OIG recommends HHS establish Medicare Advantage RAC program, step up enforcement of Medicaid documentation requirements

HHS failed to meet targeted improper payment reductions for Medicaid and the Children’s Health Insurance Program (CHIP) and has not implemented a required recovery audit plan for Medicare Advantage, according to an Office of Inspector General (OIG) report released May 10.

In accordance with the Improper Payments Elimination and Recovery Act (IPERA) of 2010, HHS is required to publish improper payment reduction targets in its Agency Financial Report (AFR). HHS’ 2017 AFR set a goal of reducing improper Medicaid payments to 7.93% and improper CHIP payments to 8.20% in 2018.

However, according to HHS’ 2018 AFR, the actual improper payment rate for Medicaid was 9.79% and 8.57% for CHIP. According to HHS, the agency did not meet its goals due to insufficient documentation or process errors by third parties and administrative or process errors made by state or local agencies. Insufficient documentation errors mainly consisted of insufficient or no documentation submitted by providers. Administrative and process errors consisted of errors due to non-compliance with provider enrollment, provider screen, and National Provider Identifier (NPI) requirements.

The OIG recommends that HHS work with providers and state and local agencies to communicate documentation requirements and monitor compliance with the requirements. The OIG also recommends that HHS work with states to bring their systems into compliance to fully implement provider enrollment, provider screen, and NPI requirements.

IPERA requires HHS to conduct recovery audits for reach program that spends $1 million or more annually. In addition, Section 1893 (h) of the Social Security Act expanded the recovery audit contractor (RAC) program to Medicare Advantage.

Due to concerns from industry stakeholders and RAC vendors, HHS did not contract with a vendor to perform RAC audits. Instead, HHS states that Medicare Advantage RAC functions are performed by the contract-level Risk Adjustment Data Validation (RADV) program.

However, the contract-level RADV audits did not recover any overpayments in fiscal year 2018. Therefore, because expenditures exceed $1 million and recovery audits were not in place, CMS is not in compliance. The OIG recommends that HHS continue to explore conducting Medicare Advantage recovery audits and issuing a recovery audit contract that is cost-beneficial to the program.