Ohio Medicaid’s end-of-year report reveals problems stemming from eligibility system; what does it mean and how will it be addressed?

Yesterday, the Ohio Department of Medicaid (ODM) released a 13-page end-of-year report that detailed myriad issues across the health care program. Being the big, complex program that it is, when issues arise, they’re big and complex too. Here’s our first take as we dive into this. Readers should be fully prepared to read more about these issues in future publications from Community Solutions, as this comprehensive report touches on so many aspects of the Medicaid program.

PERM – Wait…I don’t know that acronym

The PERM or Payment Error Rate Measurement audit refers to an audit conducted by the Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees state Medicaid programs, that measures improper payments in Medicaid. Improper payments, or PERM errors, have nothing to do with any activity of the Medicaid enrollees themselves, rather the audit looks at issues within the program that have resulted in improper payments. Possible PERM errors include:

  • Incorrect coding. A state inadvertently assigns the parent’s eligibility code to an eligible child. This is a clerical error but would count as an improper payment.
  • Incorrect federal match. A state claims the enhanced federal match rate that is available only for those enrolled through the Affordable Care Act (ACA)’s Medicaid expansion for a parent who would have been eligible for Medicaid even before the expansion.
  • Insufficient documentation in a beneficiary’s case file. When conducting eligibility determinations, states can use electronic sources to verify the information on a Medicaid or CHIP application. An improper payment would occur if eligibility workers fail to document the verification sources they used when they processed applications. According to CMS, state failure to document verification sources is one of the biggest drivers of an increase in improper payment rates.
  • Incorrect assignment to managed care. States are expanding the use of managed care in their programs by enrolling populations that previously received benefits through the state’s fee-for-service program, such as people with disabilities. A state that incorrectly enrolls beneficiaries in managed care when they should’ve remained in fee-for-service — a mistake likely to occur when a state is transitioning thousands of beneficiaries to managed care — would count as improper payments.
  • Incorrect health insurance program assignment. A state incorrectly determines beneficiaries are eligible for CHIP when they should have been determined eligible for Medicaid. CMS cited this as a factor behind an increase in CHIP’s improper payment rate.

A payment error is NOT a measure of fraud

Ohio’s PERM audit covered state fiscal year 2018 (July 1, 2017 through June 30, 2018), the last complete fiscal year under the administration of Governor John Kasich. Ohio’s overall payment error rate in FY 2018 was the highest of the 17 states audited over this time period, at more than 44 percent, although Ohio’s rate is comparable to states that were audited in a different time period. A payment error is NOT a measure of fraud, it is “a measurement of payments made that did not meet statutory, regulatory or administrative requirements.”[1] Ohio’s eligibility determination error rate is more than 43 percent. These figures are certainly significant, but inextricably linked to the deep and long-standing problems with Ohio’s integrated eligibility system, known as Ohio Benefits.

All roads lead to Ohio Benefits

Community Solutions, among many others including ODM, has documented the many trials and tribulations that have stemmed from Ohio Benefits over the last several years. We’ve documented long wait times, administrative complexity with redeterminations and other issues that limit access and coverage for real people. The end-of-year report connects the problematic PERM findings directly to issues with Ohio Benefits and years of inaction to fully address them.

In a nutshell, the system has been riddled with issues since it went online as the state’s integrated eligibility system in October 2013. Numerous defects, we’re talking in the thousands, were detected in the way the system was created, resulting in thousands of workarounds to make it “useable.” The defects and resulting workarounds created an unwieldy, time-consuming process with outputs that are unreliable and error-ridden. Many counties have shared caseworkers, so spending more time on Medicaid issues, means they’re not able to spend as much time on other cases for Supplemental Nutrition Assistance (SNAP) etc.

The Ohio Benefits system has been riddled with issues since it went online as the state’s integrated eligibility system in October 2013

The impact of these critical issues due to Ohio Benefits was felt beyond eligibility and enrollment. The untrustworthy data from Ohio Benefits made it harder to understand the factors involved in the declines in Medicaid enrollment, what was really happening as behavioral health benefits rolled into managed care and the reasons behind the need to increase capitation rates paid to managed care plans.

What’s next?

ODM has thoroughly outlined the major issues that it faces and has taken steps already to course correct. This report touches on so many aspects of Medicaid policy that it is hard to imagine it won’t be referred to often as the administration and General Assembly approach policy decisions moving forward. Stay tuned, we’ll work to explain all of this as best we can to inform sound policy.

[1] https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicaid-and-CHIP-Compliance/PERM/index