shifted its T-MSIS efforts to assessing and improving 

the quality of T-MSIS data, and expressed its commitment to working with states on 

improving their data submissions. As part of this effort, CMS identified 12 Top Priority 

Items (TPI) for post-production data quality that all states should address. 32 CMS told 

31 See GA0-18-70. 

32Examples of the 12 TPI include "Reasonableness of Eligible Counts," under which CMS compares the number of 

beneficiaries reported in T-MSIS to other Medicaid enrollment data; and "Linking Providers from Claims to Provider 

15 
197 

Enclosure 

GAO Response to Hearing Questions 

Chairman Johnson and Ranking Member McCaskill 

Committee on Homeland Security and Governmental Affairs, United States Senate 

June 27, 2018, hearing entitled 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

GAO that it reviews a state's data quality issues in these 12 areas and then works with 

the state on addressing them. The agency plans to expand its data quality monitoring 

review to be more comprehensive following discussions with a Technical Evaluation 

Panel to be held this summer. 

CMS also noted in July 2018 that it reviews T-MSIS data using two data quality 

methods. The first is the T-MSIS system business rules review, which displays the 

results of the basic edits and identifies the obvious errors as the data are processed on 

the T-MSIS operational dashboard. 33 States are expected to address errors identified by 

the system business rules review. The second method reviews each state's data through 

inferential validation, which looks at patterns in the state's data and identifies "warnings" 

where data elements fall outside of a normal range. CMS told us that it is sharing these 

data quality results with states during meetings as part of its ongoing data quality 

monitoring efforts and expects states to make corrections to address identified issues. 

CMS continues to focus on efforts to improve the quality of T-MSIS data. In August 

2018, CMS released a State Health Official letter noting that it expects states to resolve 

identified data quality issues related to the 12 TPI no later than 6 months of the letter's 

release. Further, CMS reported that it will request a corrective action plan from states 

that are unable to resolve issues identified with respect to the 12 TPis within the 6 month 

timeframe. According to the letter, CMS will expand the data quality review from the 12 

TPis to a more comprehensive data quality approach later during 2018 and has set a 

timeframe of calendar year 2019 to have T-MSIS research-ready files available. Until 

these efforts are further along, the usefulness of T-MSIS data for CMS and state 

oversight efforts are limited. Further, as we reported in December 2017, CMS has yet to 

fully articulate specific plans for how it will use these data for oversight purposes. This 

remains the case today. 

Files," under which CMS identifies providers included on T-MSIS claims files (Inpatient, Long-Term Care, Pharmacy 

and Other) that are not found in the T-MSIS Provider file. 

"According to CMS, basic edits may include checking for valid data types (character, numeric, etc.) and valid data 

values. 

16 
198 

ili.I'.\R I \II.\ I 1 !I lli:.\1.111 .1\ll Ill II. I\ C,ll\\ :<I' 

OFFICE OF INSPECTOR GENERAL 

The Honorable Ron Johnson 

Chairman 

Committee on Homeland Security 

and Governmental Affairs 

United States Senate 

Washington, DC 20510 

Dear Chairman Johnson: 

AUG 1 0 2Dl8 

I am writing in response to questions for the record from Ranking Member McCaskill following 

my testimony before the Committee on Homeland Security and Governmental Affairs on June 

27, 2018, at the hearing entitled "Medicaid Fraud and Overpayments: Problems and Solutions." 

If you have any questions, please contact me, or your staff may contact Christopher Seagle, 

Pi~ector of External Affairs, at 202-260-7006 or Christopher.Seagle(a)oig.hhs.gov. 

Sincerely, 

Brian P. Ritchie 

Assistant Inspector General 

Enclosure: 

Responses to Questions for the Record 
199 

HHS OIG response to Post-Hearing Questions for the Record from Senator McCaskill 

Submitted to Brian P. Ritchie 

"Medicaid Fraud and Overpayments: Problems and Solutions" 

PRE-EXISTING CONDITIONS- OVERALL IMPACT 

When enacted in 2010, the Affordable Care Act (ACA) reformed the health insurance market. 

These reforms eliminated annual and lifetime caps, required free preventive services, 

guaranteed coverage of maternity care, and allowed children to stay on their parents' 

insurance until age 26. Most importantly, for the first time, the ACA required insurance 

companies to provide health insurance to everyone, regardless of their medical conditions. 

UndeFthe ACA, insurance companies were prohibited from charging individuals more based 

on their health status. 

Unfortunately, Republicans want to return to a health care system where insurers are free to 

deny people coverage for medical care when they need it most. A group of Republican 

Attorneys General have challenged the constitutionality of the ACA and the Department of 

Justice has said that they would no longer defend key provisions of the law. 

1. If the Republicans are successful in challenging the constitutionality of the ACA, and 

the protections for individuals with pre-existing conditions are eliminated as a result, 

what impact will this have on as many as 130 million adults living with pre-existing 

conditions? 

Our marketplace work, https://oig.hhs.gov/reports-and-publications/aca/, focused on 

topics related to HHS dollars and operations (for example, establishment grants, 

advance premium tax credits, and eligibility). We have not conducted work related to 

the Affordable Care Act (ACA) provision regarding coverage for individuals with preexisting conditions. We therefore do not have any findings or recommendations 

relevant to the pre-existing condition requirements. 

2. Allowing insurance companies to again discriminate on the basis of pre-existing 

conditions would create havoc on the health sector. Has the Department of Health 

and Human Services (HHS) Office of Inspector General (OIG) initiated any investigative 

work to examine the effects of removing pre-existing condition protections? Does 

HHS OIG intend to investigate this matter? 

Our marketplace work, https://oig.hhs.gov/reports-and-publications/aca/. focused on 

topics related to HHS dollars and operations (for example, establishment grants, 

advance premium tax credits, and eligibility). We have not initiated work related to preexisting condition protections. We have no plans to investigate this matter. We typically 

do not conduct reviews of the potential impact of pending changes but rather review 
200 

programs as currently operating to ensure that they are meeting intended objectives. 

All new work is evaluated as part of our normal work planning process and undergoes a 

risk assessment and legal analysis to ensure we have jurisdiction. 

PRE-EXISTING CONDITIONS- ENERGY AND COMMERCE REPORT 

Republicans want to return to a time when insurance companies could discriminate against 

people based on their past medical conditions. Prior to the passage of the ACA, insurance 

companies could refuse to provide health insurance to any one- even children- because of 

their past medical history. Alternatively, insurers could offer individuals a skimpy policy and 

refuse to cover any medical treatment for a disclosed pre-existing condition. Finally, if an 

individual made one mistake on their forms- even a clerical mistake- insurers could rescind 

an individual's health insurance coverage when a person needed it the most. 

In 2010, the House Energy and Commerce Committee investigated the extent of coverage 

denials and exclusions for pre-existing conditions in the individual health insurance market. 

The report analyzes data from the four largest for-profit health insurance companies, Aetna, 

Humana, UnitedHealth Group, and Well Point. In the three years prior to the passage of 

health reform, these four insurance companies denied over 600,000 individuals coverage 

because of pre-existing conditions. 

3. If companies are allowed to deny health insurance coverage to individuals based on 

pre-existing conditions, is it likely that the four largest health insurers and others will 

deny coverage to more than half a million people based solely on pre-existing 

conditions? 

Please see our response to question 1. 

4. On average, the four companies denied coverage to one out of every seven applicants 

based on a pre-existing condition. If we removed the protections of the ACA, what 

would happen to those people with pre-existing conditions? 

Please see our response to question 1. 

5. The committee obtained a list of over 400 medical diagnoses that triggered a 

permanent denial of health insurance coverage to applicants. Can you explain your 

understanding of the types of medical conditions that used to trigger permanent 

denials of insurance? 

Please see our response to question 1. 

2 
201 

Pre-existing conditions that health insurers routinely declined to cover included, "[a]ny 

applicant who is a surgical candidate," "[a]ny female applicant currently pregnant," and 

"[a]ny applicant with a BMI [body mass index] of 39.0 or greater." 

6. If companies are allowed to decline coverage for pre-existing conditions once again, is 

it likely that individuals with the conditions listed above will be denied coverage? 

Please see our response to question 1. 

T-MSIS 

H HS OIG previously testified that "a quality national Medicaid dataset is essential to states' 

and the Federal Government's ability to effectively and collaboratively administer and ensure 

the integrity of Medicaid." To accomplish this, HHS OIG recommended that CMS set a 

deadline for when national T-MSIS data will be available for multi-state program integrity 

efforts. 

7. As of August 2017, CMS had yet to outline how best to use T-MSIS data for program 

monitoring, oversight, and management. Has CMS articulated a specific plan and 

associated time frame for using T -MSIS data for oversight as GAO recommended? 

To DIG's knowledge, CMS has not publicly articulated a specific time frame. The 2013 

DIG recommendation that CMS establish a deadline for when T-MSIS data will be 

available for program analysis and other management functions remains open. We 

continue to follow up with CMS to monitor the status of this recommendation and 

promote its implementation. DIG notes that in June 2018, CMS announced efforts it is 

taking to improve program integrity in the Medicaid program. CMS's strategy is 

outlined here: httos://www.medicaid.gov/state-resource-center/downloads/programi nte gr ity-str ate gy-facts he et. pdf. 

8. With the full implementation of T-MSIS as recommended, how much of a reduction in 

improper payments and fraud can we expect to see? 

Having quality, useable national T-MSIS data is essential for program integrity and for 

CMS's, States', DIG's, and others' efforts to prevent, detect, and respond to fraud, 

waste, and abuse. While we cannot project exactly how many dollars may be saved 

through prevention of improper payments and fraud and through audit and 

investigative recoveries, we expect the positive return on investment to be substantial. 

3 
202 

GAO 

March 2011 

GA0-11-268 

United States Government Accountability Office 

Report to the Secretary of Health and 

Human Services and the Secretary of 

Labor 

PRIVATE HEALTH 

INSURANCE 

Data on Application 

and Coverage Denials 

GAO 

Accountability "' Integrity * Reliability 
203 

! G A 0 £ Accountablnty•lntegrlty• Reliability 

Highlights 

Highlights o! GA0-11-268, a report to the 

Secretary of Health and Human Services and 

the Secretary of Labor 

Why GAO Did This Study 

The large percentage of Americans 

that rely on private health insurance 

for health care coverage could 

expand with enactment of the Patient 

Protection and Affordable Care Act 

(PPACA) of2010. Until PPACA is 

fully implemented, some consumers 

seeking coverage can have their 

applications for enrollment denied, 

and those enrolled may face denials 

of coverage for specific medical 

senices. PPACA required GAO to 

study the rates of such application 

and coverage denials. GAO reviewed 

the data available on denials of 

(1) applications for enrollment and 

(2) coverage for medical services. 

GAO reviewed newly available 

nationwide data collected by the 

Department of Health and Human 

Services (HHS) from 459 insurers 

opcnrLi':tlg in the individual market on 

application denials from Januruy 

through March 2010. GAO also 

reviewed a year or more of the 

available data from six states on the 

rates of application and coverage 

denials and the rates and outcomes of 

appeals related to coverage denials. 

The six states included all states 

identified by experts and in the 

literature as collecting data on the 

rates of application or coverage 

denials and together represented over 

20 percent of private health insurance 

enrollment nationally. GAO 

conducted a literature review to 

identify studies related to application 

and coverage denials and reviewed 

data from selected studies. GAO 

interviewed HHS and state officials 

and researchers about factors to 

consider when interpreting the data 

ViGW 'GfR.J" i 1-268 or key components. 

For more information, contact John E. Dicken 

at (202) 512-7114 or dickenj@gao.gov. 

PRIVATE HEALTH INSURANCE 

Data on Application and Coverage Denials 

What GAO Found 

The available data indicated variation in application denial rates, and there arc 

several issues to consider in interpreting those rates. Nationwide data 

collected by HHS from insurers showed that the aggregate application denial 

rate for the fn-st quarter of2010 was 19 percent, but that denial rates varied 

significantly across insurers. For example 1 just over a quarter of insurers had 

application denial rates from 0 percent to 15 percent while another quarter of 

insurers had rates of 40 percent or higher. Data reported by Maryland-the 

only of the six states in GAO's review identified as collecting data on the 

incidence of application denials-indicated that variation in application denial 

rates across insurers has occurred for several years, with rates ranging from 

about 6 percent to over 30 percent in each of 3 years. The available data 

pro\<ided little information on the reasons that applications were denied. 

There are also several issues to consider when interpreting application denial 

rates. For example, the rates may not provide a clear estirnate of the number 

of individuals that were ultimately able to secure coverage, as individuals can 

apply to multiple insurers, and the rates do not reflect applicants that have 

been offered coverage with a premium that is higher th:m the standard rate. 

The. available data from the six states in GAO's review and others indicated 

that the rates of coverage dertials 1 including rates of denials of 

preauthorizations and claims, also varied significantly. The state data 

indicated that coverage denial rates varied significantly across states, with 

aggregate rates of claim denials ranging from 11 percent to 24 percent across 

the three states that collected such data. In addition, rates varied significantly 

across insurers, with data from one state indicating a range in claim denial 

rates from 6 percent to 40 percent across six large insurers operating in the 

state. There are several factors that may have contributed to the variation in 

rates acros...'l states and insurers1 such as states varying in the types of denials 

they require insurers to report. The data also indicated that coverage denials 

occurred for a variety of reasons 1 frequently for billing errors, such as 

duplicate claims or missing infom1ation on the claim, and eligibility issues, 

such as services being provided before coverage was initiated, and less often 

for judgments about the appropriateness of a service. J<Urther, the data GAO 

reviewed indicated that coverage denials, if appealed 1 were frequently 

reversed in the consumer's favor. For example, data from four of the six states 

on the outcomes of appeals filed with insurers indicated that 39 percent to 

59 percent of appeals resulted in the insurer reversing its orib'inal coverage 

denial. Data from a national study conducted by a trade association for 

insurance companies on the outcomes of appeals filed with states for an 

independent, external review indicated that coverage denials were reversed 

about 40 percent of the time. 

