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State Medicaid Agencies' Perspectives of Managed Care Plans' Referral of Fraud

Announced on  | Last Modified on  | Project Number: OEI-03-23-00340
Status
Completed
Agency
Centers for Medicare and Medicaid Services

OBJECTIVE

For Medicaid managed care, States contract with and oversee private health insurance companies, known as managed care plans, which have the primary responsibility for processing, paying, and monitoring claims from providers in their networks. As such, States play a critical role in safeguarding the Medicaid program's integrity. For example, States are required to: (1) monitor plans' compliance with the program integrity provisions of their contracts (including the provisions related to fraud referrals), (2) determine whether potential fraud reflects a credible allegation of fraud, and (3) take action against providers upon the identification of a credible allegation of fraud. According to Federal regulations, States' contracts with managed care plans must require the plans to promptly refer any potential fraud, waste, or abuse to State Medicaid agencies or Medicaid Fraud Control Units. However, both OIG and CMS have ongoing concerns about States' and plans' efforts to combat fraud, including a lack of fraud referrals. This evaluation will determine whether State contractual requirements support managed care plans' submission of fraud referrals, determine how States evaluate the volume and quality of the fraud referrals made by managed care plans, identify the factors that States believe incentivize managed care plans to refer fraud, and determine the challenges States face regarding fraud referrals from managed care plans. This work may also identify ways to increase the total number of managed care plans' fraud referrals and ensure the quality and timeliness of these referrals.

TIMELINE

REPORT PUBLISHED

States Have Missed Some Opportunities to Improve Medicaid Managed Care Organizations’ Provider Fraud Referrals (OEI-03-23-00340)

States’ contracts generally required MCOs to refer provider fraud to the State but had key differences:

  • Most States reported that their contracts required MCOs to refer “any potential fraud” to the State and/or MFCU, while some other States’ contracts used terms such as “credible allegations of fraud.”
  • States’ contracts specified different timeframes for MCOs to make referrals, with timeframes varying from 1 day to 270 days and some States not setting a specific timeframe at all.
  • A few States reported that their contracts did not specify the actions the State could take if MCOs did not comply with fraud referral requirements.

Further, some States did not provide fraud referrals training or feedback to MCOs, despite the potential of these practices to improve referrals.

Almost all States identified program-wide actions related to communication, guidance, or processes that CMS could undertake to help them improve the volume or quality of MCOs’ provider fraud referrals.

26-E-03-030.01 to CMS - Open Unimplemented
Update expected on 01/15/2027
CMS should work with States to ensure that all MCOs are contractually required to refer potential fraud promptly.

26-E-03-030.02 to CMS - Open Unimplemented
Update expected on 01/15/2027
CMS should urge States to ensure that their contracts with MCOs specify actions the State can take to address MCOs' noncompliance with provider fraud referral requirements.

26-E-03-030.03 to CMS - Open Unimplemented
Update expected on 01/15/2027
CMS should work with States to expand the feedback provided to MCOs about provider fraud referrals.

26-E-03-030.04 to CMS - Open Unimplemented
Update expected on 01/15/2027
CMS should assess the feasibility of Federal program-wide actions that States identified as potentially beneficial for improving MCOs' provider fraud referrals and implement those that CMS determines are most promising.

View in Recommendation Tracker
Work Plan Type
Office of Evaluation and Inspections
HHS Agencies
Centers for Medicare and Medicaid Services
Issue Areas
Managed Care Financial Stewardship
Target Groups
-
Financial Groups
Medicaid