Redefining Medicaid Agency Roles: The Imperative of Program Integrity and Legal Oversight

I’ve been an attorney working in a state Medicaid agency for over six years, but until last year, program integrity had never been formally part of my job description. That’s not to say it hadn’t always been a part of my role, but more so that it often exists in the background of the work that attorneys do for our client agencies. Over the last year, the majority of my time has been working in traditional aspects of agency actions and financial recoveries with my client, but it has also become clear that staff throughout the agency need to do their jobs with an eye toward legal and fraud, waste and abuse risks in order to maintain our agency’s program integrity. We can never be truly successful without orienting the whole agency toward this shared goal.

Program integrity, defined broadly, means that we protect the resources entrusted to our nation’s Medicaid programs while also protecting the health and well-being of the beneficiaries of those programs. The CMS Payment Error Rate Measurement (PERM) estimates calculate that the national Medicaid improper payment rate for 2019 was 14.90% or $57.36 billion. A separate HHS report showed a 16.3% error rate for fee-for-service claims. In addition, following the vast impacts the COVID-19 pandemic had on all our agencies and the beneficiaries we serve, it is clearer than ever that health outcomes are a function of the quality of care being provided. But claims-specific issues are not the full story of fraud, waste, and abuse; HHS has also indicated that Medicaid improper payment rates have been driven by errors associated with screening and enrollment of providers. Healthcare providers that commit fraud are often more than willing to jeopardize patient care, implicating not just our traditional financial integrity goals, but also the clinical and health care delivery goals of our agencies. 

Despite the priority of program integrity, the design of many of our most important tools are often outdated and technology-limited – especially the fee-for-service (FFS) payment system that many agencies retain in whole or in part.  The structure of fee-for-service program, in fact the customer-service orientation of many Medicaid agencies, retain the primary goal of simplifying provider and supplier enrollment and paying claims promptly.  Timeliness of claims processing has long been the central measure by which the success of program contractors was measured.  While working well in certain respects, the FFS payment system presented a set of built-in incentives that have contributed to fraud, waste and abuse in our programs and did not require high quality outcomes from the care provided.  

But over the last five, ten, or even twenty-five years, our health care systems have changed dramatically, and the program integrity challenges we face today don’t look like they used to. More challenging cross-ownership issues have also arisen as health care entities have become more complex, with one corporate parent often owning various providers and provider types.  Unscrupulous providers have learned how to prey on our programs.  They do this through increasingly complex webs of affiliations that allow them to simply appear, then quickly disappear if they come under scrutiny, and then re-appear repeatedly as “new” entities when, in fact, they are the same.

Program integrity is a balancing act. Too much effort in one direction can create provider abrasion. Too much provider abrasion can exacerbate access to care issues Medicaid faces leading to inadequate provider networks; too little, and its likely poor-quality providers might be incentivized to join the network. In addition, none of the agency goals I have mentioned so far, would traditionally involve a legal role or perspective. Many agencies retain counsel who are housed within their state attorney general’s office or department of justice. This distance in understanding and accessibility between the agency staff and their attorneys can create a translation barrier when operational and program integrity actions create legal risk, or policy decisions create new opportunities for fraudulent, abusive, or wasteful exploitation of agency resources. Similarly, program integrity staff are often housed in a separate state agency from the state Medicaid agency or siloed internally to maintain integrity for any investigations. This also removes a valuable agency perspective and advisor for when staff are taking actions that govern providers or make policy decisions that can open the agency up to exploitation if there isn’t an individual with program integrity experience at the table. In a world where all our agencies are resource constrained and in a difficult employment market, it can seem like an unnecessary expense to have a legal voice, or a program integrity one for that matter, at the table for important agency decisions and actions. But with record levels of fraud, waste and abuse identified in federal programs, as well as state agencies, the real question is, can you afford not to?

Nicole Fries is a Deputy General Counsel at the Arizona Health Care Cost Containment System (AHCCCS) Administration, the Arizona Medicaid Agency. She is also the Membership Chair for the Public Human Services Attorneys, an affiliate group of state health, human services and child welfare attorneys.