GAO provided a draft of the report to HHS and the Department of Labor 

(DOL). HHS agreed wilh GAO's findings, noting the need to improve the 

quality and scope of existing data, and suggested clarifications, which were 

incorporated. HHS and DOL also provided technical comments, which were 

incorporated as appropriate. 

-------------United States Government Accountability Office 
204 

Contents 

Letter 

Appendix I 

Appendix II 

Appendix III 

Appendix IV 

Tables 

Background 

Ft>dPral, State, and Otlwr Data [ndicalt-~d Variation in Application 

lknial Hates and Provid('d Lillie lnfonnalion on thL' Heasons for 

Denials 

Stat(' and Other Data Jndkatl'd Thai Coverage Drnial Hates and the 

Reasons for Dc·nials Vary and That DPnials, If Appeakd, An• 

()ften Heversf•d 

Agency C'ormncnls and Our Evaluation 

Methodology for Seleeting States and State 

Data Reviewed by GAO 

Methodology for and Studies Identified by 

Structured Literature Review 

Comments from the Department of Health and 

Human Services 

GAO Contact and Staff Acknowledgments 

TablP 1: I{ang\' of Application Denial Hares among Statf'~LkpnsPd 

12 

l(i 

2G 

2R 

:30 

04 

:J7 

lnsurt>rs, Based on HHS Data, .Janmuy-March 2010 12 

Tabk 2: Hangf' in Application Df'nial Ha1e~ across Insurt•rs 

Licen,s('d in !\bryland, 2008-2010 1:3 

Table' :3: Rates of Clnlm or PrcauthorizafioH fknials across States 

in (JAO's Hevkw and Characteristics of the State Data 19 

Tab I(~ 4: Nmnlwr and Outconws of lntPrnal Appeals I<'iled vvith 

Insurers across Statt•s in CAO's Ht-'Yif'\1\.' ~:) 

Tab1t: G: Numbt"r ;:.md OuteomPs of Apjwals Suhmi!"trd for Extrrnal 

Hf'\·iew across Stairs in GAO's HP"\i(•w 24 

'fablf' G: Information on Dt~nia! Dala CollrctPd by and Private 

Health Insumnc<' Enrollmt>nt for States in (;A()'s HP·dew 29 

Page i GA0-11·268 Data on Private Health Insurance Denials 
205 

Figure 

Table 7: [ndt•x of St11diPs Examining Private Health lnsuntn('L' 

Dellials, by Topic :31 

Figun" l: Application Denial Hates by AgE' Group for 200B, as 

Reported by Allll' 

Abbreviations 

A! liP 

AcVIA 

DOL 

ERISA 

HHS 

HIPAA 

HMO 

HRP 

NAIC 

PPACA 

PPO 

America's Health Insurance Plans 

American Medical Association 

Department of Labor 

Employee Retirement Income Security Act of 197 4 

Department of Health and Human Services 

Health Insurance Portability anct Accountability Act of 1996 

health maintenance organization 

high~risk health insurance pool 

National Association of Insurance Commissioners 

Patient Protection and Affordable Care Act 

preferred provider organization 

This is a work of the U.S, government and is not subject to copyright protection in the 

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necessary if you wish to reproduce this material separately. 

Page ii GA0-11·268 Data on Private Health Insurance Denials 
206 

United States Government Accountability Office 

Washington, DC 20548 

March 16, 2011 

The Honorah1e Kathleen Sebelius 

Secretary of Health and Human Services 

The Honorable Hilda L. Solis 

Secretary of Labor 

A large majority of Americans-nearly 64 percent as of 2009-rely on 

private insurance for health care coverage, most through employersponsored group health coverage. 1 \Vith the enactment of the Patient 

Protection and Affordable Care Act (PPACA) in March 2010,' enrollment 

in private health insurance could expand significantly, particularly for 

individuals and families that do not have access to group coverage through 

their employer. \Vhile there are certain federal requirements protecting 

against the denial of applications for enrollment for individuals eligible for 

group coverage, until PPACA is fully implemented, these protections do 

not apply to some consumers seeking individual coverage from private 

health insurers.'' In addition, once consumers are enrolled in either group 

or individual coverage, coverage can be denied for specific medical 

services, either through a denial of authorization of a service berore it ba"> 

been provided or payment for a service that has been delivered. ·

1 There are 

some national data on the extent to which applications for enrollment are 

being denied; however, there is not yet any comprehensive, national 

information on the extent to which coverage for medical services is being 

denied when consumers seck health care. The federal govemm(_~nt plans to 

1

Private hC'alLh insurance includes all forms of heallh insurance that are not funded by the 

govenuncnt and may bC' purchHSed on an individual or group basis, 

2

Pub. L. No. 111~148, 124 Stat.l19 (Mar. 23, 2010), as amended by Uw Health Care and 

Education Reconciliation Act of2010, Pub. L. No, 111~152, 124 Stat.l029 (Mar. 30, 2010) 

:Throughout this report, the term "insurer" r0fers to commercial, state--licensed issuers of 

health insurance coverage and cnlities such as health maintenance organlzations (HMO). 

Insurers can offer coverage in the group market, individual market, or both. In this report, 

the term "insurer'' does not include self-funded group health plans where instead of 

purchasing health insurance from an insurance company an Pmploycr sets aside it<> own 

funds to pay for at least some of its employC'es' health care. 

'

1

Throughout this report, we refer to deniaL.:; of authorization for services not yet provided 

as "prcauthorization dC'nials" and denials of payment for services rendered as "daim 

denials." 

Page 1 GA0-11-268 Data on Private Health Insurance Denials 
207 

collect additional information on the extent of denials of applications for 

enrollment and coverage for medical services and the rea'3ons for those 

denials, with the intent to make it easier for consumers to shop for 

coverage. According to experts, those data may also help with government 

oversight of private health insurance, 

Oversight of private health insurance has been a responsibility of state 

departments of insurance, and states vary in what they require of insurers 

and the degree to which they track insurers' activities, including the extent 

to which insurers are denying applications and coverage. The federal 

government's role in the oversight of private health insurance has 

included, for example, the establishment of certain consumer protections 

for states to enforce. It also includes oversight of employer-ba...;;ed 

coverage performed by the Department of Labor (DOL). However, the 

federal government's role has expanded with the enactment of PPACA. 

PPACA required the Department of Health and Humarl Services (HilS) to 

begin collecting, monitoring, and publishing information on health 

insurance products. HHS began publishing data from insurers on denials 

of applications for enrollment in October 2010 and intends to collect data 

in the future on denials of coverage for medical services. 

PPACA directed us to study denials of applications for enrollment and 

coverage for medical services by considering samples of data related to 

such denials, including the reasons for the denials and favorably resolved 

disputes resulting from the denials." Specifically, we reviewed (1) tbe data 

available on denials of applications for enrolhnent and (2) the data 

available on denials of coverage for medical services. 

To describe the data available on denials of applications for enrollmentreferred to as application denials in this report-we reviewed federal, 

state, and other data including data on the rates of and reasons for such 

denials. First, we reviewed data recently collected by HilS from 459 

insurers operating in the individual market in all 50 states and the District 

of Columbia. G The data included application denial rates by insurer for a 

3-month period-January through March-··in 2010.' To supplement the 

"PPACA also directed that we submit our report to the Secretaries of lUIS and DOL. Pub, L. 

No. lll-148. § 10107, 124 Stat 911-2. 

"The data were reported by state-licensed health insurers offering coverage in the 

individual market. 

7

This is the only quarter of data that HHS had collected as ofDE'cember 2010. 

Page Z GA0-11·268 Data on Private Health Insurance Denials 
208 

single calendar quarter of HI-IS data, we conta.cted insurance department 

officials in six states regarding data on application and coverage denials. 8 

The six states include all the states identified by experts and in the 

literature as states that collect data from insurers on the incidence of 

application denials, coverage denials, or both. Because we did not survey 

all states to detennine whether they collect data on the incidence of 

application or coverage denials, or both, there may be other states that 

collect such data that were not known to experts or discussed in the 

literature. 9 Of the six states, we identified one, Matyland, that collected 

data on application denials. We reviewed data from Maryland for 2008, 

2009, and the first half of 2010 on the rate of application denials by 

insurers operating in the individual market in that state, (See app. I for 

more information about our methodology for selecting states and the state 

data we reviewed.) We also conducted a structured literature review to 

identify studies related to application and coverage denials. 10 We 

determined that a study was directly relevant to our objective on 

application denial data if it included empirical analyses of the frequency of 

application denials. Through our review, we identified four studies that 

met our criteria. Two of these four studies, produced by America's Health 

Insurance Plans (AHIP), included data on application denial rates in 2006 

and 2008, and we reviewed those data, (See app, II for a description of the 

literature review methodology and the list of studies identified through tile 

review.) Finally, we interviewed officials from HHS, Maryland, and AHIP 

about factors to consider when interpreting the data. W c also inten-'icwed 

officials from three large insurance companies about the data they collect 

on application denials. H 

S,11c six states we sek>cted to contact were California, Connecticut, Florida, Maryland, New 

York, and Ohio. 

9

For example, through the course of our work, we found that Texas requires certain 

insurers to report on the number of requests for preauthorization of coverage for proposed 

sen..ices that insurers declined. 

t1'o conduct this review, we searched a numbt>r of reference databases, such as EconLit 

and Social SciSearch, for peer-reviewed, industry, or government studtes published from 

January 2000 through July 2010. In addition, W{~ checked the bibliographies of the studies 

and interviewed a number of experts regarding the research done on private health 

insurance denials to identify other relevant studies. 

11The insurance companies we cont.:·•cted offered coverage in both the individual and group 

markets and, according to AHIP, were among the 10 largest by enrollment, together 

aceounting for nenrly 26 million €'nrollces. 

Page 3 GAO-ll-268 Data on Private Health Insurance Denials 
209 

To describe the data available on denials of coverage for medical 

sen.rices.~referred to as coverage denials in this report-we reviewed 

state and other data, including data on the rates of and reasons for denials 

and the outcomes of appeals related to denials, such as disputes resolved 

in favor of consumers. First, of the same six states we contacted regarding 

application denial data, we reviewed the most recent year of data available 

on the rate of coverage denials from the four that reported collecting such 

data. 12 Second, we reviewed data on lhe outcomes of appeals related to 

coverage denials from all of the six states for the most recent year 

available. We also inlen.ricwed officials from departments of insurance and 

other departments involved in overseeing insurance or responding to 

appeals in the six states about considerations for interpreting the data, To 

supplement the information from selected states, we reviewed data 

reported by 49 states and the District of Columbia to the National 

Association of Insurance Commissioners (N AIC) on the number of 

complaints related to coverage denials resolved in 2009 and the reasons 

for and outcomes of those complaints. 13 We also reviewed information on 

the outcomes of complaints and appeals submitted by 35 states and the 

District of Columbia to HilS in applicalions for Consumer Assistance 

Program grants. 14 As part of our literature review, we identified studies 

that included empirical analyses ofthe frequency of coverage denials, the 

reasons for such denials, the frequency of appeals of coverage denials, or 

the outcomes of such appeals. Through the review, we identified annual 

studies produced by the American Medical Association (A;\1A) in 2008, 

2009, and 2010 that included data on the incidence and reasons for claim 

12The data obtained from states on thr! incidence of coverage denials were not broken out 

by thf' types of medical sen-ices being denied. 

uState regulators t>stablished ~AlC to help promote effective insurance regulation, to 

encourage uniformity in approachC'S to regulation, and to help coordinate states' activities. 

Among other activities, NAIC collects data from state regulators on insurers, including 

complaints about insurer practices filed by consumers with states. We requested NAlC to 

provide us with data on the number of complaints reported by states that were related to 

coverage d('nials. The complaint data did not include information on the type of sP.rviee for 

which coverage was denied. 

11Cnder PPACA, S30 million wa<; appropriated to the Secretary ofl-IHS for the award of 

federal grants to states to establish, expand, or provide support for offices of health 

insurance consumer assislancc or health insurance ombudsmen programs. Pub. L. No. 111-

148, § 1002, 124 Stat 138. To receive these grants, called Consumer Assistance Program 

grants, states must ensure that their programs assist consumers with such tasks as 

enrolling in hf'alth coverage and filing complaints and appeals. In the applications for the 

grants, HHS directed states to report on complaints and appeals. States varied in the data 

they included in their application and the time frames for those data. 

Page 4 GA0-11-208 Data on Private Health Insurance Denials 
210 

Background 

denials. We reviewed data from the 2010 study and intemcwed AMA 

officials about factors to consider when interpreting the data. Finally, we 

reviewed data from DOL on complaints related to coverage denials for 

those with em.ploycr~sponsored coverage from fiscal year 2010, including 

the number and value of financial recoveries made by the department on 

behalf of consumers as a result of complaints. 

To assess the reliability of the data we reviewed on the incidence of 

application and coverage denials, the reasons for such denials, and the 

outcomes of appeals and complaints related to those denials, we 

interviewed federal, state, and other officials about their efforts to ensure 

the quality of the data. This included discussing whether they required 

insurers to certify the accuracy of data reported on the incidence of 

application or coverage denials and what steps were taken to ensure the 

quality of data tracked by states and DOL on the outcomes of appeals and 

complaints related to denials. We also asked officials about the limitations 

of the data and reviewed any statements about data limitations in 

published reports of the data. We detem1ined the data to be sufficiently 

reliable for the purposes of describing the (1) denial rates, (2) reasons for 

denials, and (3) outcomes of appeals related to denials indicated by the 

data; where relevant we stated the limitations of the data in the findings. 

