Why OIG Did This Review. Managed care is the primary delivery system for Medicaid. As of 2015, it covered 80 percent of all Medicaid enrollees. Although managed care has rapidly expanded, program integrity issues have not received the same attention in managed care as they have in Medicaid fee-for-service. The Office of Inspector General (OIG) and others have ongoing concerns about program integrity in Medicaid managed care. How OIG Did This Review. We based this study on data from three sources: (1) a survey requesting 2015 data from the MCO with the largest expenditures in each of the 38 States that provides Medicaid services through managed care, (2) structured interviews with officials from five selected MCOs, and (3) structured interviews with officials from the same five States as the selected MCOs. What OIG Found. Managed care organizations (MCOs) play an increasingly important role in fighting fraud and abuse in Medicaid, yet weaknesses exist in their efforts to identify and address fraud and abuse. Although the number of cases varied widely, some MCOs identified and referred few cases of suspected fraud or abuse to the State in 2015, and not all MCOs used proactive data analysis--a critical tool for fraud identification. In addition, MCOs took actions against providers suspected of fraud or abuse but did not typically inform the State, including when MCOs terminated provider contracts for reasons associated with fraud or abuse. Finally, MCOs did not always identify and recover overpayments, including those associated with fraud or abuse; overpayments are factored into future MCO payments from the State. These weaknesses may limit States' ability to effectively address fraud and abuse in their Medicaid programs. At the same time, selected States employ a number of strategies to address MCOs' weaknesses and improve their efforts. These include providing education and training and facilitating information sharing among MCOs. States also reported using encounter data to conduct their own proactive data analysis, but these data have limitations. What OIG Recommends and How the Agency Responded. We recommend that the Centers for Medicare & Medicaid Services (CMS) work with States to (1) improve MCO identification and referral of cases of suspected fraud or abuse, (2) increase MCO reporting to the State of corrective actions taken against providers suspected of fraud or abuse, (3) clarify the information MCOs are required to report regarding providers that are terminated or otherwise leave the MCO network, (4) identify and share best practices about payment-retention policies and incentives to increase recoveries, (5) improve coordination between MCOs and other State program integrity entities, (6) standardize reporting of referrals across all MCOs in the State, (7) ensure that MCOs provide complete, accurate, and timely encounter data, and (8) monitor encounter data and impose penalties on States for submitting inaccurate or incomplete encounter data. CMS concurred with all but one of our recommendations; it did not concur with our recommendation to work with States to standardize the reporting of referrals in the State.
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