GAO Report Recommends Enhancements to Reduce Improper Medicaid Payments

​In a March 13, 2013, report to Congress, the U.S. Government Accountability Office (GAO) found that although the Centers for Medicare and Medicaid Services’ (CMS) methodology for estimating a national improper payment rate for the Medicaid program is statistically sound, CMS’s procedures did not provide for considering revisions to state-level Medicaid program error rates for calculating its national Medicaid program error rate. CMS’s Payment Error Rate Measurement (PERM) manual did not clearly identify the circumstances under which states should consider, and if cost-effective include, nonpayment errors (e.g., certain coding errors that could have but did not result in a payment error) and minimal dollar errors in their corrective action plans (CAPs). It found that the PERM manual and the associated website did not provide complete and consistent information on the required elements to include in a state CAP. CMS guidance did not clearly delineate CMS officials’ roles and responsibilities for conducting oversight of (1) state CAP submissions to ensure that they contained all of the required elements and adequately addressed errors identified in the PERM reviews and (2) states’ progress in implementing CAP corrective actions.