Recommendation: The Administrator of CMS should ensure the agency's Medicaid third-party liability guidance is consistent with federal law related to

• the requirement for states to apply cost avoidance procedures to claims for labor, delivery, and postpartum care services,
• the requirement for states to make payments without regard to potential third-party liability for pediatric preventive services unless the state has made a determination related to cost-effectiveness and access to care that warrants cost avoidance for 90 days, and
• state flexibility to make payments without regard to potential third-party liability for pediatric services provided to child support enforcement beneficiaries. (Recommendation 1)

Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open

Comments: On November 14, 2019, CMS issued an Informational Bulletin providing further guidance to Medicaid Bipartisan Budget Act (BBA) of 2018 and changes to Medicaid Provisions Passed in April 2019-Third Party Liability in Medicaid and CHIP. The intent of the information Bulletin is to further clarify CMS guidance issued in the agency's June 2018 Bulletin on key provisions related to third party liability in Medicaid and CHIP. The Bulletin also addresses April 2019 changes to the Bipartisan Budget Act of 2013. The bulletin clarifies CMS guidance on two of the three issues we identified in our 2019 report. The bulletin notes that (1) effective February 9, 2018 a state is required to use standard coordination of benefits cost avoidance when processing claims for prenatal services which now includes labor and delivery and postpartum care claims, and (2) effective October 1, 2019, a state is required to make payments without regard to third party liability for pediatric preventive services unless the state has made a determination related to cost-effectiveness and access to care that warrants cost avoidance for 90 days. However, with regard to the third issue, the bulletin notes that, effective April 18, 2019, a state is allowed 100 days to pay claims related to child support enforcement, but does not note that states may choose to make payment within 30 days, if the state determines doing so is cost-effective and necessary to ensure access to care. We will continue to monitor CMS guidance on payments related to child support enforcement to assess whether the recommendation is fully implemented.

Recommendation: The Administrator of CMS should determine the extent to which state Medicaid programs are meeting federal third-party liability requirements and take actions to ensure compliance as appropriate. Such actions can include ensuring that state plans reflect the law. (Recommendation 2)

Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open

Comments: As of February 2020, we are unaware of any actions taken by CMS to implement this recommendation.

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 2)

Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Priority recommendation

Comments: CMS agreed with and has taken some steps to address this action, as recommended by GAO in July 2018. In September 2019, CMS reported that in July 2019 CMS held a meeting with states and collaborative audit contractors to discuss coordination of managed care audits, including a wide range of challenges with managed care audits. As result of the feedback and recommendations received, CMS is evaluating several process improvements and reiterated that audit contractors will continue to work with states to provide support and assistance in Medicaid managed care, and that Medicaid managed care audits should not be limited by MCO contract language. Although CMS has communicated to states the need to increase audits in managed care and address identified issues, it is unclear if these actions will remove known impediments to managed care audits or result in an increase in the number of collaborative audits. Implementing GAO's July 2018 recommendation is needed because few audits of Medicaid managed care have been conducted and overpayments can be significant based on the findings from federal and state audits and investigations that have been completed. .

Recommendation: To ensure efficient use of federal resources, the Administrator of CMS should account for Medicaid payments a hospital has received that offset uncompensated care costs when determining hospital uncompensated care costs for the purposes of making Medicare UC payments to individual hospitals.

Agency: Department of Health and Human Services: Centers for Medicare and Medicaid Services
Status: Open
Priority recommendation

Comments: No executive action taken as of March 2020. CMS initially agreed with GAO's June 2016 recommendation. However, in October 2018, and again in December 2019 , CMS indicated that it was reconsidering whether to offset Medicare Uncompensated Care (UC) payments by Medicaid's uncompensated care payments. CMS stated that because Medicare UC payments are distributed based on hospitals' relative (not actual) uncompensated care costs, it would not be appropriate to account for Medicaid payments that reduce hospital uncompensated care. However, in some states Medicaid payments reduce or even eliminate hospital uncompensated care costs, which can result in an inequitable distribution of payments. Because the total amount of Medicare UC payments is capped, not accounting for Medicaid payments will result in hospitals that have little or no uncompensated care costs receiving a higher proportion of Medicare UC payments than warranted, resulting in in less funding for hospitals that actually have uncompensated care costs. Implementing GAO's recommendation would ensure that Medicare UC payments are based on accurate levels of uncompensated care costs and result in CMS better targeting billions of dollars in Medicare UC payments to hospitals that do have with the most uncompensated care costs, while avoiding making payments to hospitals with little or no uncompensated care costs.