Medicaid Eligibility: Accurate Beneficiary Enrollment Requires Improvements in Oversight, Data, and Collaboration
Released: 2019-10-30T00:00:00

Letter

Background

The federal government and states share responsibility for the financing and administration of the Medicaid program. With regard to financing, Medicaid is funded jointly by the federal government and states, with FMAP rates ranging from a statutory minimum of 50 percent to a statutory maximum of 83 percent. Under PPACA, expenditures for Medicaid expansion enrollees are matched at 90 percent for fiscal year 2020.

Program administrative responsibilities are shared between states and the federal government. State administrative responsibilities include, among other things, determining eligibility, enrolling beneficiaries, and adjudicating claims. With regard to eligibility, states are primarily responsible for verifying eligibility and enrolling Medicaid beneficiaries. These responsibilities include verifying and validating individuals’ eligibility at the time of application and periodically thereafter, accurately assigning enrollees to the appropriate eligibility group, and promptly disenrolling individuals who are not eligible.

PPACA requires states to use third-party sources of data to verify eligibility to the extent practicable. Consequently, states have had to make changes to their eligibility systems, including implementing electronic systems for eligibility determination and coordinating systems to share information. In addition, states have had to make changes to reflect new sources of documentation and income used for verification. In certain circumstances, states may delegate responsibility to the federal government to make eligibility determinations.

At the federal level, CMS is responsible for overseeing states’ design and operation of their Medicaid programs and ensuring that federal funds are appropriately spent. CMS oversees state enrollment of beneficiaries and reporting of expenditures. For example:

CMS reviews and approves states’ Medicaid eligibility verification plans, which rely primarily on information available through data sources—including federal data sources such as the Social Security Administration and the Internal Revenue Services, or state data sources such as state tax records or unemployment information— rather than paper documentation from families.

CMS has various review processes in place to ensure that expenditures reported by states are supported and consistent with Medicaid requirements. The agency also has processes to check whether the correct federal matching rates were applied only to expenditures receiving a higher than standard federal matching rate, which can include certain types of services and populations.

CMS estimates Medicaid improper payments, including improper payments due to erroneous beneficiary eligibility determinations. Although CMS has not calculated the improper payments related to beneficiary eligibility determinations since 2014, it plans to begin reporting this estimate in November 2019.

CMS Oversight of Medicaid Eligibility Determinations and Related Expenditures Has Gaps

Our previous work has identified gaps in CMS oversight of Medicaid eligibility determinations, which affect the federal matching rate. An accurate determination of eligibility is critical to ensuring that only eligible individuals are enrolled, that they are enrolled in the correct eligibility group, and that states’ expenditures are appropriately matched with federal funds for Medicaid enrollees. The implications of inaccurate eligibility determinations can be significant, especially given the growth in enrollment and spending of the expansion population, which represented nearly one quarter of program enrollment and federal expenditures in fiscal year 2017. (See fig. 1.)

In September 2016, we reported on our undercover testing for determining Medicaid eligibility and the vulnerabilities we found. We found weaknesses that led to inaccurate eligibility determinations. For example, three of eight fictitious applications we submitted to federal and state marketplaces were approved for Medicaid, despite having identity information that did not match Social Security Administration records. These results, while illustrative of the challenges of assuring accurate eligibility determinations, cannot be generalized.

With respect to CMS’s reviews of eligibility determinations, in 2015, we also found that CMS did not review federal Medicaid eligibility determinations in the states that delegated such authority to the federal government. Based on our findings, we made the following recommendations.

CMS should use 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. In February 2019, we considered this recommendation implemented, as CMS confirmed that it was sharing information between its eligibility reviews and quarterly expenditure reviews regarding Medicaid expansion enrollees.

CMS should conduct reviews of federal Medicaid eligibility determinations to ascertain their accuracy and institute corrective action plans where necessary. CMS has taken some action to review federal eligibility determinations; however, until the review results are publicly reported, which CMS expects to occur in November 2019, this recommendation is not fully implemented. We will continue to monitor CMS’s implementation of this recommendation.

In August 2018, we reported that improvements in oversight of state expenditures could help CMS ensure that individuals are enrolled in the correct Medicaid eligibility group. CMS processes for reviewing expenditures reported by states and FMAP rates collectively have had a considerable federal financial benefit, with CMS resolving errors that reduced federal spending by over $5.1 billion in fiscal years 2014 through 2017. However, we identified weaknesses in how CMS targets its resources to address risks when reviewing whether states’ expenditures are supported and consistent with Medicaid requirements. For example:

CMS devotes similar levels of staff resources to review expenditures despite differing levels of risk across states. For example, the number of staff reviewing California’s expenditures—which represent 15 percent of federal Medicaid spending—is similar to the number reviewing Arkansas’ expenditures, which represents 1 percent of federal Medicaid spending.

Additionally, CMS reviews a sample of claims for expansion enrollees to examine Medicaid expansion expenditures, but the sample size does not account for previously identified risks in a state’s program. Specifically, as we noted in a 2015 report, CMS’s sampling review of expansion expenditures was not linked to or informed by reviews of eligibility determinations conducted by CMS, some of which identified high levels of eligibility determination errors.

