OIG Strengthens Oversight Strategy for Managed Care Organizations
The four-phase managed care life cycle reinforces OIG’s goals of ensuring access to care, providing financial oversight, and promoting data accuracy.
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- Managed care organizations (MCOs) require the same kind of oversight that fee-for-service programs receive from the Office of Inspector General (OIG), so OIG released a four-phase life cycle to align its oversight efforts.
A growing number of enrollees are covered through MCOs. Over eight in ten Medicaid beneficiaries have coverage through MCOs for one or more facets of care (81 percent).
Spending on managed care is also increasing. In 2022, $403 billion—or 50 percent—of all Medicare’s federal funds went into Medicare Advantage plans, up from 19 percent in 2007. Additionally, the federal government spent $254 billion on Medicaid managed care in 2021.
With so much money and so many lives tied up in managed care, OIG recognized the need for more alignment and oversight of these plans.
The Office designed a four-phase strategy, called the managed care life cycle, that will govern Medicare Advantage organization (MAOs) and MCO oversight.
“The managed care life cycle…describes the types of risks present across the different phases of managed care programs and how those risks can affect Medicare and Medicaid,” the report explained.
“Managed care oversight and enforcement is among the most complex work that OIG performs. This strategic plan will help OIG navigate that complexity, address key risk areas, and improve partnerships.”
The first stage of the managed care life cycle involves plan establishment and contracting. This stage includes contract renewals. OIG may review MAO and MCO contracts, benefit design, service area, and other information that plans have to provide in their nascency.
The second stage is enrollment. In this stage, OIG’s primary objective is to oversee marketing strategies—which have been a source of contention in Medicare Advantage—, broker and agent services, enrollment data, and eligibility determination.
Third, OIG will home in on payments from states and CMS to MCOs and from MCOs to providers.
Specifically, the Office will pay attention to risk adjustment processes to ensure accurate reporting. Officials will also seek to prevent abuse, fraud, and waste in plan to provider payments. Medical loss ratios, value-based care, and alternative payment mechanisms will be scrutinized for accuracy as part of the effort to improve payment oversight.
The final stage is services to people. In this stage, OIG will assess access to high-quality care and transparency around the cost of benefits. OIG will look for network adequacy, provider legitimacy, proper coverage determinations, fraud schemes affecting multiple plans or federal health programs, and whether care choices are rooted in clinical guidelines.
All of these pieces of the managed care life cycle promote three OIG goals: they advance access to care, offer financial oversight, and promote evidence-based decision-making with accurate data.
Assessing access to a broad range of services in a proximate, timely way is part of ensuring access to care. Additionally, the Office will analyze whether care is delivered in a safe and effective way that upholds health equity.
Ensuring payment accuracy and identifying and stopping fraud falls under OIG’s financial oversight goal. This is already part of OIG’s approach to MCO oversight: the Office has discovered $377 million in potential overpayments as of August 2023.
Tracking data accuracy and collection timeliness helps support OIG’s goal of promoting accurate, evidence-based decision-making.
