Report: Eliminating improper payments is critical to sustaining Medicaid

March 15, 2016 | By Evan Sweeney

With a growing budget, higher enrollment numbers and a rising improper payment rate, Medicaid sustainability depends on better fraud prevention and more accountability from states, according to a report from the American Action Forum (AAF).

Medicaid's improper payment rate leapt from 6.7 percent in 2014 to nearly 10 percent in 2015, and it's expected to hit 11.53 percent this year. Meanwhile, changes introduced by the Affordable Care Act led to a 14 percent increase in both enrollment and spending. Researchers have previously said that unmanageable budgets in government-run healthcare programs have led to rampant fraud.

The AAF report indicates that the Medicaid program is financially unsustainable if improper payments continue to go undetected. Currently, Medicaid's fraud reporting protocols are optional, leaving states with little incentive to combat improper payments. The existing tools aimed at reducing fraud, waste and abuse are "ineffective, duplicative and/or simply not used," according to the organization.

AAF states that current laws prohibit states from denying benefits to beneficiaries without a permanent address, opening up the possibility for individuals to illegally enroll in Medicaid. Additionally, poor information systems allow excluded providers to bill Medicaid and fraudulent providers can submit claims under a false provider number for services that were never provided.

Although some state and federally mandated programs have improved fraud detection efforts and taken steps to eliminate excluded providers, AAF calls for more focus on preventing fraud rather than trying to recover existing overpayments. Since Medicaid is consistently ranked among the programs with the highest amount of fraud, waste and abuse, eliminating improper payments should be a priority in order to reduce the federal deficit and help the program remain financially solvent.

To learn more:
- read the AAF report