We conducted our perfonnance audit from September 2010 through 

January 2011 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perfom1 the audit to 

obtain sufficient, appropriate evidence to provide a rea."ionable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectlves. 

In 2009, approximately 156 million nonelderly individuals obtained health 

insurance through their employer and another 16.7 million purcha<;ed 

health insurance in the individual market. Of those with employersponsored group health plans, in 2009, 43 percent were covered under a 

fully insured plan where the employer pays a per-employee premium to an 

insurance company. 15 The remaining 57 percent were covered under self-

~'Throughout this report, the term "group health plan" refers to employer-sponsored health 

plans, including both fully insured and self-funded plans. 

Page 5 GA0-11·268 Data on Private Health Insurance Denials 
211 

Application Denials 

funded plans where instead of purchasing health insurance from an 

insurance company the employer set.~ aside its own funds to pay for at 

least some of its employees' health care. w 

Application denials result when an insurer determines that it will not offer 

coverage to an applicant either because the applicant does not meet 

eligibility requirements or because the insurer determines that the 

applicant is too high of a risk to insure. Underwriting is a process 

conducted by insurers to assess an applicant's health status and other risk 

factors to detennine whether and on what terms to offer coverage to an 

applicant. 

Many consumers are protected from having their application for 

enrollment denied. Consumers who obtain health coverage through their 

employment by enrolling in a group bealtb plan sponsored by their 

employer have certain protections against application denials. For 

example, under federal law, individuals enrolling in group health plan 

coverage are protected from being denied enrollment because of their 

health status. t

7 Under federal law, insurers also generally are prohibited 

from denying applications for individual health coverage for certain 

uiAs of 2009, 85 percent of small employers, those with 3 to 199 employees, that offered 

health benefits WC're fully insured while 88 percent of large employers, those with 5,000 or 

more employees, offered self-flmded plans. See The Kaiser Family I•'oundation and Health 

Research & Educational Trust, Employer Health flenefi.ts: 2009 Annua,l5'ttrvey (2009). 

t

7

Group health plans and hf.'alth insurancE' issuers offering group coverage are prohibitC'd 

from implementing eligibility rules based on hcaltlt-status-rclated factors defined as health 

status, medical condition, claims expelience, receipt of hraHh care, medical history, 

genetic infonnation, evidence of insurability, or disability. Sre, for example, 42 

U.S. C. § :JOOgg-1 (2006). PPACA exte-nds this prohibition to health insurancE' issuers 

offf'ring coverage in the individual market for plan years beginning on or after January 1, 

2014. Pub. L. No. 111-148, § 1201(4), 124 Stat 156. 

Health insurance issuers that offer coverage in the small group market in a state generally 

are required to accept every small employer that applies for health coverage in that state. 

In addition, issuers cannot deny an application for enrollment by individuals ernployC'd by 

such employers due to health-status-related factors if the individuals apply when they are 

frrst eligible. See 42 U.S. C.§ 300gg-11 (2006). For plan years beginning on or after 

January 1, 2014, PPACA requires ht"alth insurance issuers offering group or individual 

coverage in a state to accf.'pt every employer and individual that applies for coverage in that 

statE', subject to certaln requirt"mmLs. Pub. L. No. 111·148, § 1201(4), 124 Stat. 156 

Page 6 GA0-11-268 Data on Private Health Insurance Denials 
212 

individuals leaving group health plan coverage and applying for coverage 

in the individual market. ts 

Currently, some consumers who apply for private health insurance 

through the individual market can have their applications denied for 

eligibility reasons or as a result of undetwriting, For example, applications 

filed by some consumers with preexisting healtl1 conditions can be denied, 

unless prohibited by state or federal law." Additionally, insurers may 

accept the application but offer coverage at a premium level that is higher 

than the standard rate or that excludes coverage for certain benefits. The 

options for appealing application denials in the individual market can be 

limited to filing a complaint with the state department of insurance. 

However, in 35 states, individuals who-due to a preexisting health 

condition-have been denied enrollment or charged higher premiums in 

the individual market are typically eligible for coverage through high-risk 

health insurance pools (HRP). 20 Additionally, as required under PPACA, 

indhriduals who have preexisting health conditions and have been 

~.~Health insurance issuers offering individual coverage are prohibited from dPnying 

coverage for individuals who (1) have had at least 18 months of prior creditable coverag~· 

with no break of more than 63 days; (2) have exllausted any avaiJable continuation of 

coverage; (;J) are nninsured and are not eligible for other group coverage, Medicare, or 

Medicaid; and (4) r.lid not lose group coverage because of the nonpayment of premiums or 

fraud. See 42 U.S.C § 300gg-41 (2006). As referenced above, PPACA requin~s health 

insurance issuers to guarantee coverage to all individuals seeking coverage in that state for 

plan years beginning on or after January l, 2014, subject to certain requirement..<>. 

wAccording to data from the Kaiser Family Foundation, as of .January 2010, six stat<>s have 

guaranteed issue requirement.<> that prohibit any insurer from denying coveragP to an 

individual ba."ied on their ('Urrent medical conditions or risk of poor health. Another seven 

states have guarantcC'd issue requirements that only apply to certain insurance plans or 

during limited times during the year. 

As referenced above, in certain circumstances, federal law also protects consumers 

seeking individual coverage from application df.'nials. For example, health insurance 

issuers cannot deny applications for eligible consumers who had prior group or other 

coverage. 

20See GAO, Health Insurance: Enrollment., Benl?fits, Funding, and Other Characteristics of Stale lhgh-RiskHealth !nsv.mnce Pools, G.-\0-0!l-TKlR (Washington, D.C.: July 22, 2009). 

Page 7 GA0-11-268 Data on Private Health Insurance Denials 
213 

Coverage Denials 

uninsured for 6 months are eligible for enrollment in a temporary national 

IIRP program." 

Coverage for medical services can be denied before or after the service 

has been provided, either through denial of prcauthorization requests or 

denial of claims for payment A.c; a condition for coverage of some services, 

providers or consumers are required to request authorization prior to 

providing or receiving the service. Preauthorization denials occur when a 

determination is made that (1) the consumer is not eligible to receive the 

requested service, for example, because the service is not covered under 

the individual's policy, or (2) the service is not appropriate, meaning that it 

is not medically necessary or is experimental or investigational Denials of 

claims occur for various reasons. Claims may be denied for hilling reasons, 

such as the provider failing to include a piece of required information on 

thf' claim, such as documentation that the provider received 

preauthorization for a service, or submitting a duplicate claim. Claims may 

also be denied because of eligibility issues. For example, a claim may be 

submitted for a service provided before an individual's coverage began or 

after it was terminated, or a claim may be submitted for a service that has 

been excluded from coverage under an individual's policy. Another reason 

for denials reported by some insurers is that the individual has not met the 

cost-sharing requirements of his or her policy, such as the required 

deductible. Finally, claim denials can occur when a determination is made 

that the service provided was not appropriate, specifically that the service 

was not medically necessary or was experimental or investigational. 

Depending on the reason for a claim denial, either the provider or the 

consumer may bear the financial responsibility for the denied coverage 

amount. Claims that are denied because of such billing errors a...:;; the 

provider not providing a required piece of information can be resubmitted 

and ultimately paid. 

21The temporary national HRP program '""ill trrminatc in 2014. Pub. L. No. 111-148, § 1101, 

124 Stat. 141. As referenced above, for plan years beginning on or after January 1, 2014, 

PPACA prohibits health insurance issuers offering individual coverage from implementing 

eligibility rules basC'd on health status-related factors and requires health insurance issuers 

offering individual coverage to aecept every individual in the state who applies for 

coverage, subject to certain requircmenls. In addition, PPACA prohibits group health plans 

and insurers offering group and individual coverage from excluding coverage for preexisting health conditions. This prohibition is generally effective for plan years beginning 

on or after January 1, 2014 for adults and plan years beginning on or after September 23, 

2010 for individuals under age 19. Pub. L. No. 111-148, § 1201(2), 10103(e), (f), 124 Stat. 154, 

895. 

Page 8 GAO-U-268 Data on Private Health ln•mrance Denials 
214 

For claim denials, the full claim may be denied or, if the claim contained 

multiple lines, such as a surgery with charges for multiple procedures and 

supplies, only certain lines of the claim may be denied. How insurers and 

self-funded group health plans track claim denials and the reasons for 

denials may vary. For example, AN!A officials noted that there is no 

guidebook for how reason codes should be assigned to claim denials. 

Officials noted that denials are often assigned the code for the most 

general reason even though the denial may be for a more specific reason. 

Consumers have several avenues available to dispute coverage denials. 

First, consumers can file an appeal of a denial with the insurer or selffunded group health plan for review, referred to as an intemal appeal. 

lntemal appeals can result in the denial being upheld or reversed. In 

addition, consumers in most states can have their appeal reviewed by an 

external party, such as an independent medical review panel established 

by the state. n These appeals, referred to as external appeals, can also 

result in denials being reversed and in states recovering funds for 

consumers for the cost of the denied service. State external appeal oplions 

may only be available once the consumer has exhausted the internal 

appeal process or for consumers with certain types of coverage. 

Historically, those with self-funded group health plans generally did not 

have access to an external appeal process, but consumers could file suit 

against a health plan in court to challenge a deniaL PPACA, however, 

required that group health plans, including self-funded plans, provide 

access to an external appeal process that meets federal standards for plan 

years beginning on or after September 2010.:11 Finally, consumers may file 

complaints regarding coverage denials with the state, generally the 

department of insurance, or, for those with group health plans, with DOL. 

22According to research completed by AHIP, as of January 2006, 44 states and the District 

of Columbia operated extemal review programs. Such programs are generally available to 

consumers purchasing coverage from insurers regulated by states. 

2

"Under PPACA and implementing regulations, group health plans and heaiU1 insurance 

issuers offE'ring group or individual coverage, subject to certain exceptions, must comply 

""ith a state external review process thai, at a minimum, includes consumer protections 

identified in the NAIC Unifom1 External Review Model Act If a slate external review 

process does not incorporate th('se consumer protections or a self-insured group health 

plan is not required to comply with the state external review process, then the health plan 

must follow a federal external review process. Pub. L. No. 111-148, §§ 1001(5), 10101(g), 

124 Stat. 137, 887; Interim Fina.l Rules for Group Health Pla.ns and Health Insu.rance 

Issuers Relal'ing to Internal Claim.<; and Appeals and E.rtema.l Rem:ew Processes -under 

PPACA, 75 Fed. Reg. ·13,330 (July23, 2010). 

Page 9 GAOwll·26S Data on Private Health Insurance Denials 
215 

State and Federal 

Oversight of Private Health 

Insurance 

Filing a complaint can be a less formal mechanism for disputing a 

coverage denial than filing an appeal; however, complaints can result in 

reversals of denials and in financial recoveries for consumers. 

States have responsibility for regulating private health insurance, including 

insurers operating in the individual market and the fully insured group 

market. In overseeing insurer activity, states vary in the data they require 

insurers to submit on denials and internal appeals of denials. According to 

NAIC officials, few states require insurers to report data regularly on the 

frequency of denials and internal appeals, and NAIC has not issued any 

model laws or regulations that include requirements for insurers to report 

such data. States also may use data on complaints and external appeals to 

identify trends in the practices of insurers and target examinations of 

specific insurers' practices. Nearly all states and the District of Columbia 

regularly report complaint da~ which includes information on the 

numbers of, reasons for, and outcomes of complaints, to NAIC. 

Historically, the federal government's role in oversight of private health 

insurance has included establishing requirements for states to enforce. For 

example, the Health Insurance Portability and Accountability Act of 1996 

(HIPAA) established consumer protections on access, portability, and 

renewability of coverage. In addition, with respect to group health plans, 

the federal government enforces disclosure, reporting, fiduciazy, and 

claims·filing requirements under the Employee Retirement Income 

For example, with rt'spect to those leaving group coverage and app~ying for cow rage in 

the individual market, HlP AA prohibited health insurancE' issuers from denying coverage 

for individuals who (1) have had at kast 18 months of prior creditable coverage with no 

break of more than 63 days; (2) have exhausted any available continuation of coverage; 

(3) are uninsured and are not eligible for other group coverage, Medicare, or S1cdicaid; and 

( 4) did not lose group covrrage because of the nonpayment of premiums or fr..-lud. Sec 

42 u.s.c. § 300gg-41 (2006). 

Page 10 GAO-ll-268 Data on Private Health Insurance Denials 
216 

Security Act of 1974 (ERISA)." DOL conducts a number of efforts to 

enforce the ERISA requirement.,. For example, the department conducts 

civil investigations that can result in corrective actions, such as monetary 

recoveries for consumers who are enrolled in employment-based plans. In 

addition to these formal methods, DOL also works to resolve complaints 

filed with the department. These efforts are considered infonual 

resolutions, although complaints can also serve as a trigger for formal 

enforcement actions. 

PPACA expanded the federal oversight role by requiring HHS to begin 

collecting, monitoring, and publishing data from certain insurers. 

Specifically, PPACA required the establishment of an internet Web site 

through which individuals can identify affordable health insurance 

coverage options in their state. To implement this requirement, in May 

2010, HHS issued an interim final rule requiring insurers in the individual 

and small group markets to submit data to HHS on their products, 

including data on the number of enrollees, geographic availability of the 

products, and customer service contact information, by May 21, 20101 and 

annually after that. In July 2010, HilS began publishing these data on the 

new Web site, which is designed for individuals and small businesses to 

obtain information on coverage options available in their state. In October 

2010, HHS began posting additional data collected from insurers, in eluding 

data on the percentage of applicabons denied for each product offered in 

the individual market. The interim final rule also required insurers to 

submit other data, such as data on the percentage of claims denied in the 

individual and small group markets, and the number and outcomes of 

x;ERISA established cettain federal requiremrnts that apply when employers offer their 

employees, retirees, and dependE'nts employee benefit plans that include health coverage, 

retlrernent plans such as pensions, and other benefits such a<:; life insunrnce. See Pub. L. 

l\'o. 03406, 88 Stat. 829 (1974). ERJSA requirements generally apply re-gardlrss of the size of 

the business, although some requirt:ments are streamlined for smaller employers. ERISA 

imposes certain reporting and disclosure requirements, fiduciary obligations, and 

requireme-nts for claims~filing procedures. ERISA is e-nforced through DOL's Employee 

Benefits SeC'urity Administration. PPACA expands upon ERISA's requirements for claimsfiling procedures by applying new standards for internal claims appeals and for external 

daims review processes, as referenced above. Pub. L. No. 111-148, §§ 1001(5), 1010l(g), 

137,887. 

