Fix Medicaid First

1. FIX IT FIRST:
Why Medicaid
Reform Is Needed
PREPARED AND DISTRIBUTED BY THE OFFICE OF REP. LIZ VAZQUEZ
REP.LIZ.VAZQUEZ@AKLEG.GOV
(907) 465-3892

2. Current Medicaid Program
LACKS PROGRAM INTEGRITY
 Our current Medicaid program fails at the basic
components of program integrity
 Without effective program integrity controls, our
program is at risk of:
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Fraud Waste
Abuse Endangering our
clientsMisuse

3. What Is Program Integrity?
 According to the National Association of Medicaid Directors:
“Effective program integrity will ensure:
 Accurate eligibility determination;
 Prospective and current providers meet state and federal
participation requirements;
 Services provided to beneficiaries are medically necessary and
appropriate;
 Medicaid remains the payer of last resort when other insurers or
programs are responsible for an enrollee’s care; and
 Provider payments are made in the correct amount and only for
covered services.”
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4. Core Function Failures
 Consider: Medicaid is a program that makes
payments to certified providers for services
provided to eligible clients.
 Current system is NOT ADEQUATE for:
 Ensuring client eligibility
 Making and tracking accurate payments
 Properly certifying providers
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5. Client Eligibility System
Not Ready
 Rollout of new enrollment/eligibility system ARIES
 Was supposed to go live in October 2013 – implementation
delayed by a year
 Then missed new completion date of October 2014
 As of February 2015, DHSS still “experiencing problems” with
converting to ARIES
 15 months behind initial schedule
 Experiencing enrollment backlogs
- Sources: House Finance Committee minutes, Jan. 26, 2015; Senate Health & Social
Services Committee minutes, Feb. 25, 2015
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6. Payment System Is Broken
 Enterprise (formerly named MMIS) - payment system –
BROKEN
 The system processed approximately $1.1 billion in GF
expenditures
 451 unresolved defects remained at end of August 2014
 “Because of the defects, [Enterprise] was not a fully
operational or federally certified Medicaid system during
FY 14.”
 “… the issues … represent a material weakness in internal
control and could result in a material misstatement to the
financial statements.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-021

7. Payment System Is Broken
 Examples of issues identified by Legislative Audit Division:
 Suspended Claims Backlog:
 “As of the end of August 2014, the AHE [Enterprise] system had a
significant backlog of 98,736 suspended claims totaling $184
million.”
 Interface Issues – Risks:
 “As a result of these issues, risks exists that eligible members are
not receiving services and ineligible members are
inappropriately receiving services; pharmacy claims are being
processed incorrectly; providers without licenses are receiving
payments; and private insurance reimbursements are not being
collected.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-021

8. Payment System Is Broken
 Examples of issues identified by Legislative Audit
Division, continued:
 Payment Issues:
 The Enterprise system has:
“…numerous payment related deficiencies, including
paying providers for duplicate claims, over and
underpaying providers due to miscalculation of claim
eligibility and pricing.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-021

9. Payment System Is Broken
 Examples of issues identified by Legislative Audit
Division, continued further:
 “Providers were paid for duplicate claims and were over
and/or underpaid due to the inaccurate claim eligibility and
pricing.”
 “Claims were assigned incorrect funding codes.”
 “Providers received incorrect and untimely reimbursement
for services.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-019

10. Payment System Is Broken
 Examples of issues identified by Legislative Audit
Division, continued even further:
 “Program errors … caused incorrect payments to the
federal agency including payments for ineligible
recipients.”
 “The surveillance and utilization review program was
ineffective due to unreliable system data and inadequate
staffing.”
 “Program integrity staff was unable to complete
investigations and pursue collections of potential
overpayments from providers due to unreliable system
data.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-019

11. Payment System Is Broken
 Overall:
“The extensive system defects and known
noncompliance increase the risk that Medicaid
and CHIP1 expenditures were incorrect,
ineligible, incomplete, and reported
inaccurately. Additionally, lack of controls
increases the risk for fraud, waste, and abuse.”
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– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-019
1 Children’s Health Insurance Program

