Medicaid Payment Accuracy: A Shifting Landscape
The accuracy of Medicaid payments has been a fluctuating target, heavily influenced by major policy changes and public health crises. Recent data reveals a complex interplay between the Affordable Care Act (ACA), the COVID-19 Public Health Emergency (PHE), and ongoing efforts to improve program integrity. Understanding these trends is crucial for policymakers, healthcare providers, and beneficiaries alike.
The Impact of the Affordable Care Act
Prior to the ACA, improvements in state information systems between 2009 and 2013 led to a downward trend in improper payment rates, particularly in eligibility determinations. However, the ACA’s implementation between 2013 and 2019 brought new challenges. Errors increased due to state non-compliance with new provider screening, enrollment, and documentation requirements introduced in 2012.
From 2015 to 2018, the Department of Health and Human Services (HHS) suspended eligibility audits to allow states time to adjust to the ACA’s changes. During this period, the overall improper payment rate was calculated using a proxy, based on the 2014 eligibility component error rate of 3.11 percent.
Reintroducing Standardized Audits and Rising Rates
In 2019, the Payment Error Rate Measurement (PERM) program reintroduced the eligibility component with updated rules. This required states to perform with independent contractors using nationally standardized eligibility audit procedures. The overall improper payment rate rose again between 2019 and 2021. These errors were largely attributed to insufficient documentation or administrative mistakes.
The COVID-19 PHE: A Temporary Dip
Beginning in 2021, the improper payment rate decreased sharply, reaching a low of 5.1% in 2024 – less than one-fifth of the 2021 estimate (21.7%). HHS attributed this decline, in part, to the exclusion of certain audit review elements due to policies adopted during the PHE. These policies paused eligibility renewals and disenrollments and reduced requirements for provider enrollment and revalidations.
Did you know? The 2024 improper payment rate was the lowest since the start of the COVID-19 pandemic.
Post-PHE Rebound and Future Outlook
As states phased out the continuous enrollment provision in early 2023 and resumed eligibility renewals and disenrollments, the improper payment rate began to climb again. The 2025 improper payment rate (6.1%) increased relative to 2024 (5.1%), reflecting the first full audit conducted following the conclude of the PHE. This suggests that the improvements seen during the PHE were, at least partially, a result of temporary flexibilities.
The future of Medicaid payment accuracy will likely depend on sustained state compliance with program rules, continued investment in information systems, and effective oversight by federal agencies. The resumption of regular eligibility redeterminations and provider screenings will undoubtedly present ongoing challenges.
What Factors Contribute to Improper Payments?
Improper payments in Medicaid stem from several sources, including:
- Fraud: Intentional misrepresentation of facts to obtain benefits.
- Waste: Inefficient or unnecessary spending.
- Abuse: Practices that result in unnecessary costs.
- Administrative Errors: Mistakes in processing claims or determining eligibility.
FAQ
Q: What is the PERM program?
A: The Payment Error Rate Measurement (PERM) program is a federal initiative to measure and reduce improper payments in Medicaid.
Q: How did the ACA affect Medicaid payment accuracy?
A: Initially, the ACA led to an increase in improper payments due to new compliance requirements. Later, adjustments and suspensions of audits impacted the rate.
Q: What role did the COVID-19 PHE play?
A: The PHE led to a temporary decrease in improper payments due to flexibilities in eligibility and enrollment requirements.
Q: What is being done to address improper payments?
A: Efforts include standardized audits, improved state compliance, and investments in information systems.
Pro Tip: States can improve payment accuracy by investing in staff training and implementing robust data analytics systems.
Want to learn more about Medicaid program integrity? Explore KFF’s resources on Medicaid program integrity.
Share your thoughts! What steps do you think are most important for improving Medicaid payment accuracy? Leave a comment below.