'"Pub. L. No. !11-148, §§ 1103, 10102(b), 124 Stat. 146, 892. The Web site is 

www.healthcare.gov. 

27Health Care Reform Insurance Web Portal Requirements, 75 Fed. Reg. 24,470 (May, 5, 

2010). 

Page 11 GAO~ll-268 Data on Private Health Insurance Denials 
217 

Federal, State, and 

Other Data Indicated 

Variation in 

.Application Denial 

Rates and Provided 

Little Information on 

the Reasons for 

Denials 

appeals of denials to insure 1 pay claims, and provide preauthorization, in 

accordance with guidance lobe issued by HHS. As of December 2010, HHS 

had not issued any guidance on reporting these additional data. 

Nationwide data from HHS showed variation in application denial rates 

across insurers operating in the individual market, Specifically, data 

collected by HHS from 459 state-licensed insurers on the number of 

applications received and denied from January through March 2010 

indicated that, while the aggregate rate of application denials wa..-

19 percent nationally, Lhe rate varied significantly across insurers. For 

example, just over a quarter of insurers had application denial rates from 0 

percent to 15 percent while another quarter of insurers had rates of 

40 percent or higher. 2-8 However, the insurers with rates of 40 percent or 

higher reported fewer applications. See table 1 for additional information 

on the range in application denial rates across insurers. 

Table 1: Range of Application Denial Rates among State-Licensed Insurers, Based 

on HHS Data, January-March 2010 

Number of Number of 

Application denial rates insurers reporting applications 

(percentage of applications denied) rates in range" received~ 

0 to 15 132 499,239 

16 to 23 102 471,878 

24 to 39 113 230,846 

40 or higher 112' 57,923 

Souno<J· GAO ana!ys•s ol HHS data 

'Dflta were reported to HHS by 459 state-licensed insurers operating in 50 states and the District of 

Columbia. Data on insurers operating in states with guaranteed issue reqUirements that prohibit any 

insurer from denying coverage to an individual based on his or her current medical conditions or risk 

of poor heallh were :ncluded in the analysis. 

"Insurers were instructed to report the number of app!Jcations received for products olfenng 

comprehensive medical coverage. HHS officials told us that they iden1ilied instances where insurers 

included data on applications for more limited products, such as one that covers only hospital 

services. The app!!cation data may also include applications for products being sold for only a portion 

of the 3-month period. 

'The data indicated that two insurers had denial rates of 100 percent and each of these insurers 

reported receiving one application in the 3·month reporting period. 

~he data indicated that two insurers had denial rates of 100 percent and each of these 

insurers reported receiving one application in thr 3-month reporting period. 

Page 12 GA0-11-268 Data on Private Health Insurance Denials 
218 

HHS officials noted that the data the department collected on application 

denials, which represent a single calendar quarter of applications, are only 

a starting point. They told us that as insurers report additional quarters of 

data, the value and usefulness of the data will increase. In addition, 

officials said that they have taken steps to ensure the accuracy of the data 

and noted that the accuracy of these data is critical to HHS, because no 

other source of information on private health insurance has a complete 

catalog of insurers operating in the individual market and what products 

those insurers are selling. 

Data reported by Maryland-the only state we identified as collecting data 

on the incidence of application denials-indicated that variation in 

application denial rates across insurers operating in the state's individual 

market has occurred in that state for several years. Maryland data showed 

that the range of application denial rates across insurers was 

26 percentage points or more in each of three reporting periods, 20081 

2009, and the first half of 2010. (See table 2 for the range in denial rates in 

the data reported by Maryland.) 

Table 2: Range in Application Denial Rates across Insurers licensed in Maryland, 

2008-2010 

Range in application Number of Aggregate 

denial rates insurers Number of application 

(percentage of represented applications denial rate 

Data year applications denied) in the data received (percentage) 

2008 6 to 34 11 98,612 14 

2009 7 to 33 11 107,617 14 

2010 

(first half) 6 to 45 11 47,791 16 

Source. GAO ana!ys•s o! cta!a !rom Maryland 

Note: Data are from 2008. 2009, and the first two quarters of calendar year 2010 and reported by 

insurers to Maryland. 

Data reported in studies by AHIP also showed variation in application 

denial rates. The AHIP data illustrated that application denial rates varied 

across age groups, with denial rates increasing as the age of the primary 

applicant increased. In 2008, when AHIP data showed that 13 percent of all 

Page 13 GAO*ll-268 Data on Private Health Insurance Denials 
219 

medically undenvritten applications were denied, 29 in general the denial 

rate progressively increased as the applicant's age increased, from a low of 

5 percent for applicants under 18 years of age to a high of 29 percent for 

applicants from 60 to 64 years of age." Similar variation in AHIP 

application denial rates was seen in data from 2006."' (See fig. 1.) 

Figure 1: Application Denial Rates by Age Group for 2008, as Reported by AHIP 

Denlalrale(percentage) 

35 

30 

25 

20 

29% 

15 _ _ _ ~3::gg_r:_g~:~~~ -r-- ---::-::-

10 ,.--

0-17 18-2-1 25-29 30-34 35-39 40·44 45-49 50-54 55·59 60-64 

Age category 

Source. GAO analySiS ol data reported by AHIP. 

Note: Data are from AH IP, Individual Health Insurance 2009: A Comprehensive Sutvey of Premiums, 

Availability, and Benefits (Washmgton, D.C.: 2009) 

2

c,In 2008, according to AHIP data, 84 percent of applications were medkally underwritten 

and 16 percent were not medically underwritten. Just over 1 percent of applications were 

denied before going through medical underwriting, and those dC'nials were unrelat('d to the 

applicant's health status. 

10A.rnerica's Health Insurance Plans, Individual HeaUh Insurance 2009: A Comprehensive 

Sm-vey of Prf'miums, Availability, nnd Berwfits (Wa.<ihington, D.C.: 2009). (Sec app. U for 

references to the AHIP study and other studies with information on application denial rates 

identifie-d through our literature review.) 

11America's Health Insurance Plans, Individual Health In..;;unmce 2006-2007: A 

Comprehensive Survey of Premiums, AvailabiUty, nnd Benefits (Washington, D.C. 2007). 

Page 14 GA0-11-268 Data on Private Health Insurance Denials 
220 

The available data on application denial rates provided little information 

on the reasons that applications were denied. For instance, the Hl!S and 

Maryland data did not include any information on the reao:;ons for 

application denials. The AHIP data, however, provided limited 

information. Specifically, AHIP's data showed that a higher percentage of 

applications were denied because of the applicant's health status than for 

nonmedical rea.;;ons, such as the plan not being offered in the applicant's 

geographic area. Allll' data showed that in 2008, of the L8 million 

applications for enrollment that insurers either denied or made offers of 

coverage, 1 percent were denied for nonmedical reasons and 12 percent 

were denied after underwriting when the applicant's health status and 

other risk factors were assessed. According to an AHIP official, 

applications that were denied after underwriting were presumably denied 

because the applicant's medical questionnaire responses were beyond the 

insurer's threshold for issuing a policy. 

There are several issues to consider when interpreting application denial 

rates. First, application denial rates may not provide a clear estimate of the 

number of individuals that were ultimately able to secure health coverage, 

because individuals may submit applications with more than one insurer 

and be denied by one insurer but offered enrollment by another. Second, 

denial rates also do not reflect applications that have been withdrawn. For 

example, AHIP data for 2008 indicated that 8 percent of applicants 

withdrew their applications before underwriting occurred. Experts also 

noted that some individuals may not submit applications for health 

coverage because they believe or have been advised, for example by an 

insurance agent, that their application would likely be denied. Third, an 

insurer's denial rates may be aff('cted by requirements of the states in 

which the insurer operates. For example, officials from one insurance 

company explained that for applicants in the state for which they are the 

insurer of last resort, state law prohibits them from denying applications 

for enrollment based on the health status of the applicant.·" Officials told 

us that a denial can occur only for nonmedical eligibility reasons, which 

the AHIP data indicate are far less frequent 

32According to data from the Kaiser Family Foundation, as of January 2010, four states-

:\1ichigan, Pennsylvania, Rhode' Island, and Virginia-and the District of Columbia have 

insurers of last resort, which are insurers that typically accC'pt consumers with health 

conditions that prevC'nt those consumers from obtaining coverage in the individual market. 

Page 15 GAO~ll-268 Data on Private Health Insurance Denials 
221 

State and Other Data 

Indicated That 

Coverage Denial 

Rates and the 

Reasons for Denials 

Vary and That 

Denials, If Appealed, 

Are Often Reversed 

Another consideration when interpreting application denial rates is that 

the rates do not reflect applications that have been accepted by an insurer 

but for coverage with a premium that is higher than the standard rate or 

with exclusions for coverage of specified services. Data from HHS, 

Maryland, and AHIP all indicated that some portion of applicants received 

offers at a premium that was higher than the standard rate. For example, 

the HHS data demonstrated that from January through March of 2010, 

about 20 percent of individual market applicant<; were offered coverage 

with premiums higher than the stru1dard rate. Maryland data also indicated 

that for the first half of 2010, 8 percent of applicants were offered either 

coverage with premiums higher than the standard rate or coverage that 

excluded specified health conditions. Finally, AHIP data from 2008 

showed that 34 percent of offers for coverage were for coverage at a 

higher premium rate. The AHIP data also showed that 6 percent of offers 

for coverage were for coverage that excluded specified health conditions. 

Data from selected states and others indicated that the rates of coverage 

denials, inducting denials for preauthorizations and claims, varied 

significantly, and a number of factors may have contributed to that 

variation. The data also indicated that coverage denials occurred for a 

vruiety of reasons, frequently for billing errors aod eligibility issues and 

less often for judgments about the appropriateness of a service. Further, 

the data we reviewed indicated that coverage denials, if appealed, were 

frequently reversed in the consumer's favor and that appeals and 

complaints related to coverage denials sometimes resulted in financial 

recoveries for consumers. 

Page 16 GA0-11-268 Data on Private Health Insurance Denials 
222 

State and Other Data 

Indicated Wide-Ranging 

Coverage Denial Rates, 

and a Number of Factors 

May Have Contributed to 

This Variation 

State data that we reviewed showed that rates of coverage denials by 

insurers operating in the group and individual markets varied significantly 

across states. Specifically, aggregate claim denial rates for the three states 

that we identified as collecting such data ranged from II percent in Ohio 

in 2009 to 24 percent in California in the same year.''" Data reported by the 

remaining state, Maryland, indicated a claim denial rate of 16 percent in 

2007. A fourth state, Connecticut, collected data on a different measure) 

preauthorization denials, and these data indicated a denial rate of 

14 percent in 2009. In addition, claim denial rates indicated by AMA 

data-3 percent during 2 months of 2010-varicd from coverage denial 

rates in lhc four states.*' 

Several faetors may have contributed to the variation in rates across the 

four states and the AiVIA data. For example, Ohio and AMA data were 

based on denials of electronic claims. n AMA officials told us that 

providers with electronic billing systems and insurers that accept 

electronic claims arc more sophisticated in tenns of billing management, 

:nThe Ohio data included the number of electronically submitted claims paid and denied in 

the first and third quarters of calendru· year 2009 and represented all insurers lict'nsed in 

Ohio. The Califomia data included the mm1her of claims received and denied by six of the 

hu·gest nuumged care insurers licensed in the state, each with enrollment in 2009 of over 

400,000. We obtained these data from the Department of Managed Health Care's Web site 

from June through September 2010 (www.wpso.dmhc.ca.gov/fe/search). 

3

"The Maryland data were obtained from thE' Maryland Insurance Administration's Report 

on Serni-Annua.l Claims Data FiUngjor· Calendar Year-s 2005-2007 and represented data 

for cal('ndar yem 2007 from 41 insurers licensed in the state . 

. '>HTht> Connecticut data were obta.itwd from the Connecticut Insurance Department's 

Gansu ;ner Report Ca1·d on Health Insurance Carriers ~tn Connecticut and repn•sent('d 

data for C'all?ndar yt>ar 2009 from 21 managed care insurers licensed in the st.att> 

'

1

(

1

The dat'l. were reported to GAO by AMA and represented claims from February 1, 2010, 

through March 31, 2010. The data indicated the total number of claim lines-charges for 

specific services included in the claim-that were denied. AMA defines a denial as a claim 

tine where the amount allowed and thr arnount billed were equal, but the amounl paid was 

$0. Though not included in the claim denial rate, AMA also reported data indicating that 

5 pt'rcent of claim lines were t'ditcd, that is, the claim lines were automatically reduced to a 

payment of $0 by the insurer's payment system. According to AMA offkials, both claim-line 

denials and claim-line edits result in no payment for the service, and therefore are denials 

from the perspective of the provider. The data on daim lines denied and edited were used 

as the b<lSis for rates reported in A..\1A's2010 National Health Insurer Report Cant. See 

citations to the 2010 report card and previous 1\,_,L\. report cards as well as other sludies 

related to coverage deniaJs in app. II. 

~'Providers can submit paper or electronic claims. According to Ohio and AMA officials, 

electronic claims re-presented roughly 70 to 80 percent oftheir total claims activity. 

