Weaponizing Program Integrity: A New Assault on Medicaid Expansion

CMS Administrator Seema Verma has never been a fan of the Affordable Care Act’s Medicaid expansion or the positive difference it has made in the lives of low-income Americans.  In fact, ever since Congress refused to repeal the expansion and block grant the program in 2017, Administrator Verma has been trying to make it harder for people to access health coverage by imposing barriers such as work reporting requirements.  Fortunately the federal courts have so far blocked her efforts.  But the Medicaid expansion war goes on.

Last week the Administrator opened up a new front, deploying one of her favorite weapons:  administrative burden.  The attack came in the form of an Informational Bulletin from the Center for Medicaid & CHIP Services (CMCS) innocuously titled “Oversight of State Medicaid Claiming and Program Integrity Expectations.”  According to the CMCS website, Informational Bulletins (IBs) “share information, address operational and technical issues and highlight initiatives or related efforts” but do not “establish new policy.”

Here’s what this IB is sharing.  If you are one of the 17 states that has not yet taken up the Medicaid expansion but are thinking about it, consider the administrative burden you will be walking into, and then think again (a “Program Readiness Checklist” identifies 13 different items to be addressed that can “assist in preparing for potential audits and/or program reviews.”).  And if you are one of the 37 states that has already expanded Medicaid coverage to all low-income adults, we are developing some additional administrative burden just for you (an “assurance template by which a state can attest to having proper systems and procedures in place to ensure appropriate claiming”).

It’s not subtle, but it is highly unfortunate.  Program integrity is essential to ensuring that Medicaid serves its beneficiaries and the public, and it should not be used as a weapon.  CMS needs to have confidence that if states are claiming federal matching funds at enhanced rates like 90% that the claims are accurate so that the federal funds are properly paid.

The IB cites three audits by the Office of Inspector General finding that California (2/20/2018), Kentucky (8/17/2017), and New York (1/5/2018) did not always determine Medicaid eligibility properly.  These findings, many of which the states contested, do not begin to justify the selective enforcement of program integrity rules against the 34 states that have expanded Medicaid, much less those that are merely considering taking up the option.  Long-standing program integrity processes, such the Medicaid Eligibility Quality Control (MEQC),  and Payment Error Rate Measurement (PERM), programs, are already in place.  The IB cites no evidence that these programs, supplemented by ongoing OIG audits, are insufficient to ensure the integrity of the Medicaid program in expansion states or in states that are considering expansion.

We know from the Arkansas “demonstration” that work reporting requirements can be weaponized to disenroll beneficiaries from coverage.  They are indisputably effective.  Will the “program integrity” initiative in this IB be as effective in deterring states from launching Medicaid expansions or discouraging states from continuing expansions already in place? Time will tell.  But the IB indicates that this is only the opening salvo.

The IB goes out of its way to “remind states of their obligation to ensure that beneficiaries continue to be eligible between regularly scheduled redeterminations.”  As my colleagues Tricia Brooks, Edwin Park, and Lauren Roygardner have pointed out, periodic eligibility reviews “contribute to churn in Medicaid and CHIP for low-income families who are likely to experience income instability due to more frequent job changes, irregular work hours, part-time employment, or self-employment.”  In short, frequent eligibility reviews will drive disenrollment and loss of coverage for individuals who are eligible but are unable to successfully navigate the additional barriers being placed between them and their health coverage.

The CMS announcement of this IB claims it “signifies the agency’s commitment to safeguard the health and welfare of Medicaid enrollees.”  Please.  The IB will inevitably lead to coverage loss and, in the process, gives program integrity a bad name.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.