Grassley Wants States to Tell Him How They Oversee Medicaid Managed-Care Plans

Grassley Wants States to Tell Him How They Oversee Medicaid Managed-Care Plans

By Jane Norman, CQ HealthBeat Associate Editor

Sen. Charles E. Grassley has launched a letter-writing campaign to the states to determine whether they are exercising enough scrutiny over their Medicaid managed-care programs.

Grassley, the ranking Republican on the Judiciary Committee, said Thursday in identical letters to every state Medicaid director that a 2010 Government Accountability Office (GAO) report found that the Centers for Medicare and Medicaid Services (CMS) has been inconsistent in reviewing Medicaid managed-care plan rates. CMS is required to determine whether states are being adequately reimbursed for their expenses for the plans; states are supposed to ensure that as well.

“In the 18 months since that report was issued, I have seen nothing to convince me CMS or the states have improved in their ability” to verify that managed-care entities are appropriately and correctly reimbursed for the services provided, he said.

If a plan is paid too little, the quality of care for beneficiaries is harmed, and if it is paid too much, it’s diverting scarce Medicaid dollars away from needed services, he said.

Grassley aides said the state of Minnesota and its Medicaid plans are drawing attention for what some believe to be high operating margins. The Pioneer-Press reported in February that federal authorities are investigating whether the Minnesota state government received excess Medicaid money from the federal government, although details of the investigation are unclear. Most Medicaid recipients in the state receive benefits through private HMOs, and critics say the plans make more money on Medicaid than on their private beneficiaries, the newspaper said.

Grassley said in his letter that for years states have been allowed to provide Medicaid services through private plans so they can better manage costs, and these entities have proved better at care coordination than public programs.

However, he said, states also have to be correctly reimbursed, and the risk of inaccurate reimbursements will grow as the Medicaid program expands under the health care law.

Grassley asked that each state tell him, by March 16, whether they have independent audit requirements for managed-care plans and how those audits are performed. He also asked states for examples of the language in the plan contracts dealing with allowable medical costs and for examples of documents that plans give to states reporting on their medical costs, administrative costs and profits.