OIG Announces Plan to Investigate Managed Care Contracts

In August 2023, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced its strategic plan to investigate the life cycle of Medicare and Medicaid managed care contracts. OIG’s plan will scrutinize these contracts from inception through enrollment, reimbursement, services, and renewal. In order to address fraud, waste, and abuse risks, the goal of OIG’s plan is to hold accountable Medicare Advantage organizations (MAOs) and Medicaid managed care organizations (MCOs).

Currently, more than half of Medicare enrollees and more than 80% of Medicaid enrollees are covered by managed care programs. In order to oversee the approximate $700 billion that the federal government spent on managed care programs in 2022, OIG has set out four phases of managed care that it intends to investigate: (1) plan establishment and contracting, (2) enrollment, (3) payment, and (4) provision of services.

In the first phase, OIG intends to review activities that occur when the Centers for Medicare & Medicaid Services (CMS) or states initially establish or renew managed care contracts. In this contract review phase, OIG will evaluate whether MAOs and MCOs are providing the government with accurate information, including in their bids, and abiding by the contract terms for their plan design, service offerings, and coverage area. In the second phase, OIG will review enrollment processes. Specifically, OIG will focus on potentially aggressive marketing campaigns and inaccurate information collection.

In the third phase, OIG will track CMS and state payments to plans, as well as plan payments to providers, with an eye on risk adjustment. OIG has expressed its concern that plans receiving risk-adjusted payments may be incentivized to make enrollees appear sicker than they are to receive higher government reimbursement. In the fourth phase, OIG will investigate enrollees’ access to quality healthcare services, with an eye toward different payment models that trigger different incentives among managed care plans. In analyzing access to services, OIG will focus on provider network adequacy, ineligible or untrustworthy providers, coverage determinations, care that meets clinical guidelines, and fraud schemes that cross multiple plans and/or federal healthcare programs.

OIG’s strategic plan likely means more audits of plans and providers participating in Medicare Advantage, traditional Medicare, and Medicaid managed care. This new managed care audit movement may also be indicative of increased audit activity by government contractors outside of managed care. As such, providers of all types should review their internal policies and practices and take any steps necessary to strengthen compliance.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.