To address these weaknesses, we made three recommendations, including that the Administrator of CMS revise the sampling methodology for reviewing expenditures for the Medicaid expansion population to better target reviews to areas of high risk. CMS concurred with this recommendation, but in November 2018, CMS officials indicated that given the agency’s resources, they believe the current sampling methodology is sufficient and have no plans to revise it. However, we continue to believe action is needed to better target areas of high risk and this recommendation remains unimplemented.

Our examination of Medicaid eligibility determinations will continue as we have work underway that will describe how selected states decide the basis of eligibility for individuals who may qualify for Medicaid under more than one category of eligibility, such as a low-income individual with a disability; what is known about the accuracy of Medicaid eligibility determinations and selected states’ processes to improve the accuracy of determinations; and

CMS efforts to recoup funds related to eligibility errors.

We expect to complete this work early next year.

CMS Efforts to Improve Medicaid Data Could Benefit Program Oversight

Improvements in Medicaid data could benefit program oversight, including ensuring that only eligible beneficiaries are enrolled. CMS has acknowledged the need for improved Medicaid data and the Transformed Medicaid Statistical Information System (T-MSIS) initiative is the agency’s primary effort—conducted jointly with states—to improve its collection of Medicaid expenditure and utilization data. According to CMS officials, aspects of T-MSIS are designed to broaden the scope and improve the quality of state-reported data, as well as the data’s usefulness for states. T-MSIS also includes automated quality checks that should improve the quality of data that states report. In addition,

T-MSIS is designed to capture significantly more data from states than was previously reported. For example, T-MSIS will include a beneficiary eligibility file that will have expanded information on enrollees, such as their citizenship, immigration, and disability status; and expanded diagnosis and procedure codes associated with their treatments.

T-MSIS also is intended to benefit states by reducing the number of reports CMS requires them to submit, and by improving program efficiency by allowing states to compare their data with other states’ data in the national repository or with information in other CMS repositories, including Medicare data.

With the continued implementation of T-MSIS, CMS has taken an important step toward developing a reliable national repository for Medicaid data. While recognizing CMS’s progress, we have made several recommendations aimed at improving the quality and usefulness of T- MSIS data. For example, we recommended in 2017 that CMS refine its T- MSIS data priority areas to identify those that are critical for reducing improper payments and expedite efforts to assess and ensure their quality. CMS has implemented this recommendation, yet other recommendations that CMS concurred with related to T-MSIS have not been fully implemented, including outlining a specific plan and associated time frames for using T-MSIS data for oversight.

Further Collaboration with Stakeholders Could Improve Program Oversight and Better Ensure Appropriate Enrollment

We have previously reported 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. CMS has engaged state agencies and other partners to promote program integrity through the Medicaid Integrity Institute, a national training program for states, and other partnerships to combat Medicaid fraud. These efforts have created more opportunities for program integrity professionals to collaborate, share best practices, and ultimately increase the effectiveness of their oversight activities.

We have also testified that state auditors are uniquely positioned to help CMS in its oversight of state Medicaid programs, because of their roles and responsibilities—which can include carrying out or overseeing their state’s single audits. Through their program integrity reviews, state auditors have identified improper payments in the Medicaid program and deficiencies in the processes used to identify them. For example, state auditors have found that in some cases their state Medicaid agencies’ eligibility determinations did not identify or address beneficiaries’ changes in circumstances, and in other cases relied on incorrect or incomplete income or asset information.

A 2018 audit of New Jersey’s Medicaid program found the state was not identifying and disenrolling some deceased individuals. When state auditors conducted a data match to a Social Security number verification service, they found managed care payments of $510,834 and fee-for-service claims of $217,913 for 41 individuals after their reported date of death. Auditors recommended that the eligibility system be reconciled with a Social Security number validation service on a periodic basis to better identify deceased individuals.

In 2017, state auditors in North Carolina found that most of the 10 sample county departments of social services did not consistently provide adequate oversight or controls for the eligibility determination of new applications and re-certifications. For new applications, the auditors showed accuracy error rates ranging from 1 percent to nearly 19 percent; for redeterminations of eligibility, accuracy error rates ranged from 1 percent to 23 percent.

Based on information from an independent verification service, state auditors in New York found, during a 9-month period in 2014, that 354 Medicaid enrollees were actually deceased, and that the state made $325,030 in Medicaid payments for a subset of these individuals. Auditors noted that the state’s eligibility system did not have a standard process to periodically verify the life status of all enrollees and end coverage for deceased individuals.

In April 2019, the Comptroller General and representatives from the National State Auditors Association sent a letter to CMS requesting changes to the Compliance Supplement to leverage state auditors’ ability to examine key areas of Medicaid, including improvements in the oversight of Medicaid eligibility processes. The Compliance Supplement—which is issued by the OMB based on agency input and direction—is used by state auditors during their annual audit of state entities that administer federal financial assistance programs, including Medicaid.

