CMS needs to ensure reliability of Medicaid encounter data

While the Centers for Medicare and Medicaid Services requires states to have independent audits of their Medicaid data for reliability, CMS hasn't fully informed them on how to conduct such audits.

That’s the finding of a Government Accountability Office report which found that CMS needs to provide states with additional information on the audits and how it will enforce the new data reliability requirements.

As the GAO points out, CMS now requires states to collect service utilization data—known as encounter data—from Medicaid managed care organizations. Last year, federal expenditures for Medicaid were estimated at $364 billion, with nearly half—$171 billion—paid for services delivered under managed care.

However, according to the GAO’s report, questions have been raised about the reliability of states’ Medicaid managed care encounter data, which are used to help set rates paid to MCOs, identify inappropriate billing patterns, as well as ensure access to services.

Also See: GAO calls Medicare Advantage encounter data into question

“GAO found that CMS has provided states with limited information on how to fulfill new regulatory requirements related to encounter data reliability,” states the report. “Because of the limited information from CMS, the agency will not have the information it needs to perform effective oversight of encounter data reliability.”

To address this lack of effective oversight, the GAO made three recommendations. First, CMS should provide states with more information on how to fulfill the requirement for independent encounter data audits, including information on the required audit scope and methodology as well as what should be described in the resulting report.

Second, the GAO recommends that CMS should provide states information on the required content of the annual assessment of encounter data reporting. And, third, CMS should provide states with information on the circumstances under which the agency would defer or disallow matching funds in response to noncompliant encounter data submissions.

In a written response to the report, CMS concurred with the GAO’s first two recommendations and neither agreed nor disagreed with the third recommendation.