Page 17 GAO*l1*268 Data on Private Health Insurance Denials 
223 

and therefore the denial rates calculated by AMA may be lower than rates 

of denials for all claims, including both electronic and paper-based. In 

another example, Maryland's rate was calculated using data for categories 

of denials that accounted for about 90 percent of all claims denied. In 

contra..;;t, according to California officials, California's data represented all 

claim denials. ~R Differences in the time frames for the data may have also 

contributed to the variation. AMA officials noted that their data were from 

a 2-month period of the year (February through March) when there was 

less contractual activity, such as open enrollment periods, and when 

denials related to meeting deductible requirements-which according to 

officials from one insurance company can be significant-have already 

been resolved. In contrast, data from the four states, except Ohio, covered 

a full year and therefore reflect all denials for the year, including those 

related to enrollment and deductible issues. See table 3 for the rates of 

coverage denials indicated by state data and a description of the 

characteristics of the data, some of which may have contributed to the 

variation in rates. 

'

1

HCalifomia officials told us they currently require plans to report on their full "inventory" 

of denials but the state is revising its claim denial reporting instructions to clarify the 

denials that should be included and excluded from the numbers report<' d. 

Page 18 GA0-11-268 Data on Private Health lnsurtm{'e Denials 
224 

Table 3: Rates of Claim or Preauthorization Denials across States in GAO's Review 

and Characteristics of the State Data 

Rate of claim or 

State preauthorization denials Data year" Characteristics of the data 

Ohio 11 percent across all 2009 Data limited to denials of 

insurers licensed in the electronic claims in the first and 

state third quarters of the fiscal year~ 

Connecticut 14 percent across 

21 managed care 

organizations licensed in 

the state 

Maryland 16 percent across 

41 insurers licensed in 

the state 

California 24 percent across six of 

the largest managed care 

organizations licensed in 

the state 

Source. GAO analysis o! data reported by msurers to states 

2009 Data were limited to denials of 

preauthorization for services 

and did not include data on 

denials of claims" 

2007 Data were limited to 16 

categories of denials of claims, 

representing 90 percent of total 

claim denia!sn 

2009 Data were limited to denials of 

claims and reflected each 

insurer's inventory of denials, 

which means that some 

insurers may have reported 

denials for government· 

sponsored health coverage, 

such as Medicaid" 

'The data years cited represent calendar years and lhe data reflect the most recent complete year of 

data available. 

'Data were reported to GAO by the Ohio Department of Insurance 

'Data were obtained from Connecticut's Consumer Report Card on Health Insurance Carriers in 

Connecticut {Hartford, Conn.: 201 0). 

~Data were obtained !rom the Maryland Insurance Administration's Report on Semi~Annual Claims 

Data Filing for Calendar Years 2005-2007 (Baltimore, Md.: 2009). 

"Data were obtained from the Department of Managed Health Care's Web slte from June through 

September 2010 {www.wpso.dmhc.ca.gov/fe/search) 

In addition to variation across states in aggregated rates, state and other 

data also indicated that coverage denial rates varied significantly across 

insurers. For example, the California data indicated that in 2009 claim 

denial rates ranged from 6 perccnllo 40 percent across six of the largest 

managed care organizations operating in the state. Similarly, 

preauthorization denial rates in Connecticut varied across 21 insurers, 

with rates among the seven largest insurers ranging from 4 percent to 

29 percent in 2009. Somewhat narrower variation across insurers was also 

evident in the AMA data, with claim denial rates in 2010 that ranged from 

Page 19 GA0-11·268 Data on Private Health IIL'lnrance Denials 
225 

State and Other Data 

Ir.dkated That Coverage 

Denials Occurred for 

Various Reasons and 

That Denials, If Appealed, 

Were Frequently Reversed 

less than 1 percent to over 4 percent across the seven insurers represented 

in those data. 39 

State and other officials told us about several factors that may have 

contributed to the variation across insurers and make it difficult to 

compare data across insurers. First, California officials told us that 

insurers may interpret a state's reporting requirements differently and 

noted that some insurers may count certain claims transactions as denials 

that the slate would not consider a denial. This was evidenced by 

discussions with one insurer who told us that if asked to report the 

number of claims denied, some insurers might include claims where the 

service was approved but the insurer paid nothing because the member 

was liable for the charge, which California officials would not characterize 

as a denial. Officials from the insurer said that their current overall denial 

rate is 27 percent, but it would be 18 percent if member liability denials 

were excluded. Officials from California and AMA also indicated that 

circumstances unique to an insurer may affect their denial rate. For 

example, California officials told us one insurer's denials rose sharply in a 

month because providers were submitting claims to the insurer's HMO 

when they should have gone to the preferred pro\~der organization (PPO). 

Rather than transferring the claims, the HMO denied all of them, and then 

the PPO paid the claims shortly after that. 

According to stale and other data, coverage denials occurred for various 

reasons. For example: 

Claim denials were often made for billing errors such as duplicate claims 

and missing information on the claim. For example, data from Maryland 

showed that the most prevalent reason for claim denials in 2007 was 

duplicate claim submissions, accounting for 32 percent of all denials. 

Among six of the largest managed care organizations in California, the 

four that reported on the nwst prevalent reasons for claim denials in 2009 

all reported duplicate claims as one of those reasons. With regard to 

claims missing required information, the 2010 AMA data indicated that five 

of the seven insurers represented in the data made 15 percent or more of 

According to officials, the AlvlA claim data included data for insured products offered by 

the companies represented and self-insured products administered by the companies. 

40The calendar year 2007 data were obtained from the Maryland Insurance Administration's 

Re-po-rt on Se-Jni-Annua.l Claims Data Fil.ingfur Calerular Yea1s 2005-2007. 

Page 20 GA0-11-268 Data on Private Health Immrance Denials 
226 

denials on the basis that the claim was missing information, such as 

documentation of preauthorization. Data from Maryland showed that 

74 percent of denied claims did not meet the state's criteria for "clean" 

claims, those claims that include all of the required information needed for 

processing. 41 

Denials of claims aiso frequently resulted from eligibility issues. For 

example, for six of the seven insurers in the 2010 AMA data, over 

20 percent of claim deniais occurred as a result of eligibility issues such 

as services being provided before coverage was initiated or after coverage 

was terminated. 

Insurers also denied preauthorizations and claims a..o;; a result of judgments 

about the appropriateness of the service, such as that the service was not 

medically necessary or was experimental or investigational, although less 

frequently t11an for billing errors and eligibility issues. Data from Maryland 

showed that in 2007 insurers denied nearly 40,000 preauthorizations or 

claims because they determined the services were not medically 

necessary. 42 This was a relatively small number compared to the 6.3 

million claim denials reported in the same year."' The 2010 AMA data 

showed that only one of the seven insurers denied claims on the basis that 

services were not appropriate, specifically that the service was 

experimental or investigational, with about 9 percent of denials made for 

that reason." NAIC data on complaints filed with states in 2009 also 

provided some information on coverage denials related to the 

appropriateness of services. Specifically, the data showed that of the 

4

lMaryland reports the total daim ctenialratt>, as well as a denial rate for "clean claims"~ 

those health care claims submitted by a health care provider on one of two widely used 

industry standard billing forms and that also include all of the essential infonllation rt€edcd 

by a plan for processing-in their Semi-Annual Claims Data Filing Reports. 

42Thc data were obtained from The Maryland Insurance Administration's 2007 Repwrl on 

the Health Care Appeals & Grievances Law. 

4

:

1

The data wen• obtained from the Maryland Insurance Administration's Report on SemiAnnual Claim,s Data Fi.lingjor Calendar Years 2005-2007. 

44The data on the n'asons for claim denials reflect the reasons assigned by the insurer that 

drnied the claim. According to M1A officials, there is no requirement that insurers assign 

the most specific reason for the claim denial, and they sometimes assign more general 

reasons. For example, although a denial may have occtured because the insurer 

determined a service was not medically necessary, the insurer may document that the 

claim was denil'd because the service was not covcre.d, which could be for reasons other 

than that the service was not. medically necessary. 

Page 21 GAO~ll~268 Data on Private Health Insuranee Denials 
227 

approximately 14,000 complaints related to coverage denials, at least 8 

percent were related to the insurer's determination that the service wa..<; 

not medically necessary and 2 percent were related to the determination 

that the service was experimental. 

State and other data indicated that coverage denials, if appealed, were 

frequently reversed in the consumer's favor. 45 The data from the four 

states that we identified as collecting data on the outcomes of internal 

appeals filed with insurers indicated that at least 39 percent of internal 

appeals resulted in the insurer reversing its original coverage denial. 

Officials from two insurance companies explained that denials are 

frequently reversed because lhe consumer or provider submits additional 

information, such as the consumer's medical records. Ot1icials from one of 

these insurance companies also explained that because insurers receive 

additional information through the appeals process, reversals of denials 

are expected even when the company is using accepted medical criteria to 

make the initial assessment of the appropriateness of the service; and 

regulators arc sometimes concerned when few appeals result in reversals 

of denials. See table 4 for a summacy of the outcomes of internal appeals 

reported by insurers to Connecticut, Maryland, New York) and Ohio. 

15Reversals of cowrage denials were limited to denials for which an appeal was initiated 

The data we reviC'wcd did not allow for a systematic calculaHon of an "appeal rate"~the 

number of coverage denlal<> for which an appeal was initiated~!or several reasons, 

including different data sources or data years for rtenials and appeals data. Data from Ohio 

did provide limited information; specifically, for the first quarter of calendar year 2010, 

Ohio data indicated that 0.5 percent of claim denials were internally appealed. 

Page 22 GAO·ll·268 Data on Private Health ln...,urance Denials 
228 

Table 4: Number and Outcomes of Internal Appeals Filed with Insurers across 

States in GAO's Review 

Number of 

Type of insurer internal determination was 

State reporting~ Data year" appeals reversed 

Connecticut" HMOs 2009 1,932 53 

Indemnity managed 2009 1,797 59 

care organizations 

Mary!and1 HMOs, nonprofit health 2009 4,844 50 

service plans, and 

commercial insurers 

New Yorks HMOs 2009 5,968 39 

Commercial insurers 2009 71,787 47 

Nonprofit indemnity 2009 8,946 48 

insurers 

Ohio' All insurers 2010 6,434 48 

(1"quarter) 

Sou<ce.GAOanatySISOfdatarepMedbylnsurerstostates 

"The types of insurers reported in this column are the categories used by each state and may not be 

comparable across states. 

"The data years cited represent calendar years and renee! the most recent complete year of data 

available, unless indicated otherwise. 

OData were obtained from Connecticut's Consumer Report Card on Hearth Insurance Carriers in 

Connecticut (Hartford, Conn.: 2010). The reversal rates represent the aggregate reversal rates for 6 

HMOs and 15 tndemnity managed care organizations. 

"Data were obtained from the Maryland Insurance Administration's 2009 Report on the Health Care 

Appeals & Gn"evances Law {Baltimore, Md.: 201 0). 

"Data were obtained from the 2010 New York Consumer Guide to Health Insurers (Albany, N.Y.: 

2010) The reversal rates represent the aggregate reversal rates for 12 HMOs, 2B commercial 

insurers, and 5 nonprofit indemnity insurers. 

'Data were reported to GAO by Ohio and represent internal appeals filed by all insurers licensed in 

Ohio. 

Data on the results of appeals filed with states for external review also 

indicated that denials were frequently reversed. A study conducted by 

A HIP on 37 states' external appeal programs showed that for 2003 and 

2004, about 40 percent of external appeals resulted in denials being 

reversed. 46 More recent data from the six states we contacted indicated 

""America's Health Insurance Plans, Update on State External Review (Washington, D.C.: 

2006). 

Page 23 GA0-11~268 Data on Private Health Insurance Denials 
229 

similar rates of denials being reversed upon external appeaL See table 5 

for a summary of the outcomes of external appeals indicated by state data. 

Table 5: Number and Outcomes of Appeals Submitted for External Review across 

States in GAO's Review 

Percentage of 

Number of appeals where 

Types of insurers external insurer 

for which denials appeals determination was 

State 

California" 

were appealed" Data year' resolved reversed or revised 

Managed care 2009 1,606 54 

organizations with 

enrollment over 

400,000 

Connecticut4 Managed care 2009 184 40 

organizations 

Florida" Managed care State fiscal 186 49 

organizations year 2010 

Maryland HMOs, nonprofit 2009 915 54 

health service 

plans, and 

commercial insurers 

New York9 HMOs 2009 570 38 

Commercial 2009 812 42 

insurers 

Nonprofit indemnity 2009 395 41 

insurers 

Traditional health 2008 311 23 

insurers, PPOs, 

HMOs, and Public 

Employee Health 

Benefit Plans 

So,_.rce GAOanalyslsolclatareporteclbystates 

"The types of insurers reported in this column are the categories used by each state and may not be 

comparable across states. 

"The data years cited represent calendar years unless indicated otherwise, and the data reflect the 

most recent complete year of data available. 

'Data were obtained from the Ca!ifomia Department of Managed Health Care's 2009/ndependent 

Medical Review and Complaint Results report_ 

~Data were reported to GAO by the Connecticut Insurance Department. 

"Data were reported to GAO by the Florida Agency tor Health Care Administration. 

'Data were obtained from the Maryland Insurance Administration's 2009 Report on the Health Care 

Appeals & Grievances Law (Baltimore, Md: 201 0). 

~Data were obtained from the 2010 New York Consumer Guide to Health Insurers (Albany, N.Y.: 

201 0). The reversal rates represent the aggregate reversal rates across 12 HMOs, 28 commercial 

insurers, and 5 nonprofit indemnity insurers. 

