Medicaid's Quality Control System Is Not Realizing Its Full Potential

HRD-82-6: Published: Oct 23, 1981. Publicly Released: Oct 23, 1981.

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Based on data from the Medicaid Quality Control (MQC) Program, the Health Care Financing Administration (HCFA) estimates that about $1.2 billion in erroneous Medicaid payments are made annually. GAO reviewed the program because it is a primary means of identifying actions needed to reduce erroneous Medicaid payments.

The MQC fiscal disallowance designed to encourage lower error rates has not totally achieved the desired results. Their size represents such a potentially severe penalty for missing errorrate targets that the States generally have resisted citing errors, often based on their interpretations of HCFA regulations. The HCFA reactions to this resistance and its attempts to ensure defensible error rates have created an adversary relationship between it and the States. MQC reviewers correctly worked most of the cases; however, GAO found enough errors, unreviewed claims, and questionable practices to cast doubt on the accuracy of the base period error rates. Because the MQC system deals with relatively small samples of cases, even one case incorrectly reviewed can potentially have a significant effect on a State. HCFA has not provided effective leadership or clear direction for the MQC corrective action program. Consequently, it is not as effective as it could be. The data produced from the MQC system have been of limited value to States in their corrective action because: (1) the claims processing data are outdated before they are available and do not report problems on some types of claims; (2) claims paid because of retroactive eligibility are never reviewed; (3) the eligibility data overstate the potential savings from correcting errors and thus complicate the corrective action process; and (4) the review criteria do not identify all program weaknesses and the third-party data do not evaluate States' third-party recovery efforts.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Section 133 of the Tax Equity and Fiscal Responsibility Act of 1982 amended the penalty provision associated with the Medicaid quality control program but did not include this recommendation.

    Matter: Congress should consider enacting legislation providing fiscal incentives similar to those in the Aid to Families with Dependent Children Quality Control Program for States maintaining low error rates.

  2. Status: Closed - Not Implemented

    Comments: Section 133 of the Tax Equity and Fiscal Responsibility Act of 1982 amended the penalty provision associated with the Medicaid quality control program but did not include this recommendation.

    Matter: Congress should consider enacting legislation changing the formula for determining Federal fiscal penalties to one which reduces only the Federal participation in administrative expenses.

  3. Status: Closed - Implemented

    Comments: When we determine what steps the Congress has taken, we will provide updated information.

    Matter: Congress should consider enacting legislation suspending its directive for Federal fiscal sanctions against the States' based Medicaid quality control error rates to allow time for HCFA and the States to develop and implement a system free of weaknesses.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The agency disagreed with the recommendation and intends to take no action. GAO believes the recommendation is valid, but a followup review would not be warranted until the recent changes in the law have been implemented.

    Recommendation: The Secretary of the Department of Health and Human Services (HHS) should direct the Administrator of HCFA to require HCFA Medicaid quality control reviewers to determine the extent of verification necessary for a case before examining State Medicaid quality control files.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to reemphasize the need for HCFA Medicaid quality control reviewers to follow established procedures designed to assure independent HCFA re-reviews.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to designate within HCFA central and regional offices clear responsibility for and authority to carry out the Medicaid quality control corrective action program.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to issue a corrective action manual for assisting the States in developing strong corrective action programs.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to improve Medicaid quality control procedures by selecting the Medicaid quality control claims processing and third-party liability sample from the universe of claims paid during the review month, including claims paid for retroactively eligible cases, which would separate the claims processing sample for the eligibility sample.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to improve Medicaid quality control procedures by changing the method of reporting Medicaid quality control errors to include estimates of the potential savings available from eliminating Medicaid eligibility determination errors.

    Agency Affected: Department of Health and Human Services

  7. Status: Closed - Not Implemented

    Comments: The agency has discontinued the use of the Medicaid quality control system for evaluating state third party liability efforts.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to improve the Medicaid quality control procedures by adding an evaluation of the States' third-party recovery efforts to Medicaid quality control review.

    Agency Affected: Department of Health and Human Services

  8. Status: Closed - Not Implemented

    Comments: The agency disagreed with this recommendation and intends to take no action. GAO believes the recommendation is valid, but a followup review would not be warranted until the recent changes in the law have been implemented.

    Recommendation: The Secretary of HHS should direct the Administrator of HCFA to improve Medicaid quality control procedures by making the ultimate criteria for determining Medicaid quality control errors the Federal Medicaid regulations instead of the States' Medicaid plans when the two are inconsistent.

    Agency Affected: Department of Health and Human Services

 

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