Program integrity includes activities to prevent, detect and respond to fraud, waste, abuse and noncompliance with certain contractual or other regulatory requirements that result in improper payments. Medicaid’s Payment Error Rate Measurement (PERM) program estimates the improper payment rate in Medicaid managed care to be only 0.3% or $500 million of Medicaid expenditures. The May 2018 GAO report, however, found that the rate of improper payments for Medicaid managed care is significantly underestimated.
With the convergence of Medicaid program oversight and the growth of Medicaid managed care, CMS, the states, managed care organizations (MCOs) and providers are all working to develop the best approaches to preventing fraud, waste and abuse. In the CMS 2016 Medicaid Managed Care final rule, CMS increased and standardized program integrity and other program oversight requirements.