Page 24 GAO·ll-268 Data on Private HeaJtll ln._o;;urance Denials 
230 

~Data were obtained from the Ohio Department of Insurance's Patient Protection Act Report tor the 

Year 2008 (Columbus, Ohio: 2009). The data represent external reviews for denials because the 

service was not appropriate and denials for contractual reasons, which were less frequently reversed 

than denials because the service was not appropriate. 

The data on the outcomes of external appeals also indicated that the rate 

at which denials are reversed, if appealed, may vary depending on the 

reason for the denial and the type of service denied. For example, one 

study identified through our literature review looked at 740 external 

appeal decisions in California in 2001 and 2002. The study showed that 

appeals resulted in denials being reversed in 42 percent of cases where the 

denial resulted from the determination that services were not medically 

necessary and 20 percent of cases where services were determined to be 

experimental and investigationaL47 Further, the study showed that 

reversals of denials were more likely for certain services, such as ga.stric 

bypass surgery, stem cell U"artsplants, and breast reduction surgery1 than 

for other services, such as residential behavioral health care. Data from 

1<"1orida also indicated variation in outcomes of external appeals based on 

the reason for the denial and the type of service denied. For example, for 

state fiscal year 2010, denials were reversed in 49 percent of cases where 

the denial resulted from the determination that senices were not 

medically necessary and in 60 percent of cases where the service was 

deemed experimental or investigational, although there were fewer 

appeals of coverage denials for this reason.'" Further, the data showed that 

appeals were more likely to result in a denial being reversed when the 

denial was for diagnostic testing and pharmaceuticals than for other 

services, such as cosmetic surgery and durable medical equipment 

Finally, federal and state data indicated that appeals and complaints 

related to coverage denials sometimes resulted in financial recoveries for 

consumers. According to data from DOL, more than 9,600 complaints 

related to coverage denials by group health plans resulted in about 500 

recoveries of payments totaling nearly $7 million in fiscal year 2010. Data 

"

17C. R Gresenz and D. M. Studderi, "Extemal Review of Coverage Dt>nials by Managt>d Car(' 

Organizations in California" (RAND Institute for Civil Justice, Santa Monica, Calif.: 2005). 

See app. U for the list of studies that includE'd external appeal data by the reason for the 

denial being appealed and the typE' of service being denied. 

'

1

gData wen' reported to GAO by t.he Florida Agency for Health Care Administration. 

Maryland's data, obtained from the Mmyland Insurance Administration's 2009 Report on 

the Health Care .Appea{s & Grievance,s Law, also included some information on external 

appeals by the type of seJVice being denied. 

Page 25 GA0-11-268 Data on Private Health Insurance DeniaL<> 
231 

Agency Comments 

and Our Evaluation 

reported by states to HHS in applications for the Consumer Assistance 

Program grants also documented that complaints and appeals resulted in 

recoveries." Specifically, 21 of the 35 states submitting applications 

reported financial recoveries. For example, Maryland reported recovering 

more than $1.4 million for consumers in fiscal year 2009 as a result of 

internal appeals. NAIC data on complaints filed with states also gave some 

indication of recoveries. For example, NAIC's 2009 data indicated that of 

the approximately 14,000 complaints related to coverage denials, over 4 

percent resulted in an outcome where money or benefits were returned to 

the consumer and about 7 percent resulted in the insurer paying more of a 

claim than was initially paid. 

HHS provided us with written comments on a draft version of this report. 

These comments are reprinted in appendix Ill. HHS agreed with our 

findings, noting in particular the need to improve the quality and scope of 

existing data, and suggested clarifications, which we incorporated. HHS 

and DOL also provided technical comments to the draft report, which we 

incorporated as appropriate. 

In its written comments, HHS emphasized the importance-for 

policymakers, regulators, and consumers-of data on health insurance 

application and coverage denials. HHS noted that data on application and 

coverage denials can help increase transparency in the plivate health 

insurance market and that these data can also provide an important 

baseline measure for evaluating the impact of changes resulting from 

PPACA. In its comments, I!HS also noted that data collection on 

application and coverage denials has been uneven across insurers, plans, 

and states and that very little infom1ation is available to help analysts 

understand the causes or sources of variation in the data that are 

available. According to HHS, more effort is needed to improve the quality 

and scope of existing data collection to give policymakers and regulators 

better and richer data to evaluate heal1h insurance plan practices and 

market changes and to produce measures that may be useful to consumers 

when they are shopping for insurance. 

~n October 2010, HHS awarded nearly $30 million in Consumer .Assistance Program grants 

to 35 st-ates and the District of Columbia. States receiving the grant..<; are required to begin 

reporting data 6 months after the award notice on the number of inquilics filed with the 

statE' about health coverage, the reasons for the inquiries, and the outcomes of the 

inquiries. 

Page 26 GA0~11~268 Data on Private Health Insurance Denials 
232 

In its Wlitten comments, HHS also identified a limitation to our data that 

needed some clarification. Specifically, HHS pointed out-correctly-that 

while our draft report provided information on the percentage of claims 

that were denied, as well as data on the outcomes of internal appeals and 

external reviews of denied claims, our draft report did not provide data on 

the frequency with which claim denials are appealed by consumers. These 

data were not included in the report because the data we reviewed did not 

allow for a systematic calculation of an "appeal rate"-Lhe number of 

coverage denials for which an appeal was initiated-for several reasons, 

including different sources or years of denials and appeals data we 

reviewed. In response to HHS' comments, we added language to the report 

clarifying this limitation. For context, we also added information on the 

appeal rate from one quarter for one state-the only information we 

identified on internal claims appeal rates. li!IS also noted that the 

statement in our draft report that "denials arc frequently reversed" upon 

appeal may be confusing, because readers may assume a large number of 

claim denials are ultimately overturned. We revised the language in our 

draft report to prevent this misinterpretation of our data, by stating that 

coverage denials, if appealed, were frequently reversed in the consumer's 

favor. 

We are sending copies of this report to the Secretaries of HHS and DOL, 

the congressional committees of jurisdiction, and other interested parties. 

In addition, the report is available at no charge on the GAO Web site at 

http://\vww.gao.gov. 

If you or your staff have any questions about this report, please contact me 

at (202) 512-7114 or dickenj@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix IV. 

John E. Dicken 

Director, Health Care 

Page 27 GAO·Il·268 Data on Private Health Insurance Denials 
233 

Appendix I: Methodology for Selecting States 

and State Data Reviewed by GAO 

In order to describe the data on denials of applications for enrollment and 

coverage of medical services, we contacted six states to interview officials 

and to obtain data the states collect and track on denials and appeals 

related to denials. The six states we selected included states identified in 

the literature, through searches of state insurance department Web sites, 

or in interviews with experts as a state collecting data on the incidence of 

application or coverage denials. 1 These also included states that collect or 

track data on appeals related to coverage denials reviewed by insurers 

(internal appeals) or reviewed by external parties (external appeals). The 

six states accounted for at least 20 percent of national enrollment in 

private health insurance. 

Once we selected the states, we asked officials from each state whether 

they collected the following types of data: (1) incidence of application 

denials; (2) incidence of coverage denials, including incidence of denials 

of preauthorizations and claims; (3) incidence and outcomes of appeals 

re\i.ewed by insurers (that is, intenml appeals); and (4) incidence and 

outcomes of appeal<; reviewed by exten1al parties (that is, extenml 

appeals). If state officials reported collecting the data, we reviewed at 

least the most recent year of data available. We re\i.ewed data from one 

state on the incidence of application denials, from four states on the 

incidence of coverage denials, from four states on the number and 

outcomes of internal appeals, and from all six states on the number and 

outcomes of external appeals. (See table 6.) 

1

Because we did not survey aU states to determine whether they collect data on the 

incidence of application or coverage denials, there may be other states that collect such 

data that were not known to experts or discussed in the literature. For example, through 

the course of our work, we found that Texas requires certain insurers to report on the 

number of requests for veriflcation of coverage for proposed setvices that insurers 

declined. 

Page 28 GA0-11-268 Data on Private Health Insurance Denials 
234 

Appendix I: Methodology for Selecting States 

and State Data Reviewed by GAO 

Table 6: Information on Denial Data Collected by and Private Health Insurance Enrollment for States in GAO's Review 

Reported 

collecting data 

on the 

incidence of 

application 

denials 

Reported 

collecting data 

on internal 

appeals, 

including 

outcomes 

Saurce GAO summary of s1a1e and U.S. Census Bureau tla!a 

Note: Table includes data that officials from selected states reported collecting. U.S. Census Bureau 

data are from the bureau's Curren! Population Survey, 2009 Annual Social and Economic 

Supplement. 

Page 29 GA0-11-268 Data on Private Health Insurance Denials 
235 

Appendix II: Methodology for and Studies 

Identified by Structured Literature Review 

To identify research that examined private health insurance denials, 

including the incidence of denials of applications for enrollment and of 

coverage for medical services (i.e., "coverage denials") and the incidence 

and outcomes of appeal related to coverage deniaLs, we conducted a 

structured literature review. This re·view resulted in 24 studies that we 

determined to be relevant to our objectives. To conduct this review, we 

searched 23 reference databases for articles or studies published from 

January 2000 through July 20!0,' using a combination of search tenns, 

such as "denial'' and "insurer. "2 We detennined that a study was directly 

relevant to our objectives if it: (1) included empirical analysis related to 

the incidence of application denials, the incidence of coverage denials, or 

the incidence and outcomes of appeals related to such denials; and 

(2) analyzed, at minimum, denial or appeal data from an entire state or two 

or more insurers. In addition to searching the reference databases) we 

checked the bibliographies of the relevant studies to identify other 

potentially relevant research and interviewed several private health 

insurance experts about research done on denials. 

We identified 24 studies in the literature that included empirical analyses 

examining (1) the frequency of denials of applications for enrollment or 

(2) the frequency of or reasons for denials of coverage for medical services 

and outcomes of appeals related to such denials. Table 7 identifies the 

number of studies that address these topics, with some studies addressing 

more than one topic. 

1

Thc 23 databases were BIOSIS Prrviews, NTIS: National Technical Information Service, 

Social SciSearC'"h, ABIIINFORM, Gale Group PROMT, SciSearch: a Cited Reference Science 

Database, Pharmaceutical News Index, EM Care, Elsevier 13IOBASE, EMBASE, Galt> Group 

Business A.R.T.S., General Science Abstracts, Wilson Applied Science & Technology 

Abstract._<;, EconLit, Readers' Guide Abstracts, Wilson Social Sciences Abstracts, Gale 

Group Trade & Industry Database, Gale Group Legal Uesourcc Index, 1'1EDUNE, 

CA .. "l'CERLIT, EMBASE Alert, Periodical Abstracts PlusText, and Wilson Businc..s!'i 

Abstracts. 

~We searched the referencE' databases for the terms "denial" or "refusal" and "health plan," 

"insurer," "carrier," or "issuer" with all of the following combinations of terms: 

(1) "application" or "enrollment;" {2) "coverage," "claim," or "prcaulhorlzation;" and 

(3) "complaint,'' "appeal," or "dispute" and ''coverage," "claim,'' "service," or 

"prcauthorization." 

Page 30 GA0-11-268 Data on Private H('alth Insurance Denials 
236 

Appendix II: Methodology for IUld Studies 

Identified by Strul"tur~d Literature Review 

Table 7: Index of Studies Examining Private Health Insurance Denials, by Topic 

Total number 

Topic Study numbers of studies 

Frequency of denials of applications for 

enrollment 2, 3, 11, 20 

Frequency of denials of coverage for 

medical services 5, 6, 7, 10, 16, 17, 19, 22,24 

Reasons for denials of coverage 5, 6, 7, 17, 19 

Outcomes of appeals related to denials 1, 4, 8, 9, 12, 13, 14, 15, 18, 

of coverage 21, 23, 24 12 

By reason for denial being appealed 9, 12, 13,23 

By type of service being denied 9, 13,23 

Sovrce:GAO 

The 24 studies that GAO identified in the literature are as follows: 

1. American Association of Health Plans. Independent Medical Review of 

Health Plan Coverage Decisions: Empowering Consumers -wUh 

Solutions. Washington, D.C., 2001. 

2. America's Health Insurance Plans. Individual Health Insurance 2009: 

A Corrtprehensi've Survey of Premiu·ms, Availability, and Benefits. 

Washington, D.C., 2009. 

3. --.Individual Health Insurance 2006-2007: A Comprehensive 

Suroey of Prerrdums, Availability, and Benefits. Washington, D.C., 

2007. 

4. Update on State E.xternal Review Programs. Washington, D.C., 

2006. 

5. American Medical Association. 2010 Nal'ional Health Insurer Report 

Card. Chicago, Ill., 2010. 

6. ---. 2009 National Health Insurer Report Card. Chicago, Ill., 2009. 

7. --. 2008 Nationai Health Insure1· Report Card. Chicago, Ill., 2008. 

8. California Jlealthcare Foundation. Independent Medical Rm;i.ew 

Experiences in Calijbmia., Phase I: Cases of 

Investigational/Experimental Treatments. Prepared by the Institute 

for Medical Quality for the California Health care Foundation, Oakland, 

Calif., 2002. 

Page 31 GAO~ll-268 Data on Private Healtb Insurance Denials 
237 

Appendix II: Methodology for and Studies 

Identified by Structured Literature Review 

9. Chuang, K H., W. M. Aubry, and R A Dudley. "Independent Medical 

Review of Health Plan Coverage Denials: Early Treuds." Health 

Affairs, val. 23, no. 6 (November/December 2004), 163-169. 

10. Collins, S. R, J. L Kriss, M. M. Doty, and S. D. Rustgi. Losing Ground: 

How the Loss of 1idequate Health Insurance is Burdening Working 

Families: Findings from the Commonwealth Fund Biennial Health 

Insurance Surveys, 2001-2007. New York, N.Y., 2008. 

