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From Health Law Daily, April 29, 2016

GAO identifies 18 actions to improve efficiency, ‘save billions’ in health programs

By Melissa Mitchell, J.D.

Of the total 92 actions that government could take to improve efficiency and effectiveness and reduce costs of federal programs in 2016, 18 of these were health related. A report, which was released by the Government Accountability Office (GAO) in an effort to reduce fragmentation, overlap, and duplication and to achieve other financial benefits, included many Medicare and Medicaid-related initiatives in the actions that it identified. Most notably, the report highlighted the fact that, “the government could save billions of dollars if Congress were to equalize the rates Medicare pays for certain health care services.” The report also references aspects of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) that require improvement (GAO Report, No. GAO-16-580T, April 27, 2016).

Why. The GAO is required to issue an annual report that identifies federal programs and initiatives that duplicative, fragmented, and overlapping. Additionally, the GAO is mandated to find and highlight programs that present “additional opportunities to achieve cost savings or enhanced revenue collection.” This report issued for 2016 is the sixth analysis of its kind issued by the GAO.

Findings, in general. Across 37 areas, the GAO found 92 new actions that the government could take to improve efficiency and effectiveness in those areas. Additionally, the GAO highlighted 12 areas in which there was duplication, overlap, and/or fragmentation. The report also summarizes the findings of the past reports of this kind issued by the agency and indicates to what extent those actions have been implemented or not acted on at all. “Congress and executive branch agencies have made progress in addressing the 544 actions government-wide that GAO identified in its past reports.” Of those, 41 percent of the actions were addressed, 34 percent were addressed to a certain extent, and 20 percent of the proposals were not addressed at all.

Fragmentation, overlap and duplication in health. Of the 12 areas in which fragmentation, overlap, or duplication was found, health, and more specifically, health reform was identified. In particular, the GAO report identified Medicaid and health insurance exchange coordination as an area of concern. In this light, the agency recommended that CMS take action to “minimize the risk of duplicative federal spending on health insurance coverage for individuals transitioning between Medicaid and exchange coverage.” The issue of the coordination between Medicaid and the health insurance exchanges, implemented by the ACA, has been an ongoing challenge (see State’s marketplace model choice may impact Medicaid enrollment, April 6, 2016).

2016 health areas identified. In sum, this year, the GAO pointed out 59 new actions over 25 areas that the government can take to reduce costs or enhance revenues. Of those, several actions were related to health programs and initiatives, including the recommendation regarding equalization of Medicare rates for certain health services (which may vary depending on the place of service), which the agency claims would save billions of dollars. In addition to this action based on place of service payments, the report focused on actions relating to health programs as follows:

  • Distribution of Medicaid supplement payments: CMS should create written guidance to clarify its policies regarding supplement payments.
  • Eligibility of Medicare providers and suppliers: CMS should attempt to obtain better information about providers and suppliers to help prevent ineligible parties from enrolling, potentially reducing the budget of the program by billions of dollars.
  • Medicaid demonstration approved spending: By establishing criteria to determine whether demonstration spending furthers Medicaid objectives, HHS could curtail further growth of the program, “which has resulted in the authorization of billions of dollars in federal spending.”
  • Medicaid eligibility determinations: Further assessment of this is needed to minimize risk of improper payments.
  • Medicaid payments to institutional providers: CMS should increase oversight of these payments, which could result in savings of hundreds of millions of dollars.

Improving efficiencies. In the area of health programs, the GAO report predicted that by 2026 federal outlays for Medicare, Medicaid, and other federal health programs could nearly double and reach 2 trillion dollars or 7.4 percent of the gross domestic product (GDP). Of the total 82 health program-related actions that have been highlighted by the GAO in the past six years, 45, or 67 percent, were partially addressed or not addressed at all. According to the GAO, “many of these actions are directed at Medicare and Medicaid programs, which had a combined total of over $900 billion in federal outlays in 2015, representing 27 percent of total outlays.” Examples of such areas that have actions identified by GAO that were not addressed include: program integrity, Medicare Advantage payments, Medicare payments by place of service, and Medicare payments to certain cancer hospitals.

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