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Senator Concerned Over Scrutiny of Medicaid Managed Care Plan Rates

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Senator Concerned Over Scrutiny of Medicaid Managed Care Plan Rates

March 5, 2012

A 2010 Government Accountability Office report found that the Centers for Medicare and Medicaid Services had been inconsistent in reviewing Medicaid managed-care plans to determine whether states were being adequately reimbursed and if states were correctly reimbursing (too much or too little) for services provided. The Medicaid statute 1903(m)(2)(iii) requires that state payments to managed care entities be made on an actuarially sound basis.

Concerned about the scrutiny given this requirement, Senator Grassley (R-IA), ranking member of the Senate Judiciary Committee, sent certain Medicaid directors a letter last week requesting information in response to a series of questions that address whether they have independent audit requirements for managed-care plans, how those audits are performed, examples of the language in the plan contracts listing, all allowable medical costs, and for examples of documents that plan give to states reporting on their medical costs, administrative costs and profits. 

It has been reported that Minnesota and its Medicaid plans are drawing attention for what some believe to be high operating margins and that federal authorities are investigating whether the Minnesota state government received excess Medicaid money from the federal government. 

In a release issued last week, Grassley stated:  "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."