I L Doty, M. M., S. R Collins, J. L. Nicholson, and S. D. Rustgi. Failure to 

Protect: Why the Individual Insurance Market is not a Viable Option 

for Most US. Families. Findings from the Commonwealth Fund 

Biennial Health Insurance Survey, 2007. New York, N.Y., 2009. 

12. Foote, S. 13., R A Virnig, L. Bockstedt, and Z. Lomax. "External Review 

of Health Plan Denials of Mental Health Services: Lessons from 

Minnesota." Administration and Policy in Mental Health a.nd Mental 

Hea.lth Services Research, val. 34 (2007), 38-44. 

13. Gresenz, C. R, and D. M. Studdert. E.xterrwl Review of Covemge 

Den·ials by Managed Ca:re Organizati.ons in California. Working 

Paper No. WR-264-ICJ, RAND Institute for Civil Justice, Santa Monica, 

Calif., 2005. 

14. Gresenz, C. R, D. M. Studdert, N. Campbell, and D. R Hensler. 

"Patients In Conflict With Managed Care: A Profile of Appeals in Two 

HMOs." Health Aj['airs, voL 21, no. 4 (July/August 2002), 189-!96. 

15. Gresenz, C. R, and D. :\1. Studdert. "Disputes over Coverage of 

Emergency Department Services: A Study of Two Health Maintenance 

Organizations." Annals of gmm:qency Medicine, voL 43, no. 2 

(February 2004), 155-162. 

16. Kaiser Family Foundation I Harvard School of Public Health. National 

Survey on Consumer Expe·riences With and Attitudes Toward Health 

Plans: Key Findings. Washington, D.C., 200L 

17. Kapur, K, C. R Gresenz, and D. M. Studdert. ":l>lanaged Care: 

Utilization Review in Action at Two Capitated Medical Groups." Health 

Affairs, Web exclusive (2003), W3-275-282. 

18. Karp, N., and E. Wood. Understanding Health Plan Dispute 

Resolution Practices, Washington. D.C., 2000. 

Pagt" 32 GAO·ll-268 Data on Private Health Insurance Denials 
238 

Appendix II: Methodology for and Studies 

Identified by Structured Literature Re"iew 

19. Pearson, S. D. ''Patient Reports of Coverage Denial: A.;:;sociation with 

Ratings of Health Plan Quality and Trust in Physician." The American 

Journal of Managed Care (March 2003), 238-244. 

20. Pollitz, K., R. Sorian, and K. Thomas. How Accessible is Individual 

llealth Insurance for consumers in less-than-pmfect health? Prepared 

for the Henry ,J. Kaiser Family Foundation, Menlo Park, Calif., 2001. 

2L Pollitz, K., J. Crowley, K. Lucia, and E. Bangit. Assessing State 

External Review Progra.ms and the Effects of Pending Federal 

Pat-ients' Rights Legislation. Prepared for the Henry J. Kaiser Family 

Foundation, Menlo Park, Calif., 2002. 

22. Schauffler, H. H., S. McMenamin, J. Cnbanski, and H. S. Hanley. 

"Differences in the Kinds of Problems Consumers Report in 

Staff/Group Health Maintenance Organizations, Independent Practice 

A...,sociation!Network Health Maintenance Organizations, and Preferred 

Provider Organizations in California." Medical Care, vol. 39, no. 1 

(2001), 15-25. 

23. Studdert, D. :VL, and C. R. Gresenz. "Enrollee Appeals of Preservice 

Coverage Denials at 2 Health Maintenance Organizations." The Jou-rnal 

of the American Medical Associa.l'ion, vol. 289, no. 7 (Feb. 19, 2003), 

864-870. 

24. Young, G. P., J. Ellis, J. Becher, C. Yeh, J. Kovar, and M.A. Levitt. 

"Managed Care Gatekeeping, Emergency Medicine Coding, and 

Insurance Reimbursement Outcomes for 980 Emergency Department 

Visits from Four States Nationwide." Annals of R1neTgency .ltfed'icine, 

vol. 39, no. 1 (January 2002), 24-30. 

Page 33 GA0-11~268 Data on Private Health Insurance Denials 
239 

Appendix III: Comments from the 

Department of Health and Human Services 

OffiCE Of T"H! UCR!TAAY 

Anl<un1 ie<m<~ryf<>r lli'(IJ.M~tion 

Wuhtna-<<m, DC20201 

FEB 16 1011 

l .S li\l\crmlH:m.-\co.:ounl,lhlli!\{)ftke 

.J,fJ GStrcctS.W , 

W;Jshmgton, DC ~0541\ 

Page 34 GA0-11·268 Data on Private Health Insurance Denials 
240 

Appendix Ill: Comment.<i from the Department 

of Health and Human Services 

GENE!{J\L C<H1.\1E:"TS OF THE Uf:I'ARTME~T OF IIEALTII AND Ul'\IAL\' 

,"iERVJCES IHJ !Sl 0:"0 THE GOVERN:\-H::Yf AC'COlJ'I;TABILITY OFFICE'S {(;AOl 

HH·\fT U.EI'ORT ENTITI.ED. "I'IHVATE HEALTH 1:"/SliR.\.:"iCE; DATA 0:\ 

APJ'Lf('ATIO~ .-\Nil COVERAGE I>ENJALS" ((;AO~JI~2MI) 

rhe lkpartrm:ll1Hppr..:ciare~ the opporJunity f<l r~·vh::\~ amJ comm..::nt on this draft rqxm. 

\'driatinnacross ~~'Hers. Alth<l<lgh 

the data iltustmtc \>ide\ ariation h1 the n:porkd rate oft·bims d<.:nial, !hl' {iAO 1~a~ unable lo 

(kscriht' the· .~ourec'\ nr significance ofthnt \·ariation Fun her, it is f1<\\sibk tlwl the ~Wtc, that J,J 

Page 35 GAO·ll-268 Data on Private Health Ja .. urance Denials 
241 

AJ)ptmdix III: Comments from the Departme-nt 

of Health and Human Services 

GENERAL COM:"\ tENTS OFTI:m HEPAkT;\IE;o..>T OF HEALTH AND lllJMA.'I 

SERVJCl<~S IHHS) ON TilE GOVERNMENT ACCOUNTABILITY OFFICE'S ((;AO> 

llRAFT REPORT E<:NTITLED "J~HI\'ATE liEALTJII:'\SlJRAN(:t:: !lATA O.'i 

AI'I'LICATION ANI) COVF:RAGE DE:-..'IAlS' fGA0-!1-261!.) 

prn'<!dc daHl .arc also the states. with stronger appcah pmtl.'ctiom such that the reponed rates urv 

!lOt n:rrcscnti!tivc oft he- natiorul pktmt 

fundrdrb1b) 

Page 36 GA0-11-268 Data on Private Health Insurance Denials 
242 

Appendix IV: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(Z90862) 

John E. Dicken, (202) 512-7114 or dickenj@gao.gov 

In adclition to the contact named above, Kristi Peterson, Assistant 

Director; Susan Bamidge; Krister Friday; Jawaria Gilani; Teresa 

Tam; and Hemi Tewarson made key contributions to this report. 

Page 37 GA0-11-268 Data on Private Health Insurance Denials 
243 

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Please Print on Recycled Paper 
244 

HENRY A. WAXMAN, CALIFORNIA 

CHAIRMAN 

JOE BARTON, TEXAS 

RANKING MEMBER 

To: 

From: 

Re: 

ONE HUNORED ELEVENTH CONGRESS 

cteongre55 of tf)e mtntteb ~tates 

~ousc of ~epreswtatibrli 

COMMITTEE ON ENERGY AND COMMERCE 

2125 RAYBURN HousE OFFICE Bu!LOING 

WASHINGTON, DC 20515--6115 

MllfOnty (2071225·2927 

M"'<m!y (21}~))_)<;, 3641 

MEMORANDUM 

October 12,2010 

Members of the Committee on Energy and Commerce 

Chairmen Henry A. Waxman and Bart Stupak 

Coverage Denials for Pre-Existing Conditions in the Individual Health 

Insurance Market 

Since March 2010, the Committee has been investigating the extent of coverage denials and 

exclusions for pre-existing conditions in the individual health insurance market. This 

memorandum summarizes what we have learned in the investigation. W c have found ( l) the 

four largest for-profit health insurance companies denied over 600,000 individuals coverage 

because of pre-existing conditions in the three years before passage of health reform and (2) the 

number of coverage denials increased significantly each year. 

The insurance company practices described in this memorandum are those that exist in today's 

market. In all likelihood, they would continue unabated in the absence of federal health reform 

legislation. One of the major bcnef1ts of the Affordable Care Act, which was signed into law on 

March 23, 20 l 0, is a ban on the practice of denying coverage based on pre-existing conditions. 

Key findings in our investigation arc: 

From 2007 through 2009, the four largest for-profit health insurance companies, 

Aetna, Hum ana, United Health Group, and WellPoint, refused to issue health 

insurance coverage to more than 651,000 people based on their prior medical 

history. On average, the four companies denied coverage to one out of every seven 

applicants based on a pre-existing condition. One of the four companies maintained a list 

of over 400 medical diagnoses that triggered a permanent denial of health insurance 

coverage to applicants. 

From 2007 through 2009, the number of people denied coverage for pre-existing 

conditions increased at a rapid rate. The number of individuals denied coverage by 

Aetna, Humana, UnitcdHcalth Group, and Wei!Point increased from 172,400 in 2007 to 

257,100 in 2009, an increase of 49%. During the same period, applications for 

enrollment increased by only 16%. 
245 

From 2007 through 2009, Aetna, Humana, United Health Group, and WellPoint 

refused to pay 212,800 claims for medical treatment due to pre-existing conditions. 

In some cases, the companies offered health insurance to individuals with pre-existing 

conditions, but used medical riders to exclude coverage or increase dcductibles for the 

pre-existing conditions. In the case of one of the companies, nearly 15% of the 

company's customers in the individual market in 2010 had policies with riders limiting 

coverage or increasing dcductiblcs for certain medical conditions. 

Each company had business plans that relied on using pre-existing conditions to 

limit the amount of money paid for medical claims. In one document, executives 

devised a plan for "strategic growth" in the individual market that identified areas of 

opportunity to be "improved pre-existing exclusion processes, tighter condition and large 

claim review, [and] tighter underwriting guidelines." Other internal corporate documents 

show that insurance company executives were considering practices such as lengthening 

the look-back period, assessing separate dcductibles specifically for identified preexisting conditions, denying payments for prescription drugs related to pre-existing 

conditions, linking additional claims to pre-existing conditions exclusions, and narrowing 

the definition of prior creditable insurance coverage. 

The Affordable Care Act signed into law by President Obama prohibits the use of pre-existing 

conditions to deny coverage or claims. For children, this provision becomes effective for 

policies issued on or after September 23,2010. For everyone else, the ban on the use of preexisting conditions takes effect on January I, 2014. As a result, health insurance companies will 

no longer be able to deny coverage to people due to their medical history. The companies also 

will not be pcnnittcd to exclude medical coverage for treatments related to pre-existing 

conditions, and they will not be allowed to charge higher premiums based on covering 

individuals with pre-existing conditions. 

I. PURPOSE AND METHODOLOGY OF THE INVESTIGATION 

While most Americans receive health insurance coverage through group plans sponsored by their 

employers, millions of people who cannot obtain health insurance through their employers and 

do not qualify for government programs such as Medicare or Medicaid can obtain health 

insurance only through the individual market. In 2008, approximately 15.7 million adults under 

65 received their health care coverage through individual health insurance policies.' In the 

individual health insurance market, companies screen applicants for pre-existing medical 

canditions prior to providing insurance coverage. Health insurance companies use infonnation 

about pre-existing conditions to deny insurance coverage outright, charge higher premiums, or 

exclude coverage for medical claims related to the pre-existing conditions. 

In early 2010, before passage of the Affordable Care Act, we initiated an investigation into 

insurance company practices relating to pre-existing conditions. On March 2, 2010, the 

Committee wrote the four largest for-profit health insurance companies Aetna, Humana, 

'Kaiser Family Foundation, Health Insurance Coverage in America, 2008 (Oct. 9, 2009). 

2 
246 

UnitedHealth Group, and Wcl!Point- to request information about rejection of insurance 

coverage and denial of claims related to pre-existing conditions in the individual health insurance 

market. 2 Collectively, these four companies covered 2.8 million people in the individual health 

insurance market in 2009. 3 

The Committee sought documentation on the insurers' practices related to pre-existing 

conditions, including "internal communications, including e-mail, to or from senior corporate 

Ihamigemcnt" and "presentations to senior corporate management."' The Committee also 

requested information on the total number of denials of medical claims payments and the 

rejection of health insurance coverage due to pre-existing conditions over the last five years 5 

All companies voluntarily provided the information requested. In total, the Committee received 

over 68,000 pages of documents from the companies. 

This memorandum is based on the information and documents provided to the Committee. It 

provides new insights into how the largest for-profit health insurance companies used preexisting conditions to deny coverage and claims. Without passage of the Affordable Care Act, 

the practices described in the memorandum could have continued unchecked. 

II. FINDINGS 

A. Coverage Denials 

From 2007 to 2009, the four largest for-profit health insurance companies, Aetna, Humana, 

UnitedHealth Group, and Wel!Point, refused to provide health insurance coverage to more than 

651,000 people based on their prior medical history. 6 

2 Letter from Hcmy A. Waxman, Chairman, Committee on Energy and Commerce, and 

Bart Stupak, Chairman, Subcommittee on Oversight and Investigations, Committee on Energy 

and Commerce, to Angela Braly, President and Chief Executive Officer, WcllPoint, Inc., 

Stephen Hemsley, President and Chief Executive Officer, UnitedHealth Group, Michael 

McCallister, President and Chief Executive Officer, Humana, Inc., and Ronald Williams, 

Chaim1an and Chief Executive Officer, Aetna (Mar. 2, 2010). 