In June 2019, OMB issued the 2019 Compliance Supplement, which included changes related to overseeing testing of eligibility determinations that GAO and the state auditors had proposed. Specifically, the supplement now permits state auditors to test eligibility determinations to ensure that beneficiaries qualify for the Medicaid program and are in the appropriate enrollment category. The supplement also notes a requirement for states to coordinate with other state and federal insurance affordability programs, including the federally facilitated exchanges.

These changes to the Compliance Supplement will better enable state auditors to audit states’ eligibility determinations to ensure beneficiaries qualify for the Medicaid program and are enrolled in the correct eligibility group. Such eligibility determinations will supplement CMS’s eligibility determination reviews and may yield insights into program weaknesses that CMS could learn from and potentially address nationally. We continue to believe that CMS could help improve program integrity by further providing state auditors with a substantive and ongoing role in auditing their state Medicaid programs.

Chairman Toomey, Ranking Member Stabenow, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to respond to any questions you may have.

GAO Contact and Staff Acknowledgments

If you or your staff members have any questions concerning this testimony, please contact me 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), Kristin Ekelund (Analyst-in-Charge), Michael Erhardt, Arushi Kumar, and Drew Long. Also contributing were Susan Anthony, Vikki Porter, and Emily Wilson.

Appendix I: Selected GAO Recommendations to Strengthen Oversight of Medicaid Beneficiary Enrollment

Take immediate steps to assess and improve the data available for Medicaid program oversight, including, but not limited to, the Transformed Medicaid Statistical Information System (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. (GAO-17-173)

Recommendation implemented; no action needed.

Take additional steps to expedite the use of 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 utility of T-MSIS data. (GAO-18-70)

Status of recommendation; actions needed to implement recommendations Not fully implemented. Continue taking steps to make T-MSIS data usable for Medicaid program oversight, such as (1) obtaining information on the completeness and comparability of T-MSIS data, (2) notifying states of their compliance status and obtaining corrective action plans, and (3) establishing mechanisms for ongoing feedback and collaboration across states.

Articulate a specific plan and associated time frames for using T-MSIS data for oversight. (GAO-18-70)

Not fully implemented. Outline a specific plan and associate time frames for using T- MSIS data for oversight.

GAO, Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched with Federal Funds, GAO-16-53 (Washington, D.C.: Oct. 16, 2015). GAO, Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight, GAO-18-70 (Washington, D.C.: Dec. 8, 2017).

Related GAO Reports

Medicaid: CMS Has Taken Steps to Address Program Risks but Further Actions Needed to Strengthen Program Integrity. GAO-18-687T. Washington, D.C.: August 21, 2018.

Medicaid: CMS Needs to Better Target Risks to Improve Oversight of Expenditures. GAO-18-564. Washington, D.C.: August 6, 2018.

Medicaid: Actions Needed to Mitigate Billions in Improper Payments and Program Integrity Risks. GAO-18-598T. Washington, D.C.: June 27, 2018.

Medicaid: Opportunities for Improving Program Oversight. GAO-18-444T. Washington, D.C.: April 12, 2018.

Federal Health-Insurance Marketplace: Analysis of Plan Year 2015 Application, Enrollment, and Eligibility-Verification Process. GAO-18-169. Washington, D.C.: December 21, 2017.

Medicaid: Further Action Needed to Expedite Use of National Data for Program Oversight. GAO-18-70. Washington, D.C.: December 8, 2017.

Improper Payments: Improvements Needed in CMS and IRS Controls over Health Insurance Premium Tax Credit. GAO-17-467. Washington, D.C.: July 13, 2017.

Medicaid: Program Oversight Hampered by Data Challenges, Underscoring Need for Continued Improvements. GAO-17-173. Washington, D.C.: January 6, 2017.

Patient Protection and Affordable Care Act: Results of Enrollment Testing for the 2016 Special Enrollment Period. GAO-17-78. Washington, D.C.: November 17, 2016.

Health Care: Results of Recent Undercover Testing for Patient Protection and Affordable Care Act Coverage, and Review of Market Concentration in the Private Insurance Markets. GAO-16-882T. Washington, D.C.: September 14, 2016.

Patient Protection and Affordable Care Act: Results of Undercover Enrollment Testing for the Federal Marketplace and a Selected State Marketplace for the 2016 Coverage Year. GAO-16-784. Washington, D.C.: September 12, 2016.

Patient Protection and Affordable Care Act: Final Results of Undercover Testing of the Federal Marketplace and Selected State Marketplaces for Coverage Year 2015. GAO-16-792. Washington, D.C.: September 9, 2016.

Patient Protection and Affordable Care Act: CMS Should Act to Strengthen Enrollment Controls and Manage Fraud Risk. GAO-16-29. Washington, D.C.: February 23, 2016.

Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched with Federal Funds. GAO-16-53. Washington, D.C.: October 16, 2015.

Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls. GAO-15-313. Washington, D.C.: May 14, 2015.

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