12. State Reimbursement From
Federal Government:
Broken Too
 Funding Source Issues:
 “[Enterprise] system defects caused to be assigned
incorrect codes which resulted in inaccurate federal
reimbursement.”
 Over $3.6 million in revenue shortfalls due to
“weaknesses in internal controls, untimely
revenue billings, ineffective year-end financial
processes …”
– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-021
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13. Providers Not Being Properly
Certified
 Health care providers must be certified to
avoid putting patients at risk
 Ensures a provider:
 Is actually qualified to provide Medicaid-covered
services
 Has not been decertified in other states
 Has not been convicted of fraud or other crime in other
states
 Is charging appropriate rates for covered services
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14. Providers Not Being Properly
Certified
 Over half of tested Medicaid provider
certification files found to be incomplete
 “The health and welfare of service recipients are at risk
when DSDS2 certification files cannot provide
assurance that providers and their employers were
properly screened and adequately trained prior to
certification.”
– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-013
2 Senior and Disabilities Services, a division of DHSS
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15. Providers Not Being Properly
Certified
 Nearly two-thirds of tested provider files
lacked evidence of rate verification
 “Lack of proper verification and
documentation supporting RPTC3 rates
increases the risk for overpayments.”
- Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-014
3 Residential psychiatric treatment centers
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16. Providers Not Being Properly
Certified
 Half of tested Medicaid provider certification files lacked
complete employee criminal background checks
 From 15 tested provider files, Legislative Audit found:
 12 employees with NO background clearances
 6 employees in “provisional status”
 8 employees who are barred from working with clients
 “DSDS4 staff does not follow up on noted discrepancies until the
provider’s next site review – if one is required. A site review may
not happen for a year or two following identification of a
discrepancy…”
– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-017
4 Senior and Disabilities Services, a division of DHSS
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17. Providers Not Being Properly
Certified
 Employee criminal background checks,
continued:
 This is not merely a good governance issue – it is a
health and safety issue
 “Failure to adequately screen providers and their
employees puts the health and welfare of service
recipients at risk.”
– Source: Leg. Audit, FY14 Statewide Single Audit, Recommendation No. 2014-017
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18. Federal Feedback:
Our Program AT RISK
 Does the federal government think our current
program is working?
NO
 According to the latest federal review:
“the state’s Medicaid program is at risk because it has a
number of vulnerabilities in its program integrity
activities.”
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– Source: US DHHS Centers for Medicare and Medicaid Services, Medicaid Integrity Program
Alaska Comprehensive Program Integrity Review Final Report, January 2014

19. Federal Feedback:
Our Program AT RISK
 Among the vulnerabilities noted:
 “Inadequate attention to program integrity controls by failing to
suspend payments or document a good cause exception not to
suspend in cases with a credible allegation of fraud.”
 “Ineffective provider enrollment practices and reporting”, including
failing to:
 “properly search for excluded providers”
 “properly capture necessary information for enrollment”
 “properly implement new provider enrollment and screening
regulations”
 “properly handle the reporting and notification requirements for
adverse actions taken against providers…”
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– Source: US DHHS Centers for Medicare and Medicaid Services, Medicaid Integrity Program
Alaska Comprehensive Program Integrity Review Final Report, January 2014

20. Federal Feedback:
Our Program AT RISK
 “CMS is concerned that several of the issues … were
also identified in CMS’s 2010 review and are still
uncorrected.”
 The report concluded:
“The identification of significant areas of risk and numerous
instances of non-compliance with federal regulation is of
great concern and should be addressed immediately. CMS
is also particularly concerned about uncorrected, repeat
problems that remain from the time of the agency’s last
comprehensive program integrity review.”
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– Source: US DHHS Centers for Medicare and Medicaid Services, Medicaid Integrity Program
Alaska Comprehensive Program Integrity Review Final Report, January 2014

21. FIX IT FIRST!
 Alaska’s Medicaid program needs serious
reforms first.
 Without effective program integrity, the state cannot
effectively detect and combat:
 Until the reforms take place, Alaska’s Medicaid
program is NOT READY FOR EXPANSION.
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 Fraud  Waste
 Abuse  Endangering our
clients Misuse