GAO: Medicaid Home, Community Care Create Financial Conflicts

January 17, 2018 - Home and community-based services (HCBS) programs funded by Medicaid require additional protections from possible financial conflicts of interest, a new GAO report found.

Program assessors, including HCBS providers, state and local agencies, and managed care plans, may over or underestimate financial resources to support HCBS programs, leading to inappropriate Medicaid spending.

HCBS program waivers sometimes lack requirements to communicate a potential conflict of interest to federal Medicaid officials, including profitability goals based on reducing care costs or bolstering Medicaid revenues, GAO explained.

CMS allows states to provide long-term care services and supports for disabled and older Medicaid beneficiaries under one of six HCBS program waivers. However, GAO found several conflicts of interest that allow organizations and managed care plans to determine resources based on their financial goals, instead of a realistic amount of resources needed to finance HCBS treatments.

GAO interviewed HCBS officials in the states of Connecticut, Kentucky, Minnesota, New York, North Carolina, and Washington and found that states generally used several HCBS assessment tools and agencies to determine financial needs. States experienced inconsistent results with their assessment tools and program assessors.

In New York, one managed care plan participated in over-enrollment practices where the plan received a fixed rate for each beneficiary enrolled.

“The plan admitted in a settlement with the federal government to enrolling 1,740 individuals, from 2011 through 2013, whose needs did not qualify them,” GAO said. “In 2013, CMS issued guidance that managed care plans may not be involved in assessments used to determine eligibility for HCBS, but CMS has not consistently required states to prevent this involvement.”

In North Carolina and Minnesota, officials used an HBCS waiver that allowed managed care plans to conduct beneficiary needs assessments, even though it contradicted CMS guidance. CMS requires states that use managed care plans to conduct needs assessments to submit oversight data, but the states aren’t directly required to identify potential conflicts of interest.

Some states have been able to reduce unnecessary HCBS utilization through the use of an independent contractor instead of an HCBS provider or a related assessor.

In North Carolina, the state used an independent contractor to develop needs assessments for a HCBS program developed under a State Plan Personal Care Services Program waiver. The assessments were followed by a 30 percent reduction in average monthly expenditures and a reduction in the number of beneficiaries using the program.

“This suggests the program may have been over-utilized before the independent entity was used to conduct needs assessments,” GAO said.

State officials in Kentucky experienced similar results when using an independent contractor to determine HCBS needs assessments.

“Officials said that when testing a new assessment tool using independent assessors, they identified individuals who had a low level of needs, and who did not appear to require an institutional level of care, as required for program eligibility, but who had been assessed at that level in the past,” GAO said.

GAO recommended that CMS Administrator Seema Verma should add uniform standards across HCBS program need assessments, so states can avoid financial conflicts of interest when developing HCBS plan services.

The agency concluded their findings by acknowledging that HHS plans to take several actions to avoid HBCS conflicts of interest and develop improvements in HBCBS program assessment.

“HHS concurred with our recommendation to ensure that all types of Medicaid HCBS programs have requirements for states to avoid or mitigate potential conflicts of interest on the part of entities that conduct needs assessments,” GAO added.