3 National Association of Insurance Commissioners, Individual and Group 

Comprehensive Major Medical by Legal Entity (Apr. 7, 2010). 

4 Letter from Henry A. Waxman, Chairman, Committee on Energy and Commerce, and 

Bart Stupak, Chainnan, Subcommittee on Oversight and Investigations, Committee on Energy 

and Commerce, to Angela Braly, President and Chief Executive Officer, WcllPoint, Inc., 

Stephen Hemsley, President and Chief Executive Officer, UnitedHealth Group, Michael 

McCallister, President and Chief Executive Officer, Humana, Inc., and Ronald Williams, 

Chairman and Chief Executive Officer, Aetna (Mar. 2, 2010). 

'Id 

6

Letter from Counsel, Aetna, to Henry A. Waxman, Chaim1an, Committee on Energy and 

Commerce, and Bart Stupak, Chairman, Subcommittee on Oversight and Investigations, 

Committee on Energy and Commerce (Mar. 26, 2010); Letter from Counsel, Humana, Inc., to 

3 
247 

A year-by-year analysis shows a significant increase in the number of coverage denials each 

year. The insurance companies denied coverage to 172,400 people in 2007 and 221,400 people 

in 2008. By 2009, the number of individuals denied coverage rose to 257, I 007 Between 2007 

and 2009, the number of people denied coverage for pre-existing conditions increased 49%. 

During the same period, applications for insurance coverage at the four companies increased by 

only 16%. See Figure I. 

Figure 1: Coverage Denials in the 

Individual Health Insurance Market (in thousands) 

2007 2008 2009 

A significant percentage of applicants for insurance were denied coverage for pre-existing 

conditions. In 2007, these four insurance companies denied coverage to 11.9% of applicants; 

and in 2008, they denied coverage to 13.8% of applicants. By 2009, Aetna, Humana, 

UnitedHealth Group, and WellPoint denied health insurance coverage to 15.3% of their 

applicants in the individual market due to pre-existing conditions. On average, the four 

companies denied coverage to one out of every seven applicants based on a pre-existing 

condition. 

The actual number of coverage denials is likely to be significantly higher than reported by the 

companies. The companies do not report as denials individuals who are discouraged from 

applying for coverage by insurance agents because of their pre-existing conditions. A document 

Hcnty A. Waxman, Chairman, Committee on Energy and Commerce, and Bart Stupak, 

Chairman, Subcommittee on Oversight and Investigations, Committee on Energy and Commerce 

(Mar. 12, 2010); Letter from Counsel, UnitedHealth Group, to Henry A. Waxman, Chairman, 

Committee on Energy and Commerce, and Bart Stupak, Chairman, Subcommittee on Oversight 

and Investigations, Committee on Energy and Commerce (Mar. 19, 2010); and Letter from 

Counsel, WellPoint, Inc., to Henry A. Waxman, Chairman, Committee on Energy and 

Commerce, and Bart Stupak, Chairman, Subcommittee on Oversight and Investigations, 

Committee on Energy and Commerce (Mar. 12, 2010). 

7 /d. 

4 
248 

from one company states that one-third of its applicants do not obtain coverage because of preexisting conditions." This estimate may reflect the actual denial rate when individuals who are 

discouraged from submitting formal applications are taken into account. 

In addition, one of the four companies provided infonnation to the Committee from only one of 

its subsidiaries, which represents only 32% of the company's individual health insurance 

business. 9 

The documents reveal that the health insurance companies denied individuals insurance coverage 

lnscd on an extensive list of medical conditions. One of the companies maintains a list of 425 

medical dia§noses that it used to decline health insurance coverage permanently to many 

applicants.' These diagnoses include common conditions, such as pregnancy, angina, diabetes, 

and heart disease. 11 A recent Families USA study found that 57.2 million people under the age 

of 65 suffer from at least one diagnosed condition that could put them at risk for denial of 

coverage based on pre-existing conditions if they tried to purchase individual health insurance as 

a new subscribcr. 12 

For certain medical conditions, companies routinely denied health insurance coverage without an 

internal review. In 2006, one of the companies distributed an inter-office memorandum that 

included a list of medical categories that "no longer require a review for declination."ll A set of 

14 categories followed, including: 

"Any applicant who is a surgical candidate." 

"Any female applicant currently pregnant." 

"Any female applicant who has been treated for infertility within 5 years." 

.•. "Any applicant with a BMI [body mass index] of 39.0 or greater.'' 14 

The insurance companies declined coverage for applicants of all ages due to pre-existing 

conditions. Although young people generally enjoy better health, the companies routinely 

8 Articulating Health Care Value Strategyfor Individual Business (Jan. 6, 2009). 

9 National Association of Insurance Commissioners, Individual and Group 

Comprehensive Mcy'or Medical by Legal Entity (Apr. 7, 2010). 

10 Underwriting Guide concerning health products (undated). 

II Jd. 

12 Families USA, Health Reform: Help for Americans with Pre-Existing Conditions 

(May 2010). 

13 Inter-Office Memorandum from [redacted] to Distribution (Aug. 29, 2006). 

14 ld. 
249 

denied health insurance coverage for individuals under the age of 30. Internal correspondence 

shows that in some instances "[f]or ... plans for individuals, between 9 and 10 percent of 

individuals between the ages of 18 and 30 arc declined coverage during the application 

process." 15 

B. Claims Denials 

In some instances, health insurance companies offer insurance to individuals with pre-existing 

conditions, but add riders to their policies denying payment for claims relating to those 

conditions or imposing additional deductibles. This was a practice commonly used by the four 

companies. From 2007 through 2009, Aetna, Humana, UnitedHcalth Group, and WellPoint 

refused to pay 212,800 claims for medical treatment due to pre-existing conditions." 

The four companies denied 67,200 claims in 2007 and 74,650 in 2008. In 2009, the four health 

insurance companies refused to pay over 70,900 medical claims of individuals they insured due 

to pre-existing conditions. 17 

One company excluded treatment or assessed additional deductible charges for 14.7% of its 

customers in the individual market. 18 The top four riders used by this company excluded 

coverage or increased dcductibles for Caesarean deliveries, back disorders, psychiatric or 

psychological disorders, and outpatient treatment for cholesterol issues. 19 

C. Business Plans 

Documents obtained by the Committee show that the companies' business plans included using 

pre-existing conditions to limit the amount of money paid for medical claims. Executives at one 

company, for example, devised a plan for "strategic growth" in the individual market that would 

15 E-mail from [redacted] to [redacted] (Aug. 28, 2007). 

16 Letter from Counsel, Aetna, to Henry A. Waxman, Chairman, Committee on Energy 

and Commerce, and Bart Stupak, Chairman, Subcommittee on Oversight and Investigations, 

Committee on Energy and Commerce (Mar. 26, 201 0); Letter from Counsel, Humana, Inc., to 

Henry A. Waxman, Chairman, Committee on Energy and Commerce, and Bart Stupak, 

Chainnan, Subcommittee on Oversight and Investigations, Committee on Energy and Commerce 

(Mar. 12, 201 0); Letter from Counsel, UnitedHealth Group, to Henry A. Waxman, Chairman, 

Committee on Energy and Commerce, and Bart Stupak, Chaim1an, Subcommittee on Oversight 

and Investigations, Committee on Energy and Commerce (Mar. 19, 20 I 0); and Letter from 

Counsel, WellPoint, Inc., to Henry A. Waxman, Chairman, Committee on Energy and 

Commerce, and Bart Stupak, Chairman, Subcommittee on Oversight and Investigations, 

Committee on Energy and Commerce (Aug. 31, 201 0). 

17 !d. 

18 E-mail from [redacted] to [redacted] (Feb. 8, 2010). 

19 !d. 

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"[r]e-position all new customer segment's pricing, products, and risk profile to gradually 

enhance profit profile of the book and ... ultimately improvc[e] price levels." 20 Areas of 

opportunity included: "improved pre-existing exclusion processes, tighter condition and large 

claim review, [and] tighter underwriting guidclincs." 21 

At another company, executives identified key issues confronting the individual market. One 

document states: "Lack of attention to risk management, decreased ability to use pre-existing 

claim denials and rescind policies, and maternity policies have led to first year loss ratios 

climbing from less than 50% five years ago to over 65% today."22 To lessen the company's 

fmanciallosses, a senior executive recommended that the company should "[c]nsure Pre-existing 

condition[s] are administered effectively to the extent allowed by law."23 

In one training presentation to insurance brokers, executives at a third company explained: 

"Insurance is a Gamble." 24 The training materials included the following statements about the 

company's approach to the health insurance business: 

"Because U.S. insurance has such high maximum limits, selling insurance is like 

gambling." 

"When we sell someone an insurance policy, we arc betting that their total medical costs 

for the year will be less than they paid us in premiums." 

"We try to 'win' our bets by accurately assessing their medical risk and charging the right 

premiums."25 

The documents received by the Committee indicate that prior to passage of health refonn, the 

insurance companies were considering ways to expand the use of pre-existing conditions to 

avoid paying for a broader class of medical claims. Internal corporate documents show that 

high-level executives considered practices such as: 

Increasing the look-back period on pre-existing conditions: When an individual applies 

for health insurance, the company will "look back" at the applicant's prior medical 

history for a certain period of time to identify pre-existing conditions that could provide a 

justification to deny coverage. State laws govern the length of the look-back period. 

According to documents obtained by the Committee, it appears that in July 2009, 

executives at one insurer held a meeting during which they discussed lengthening the 

2

° Consumer Segment 2010-2012 Strategy Round 1 (Mar. 20, 2009). 

21 !d. 

22 [State] 2010 Plan Information for Board Presentation (Jan. 201 0). 

23 !d. 

24 The Importance of Insurance, and Your Role in Helping People Get It (undated). 

25 !d. 

7 
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look-back period for pre-existing conditions. 26 In a presentation circulated in advance of 

the meeting, the company's look-back guidelines were compared to the maximum legal 

limits in each stare27 

Assessing separate deductibles specifically jar identified pre-existing conditions: In a 

presentation concerning risk assessments in the individual health insurance market, 

executives at another company were provided a "[p]re-ex opportunity overview."28 

Among a number of "additional potential opportunities [that] should be examined," the 

presenter highlighted "the introduction of condition specific deductiblcs" as a future 

improvement to be considered. 29 

Denying payments jar prescription drugs related to pre-existing conditions: Executives 

for a third company have recently introduced a project to withhold insurance 

reimbursement for prescription dmgs if the medication is used to treat pre-existing 

conditions. A presentation in January 2010, explained: "We are proposing a pilot that 

enforces any medications used to treat pre-existing conditions be excluded for all 

members that do not have prior creditable coverage, as per Policy spccifications."30 

Linking additional claims to pre-existing conditions exclusions: During an internal 

evaluation of the individual business, executives at the fourth company discussed 

"[c]ontrol[ling] cost by conducting Pre-Existing Condition Investigations."" As part of 

this dialogue, executives emphasized the importance to "[!]ink related claims to PreExisting Condition investigations" and "[i]dentify claims that should be linked to a PreExisting Condition investigation."32 

Narrowing the definition of prior creditable coverage: Prior creditable coverage is a 

period of past health insurance coverage that can shorten the length of time a new insurer 

can exclude insurance coverage of pre-existing conditions. Internal documents reveal 

that executives at one of the companies considered changing "the dc!inition of prior 

creditable coverage to exclude prior individual coverage."33 

26 E-mail from [redacted] to [redacted] et al. (July 23, 2009). 

27 !d. 

28 [Redacted] Claim Accuracy and Risk management assessment (undated). 

29 !d. 

30 E-mail from [redacted] to [redacted] (Jan. 5, 2010). 

31 E-mail from [redacted] to [redacted] et al. (Nov. 10, 2005). 

32/d. 

33 E-mail from [redacted] to [redacted] (Apr. 27, 2009). 

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Æ 

III. EFFECT OF HEALTH REFORM 

The Affordable Care Act, which was enacted on March 23, 20 I 0, will significantly reform 

insurance company practices relating to pre-existing conditions. 

Effective January 1, 2014, insurance companies in the individual market will no longer be 

allowed to deny policy enrollment based on a person's health status, including pre-existing 

conditions. 34 Additionally, the Act will bar health insurers trom charging higher premiums to 

people who have pre-existing conditions. By 2014, health insurance companies selling coverage 

in the individual market will be allowed to set their rates based only on geography, whether the 

plan covers an individual or family, age, and tobacco use. Insurance companies will no longer 

use medical histories to calculate premium rates. 35 

For children, these rcfonns are effective earlier. The law prohibits pre-existing condition claims 

exclusions for children under the age of 19 for new policies starting in September 2010. 36 

In addition, the Affordable Care Act established a new Pre-existing Condition Insurance Plan 

administered by the Department of Health and Human Services. This temporary program 

provides health insurance to individuals who currently arc unable to obtain insurance due to their 

medical history. Enrollees must have been uninsured for at least six months due to a medical 

condition and be a United States citizen or reside legally in this country. This insurance plan will 

exist until the Act's comprehensive pre-existing condition reforms go into effect in 2014. 37 

JV. CO]'I;CLUSION 

Our investigation examined practices concerning pre-existing conditions in the individual health 

insurance market. The investigation has revealed that from 2007 through 2009, the four largest 

for-profit health insurance companies, Aetna, Humana, UnitcdHealth Group, and WcllPoint, 

denied health insurance coverage to more than 651,000 people based on their prior medical 

history. During the same period, the four companies refused to pay 212,800 claims for medical 

treatment related to pre-existing conditions. Internal company documents show that this 

increasing use of pre-existing conditions to deny or limit coverage would have continued 

unabated if Congress had not passed health reform legislation. 

34 The Patient Protection and Affordable Care Act, Pub. L. 111-148 § 1201 (2010). 

35 !d. 

36 !d. at§ 1255. 

37 Id at§ 1101.