Providers Terminated from One State Medicaid Program Continued Participating in Other States


Prior to passage of the Patient Protection and Affordable Care Act (ACA), if a State terminated the participation of a provider from its Medicaid program, the provider could potentially participate in another State’s Medicaid program, leaving the second State’s program vulnerable to fraud, waste, or abuse committed by that provider. To prevent this from happening, the ACA requires that each State terminate a provider’s participation in the State Medicaid program if that provider is terminated for cause (i.e., for reasons of fraud, integrity, or quality) from another State Medicaid program. In 2014, OIG published a report that recommended improvements to address weaknesses in CMS’s process for sharing termination information among the States. This study builds on the prior report by determining whether Medicaid providers that States reported as having been terminated for cause continued to participate in Medicaid in other States.


Because the termination data collected through CMS’s process was not comprehensive and complete, we went directly to each State Medicaid agency and requested rosters of all individual Medicaid providers terminated in 2011 for cause. We also requested rosters of individual Medicaid providers participating in Medicaid fee for service and managed care on January 1, 2012. We compared these State-submitted rosters to determine if providers were terminated. In January 2014, we followed up with State Medicaid agencies to determine if and when each provider’s participation in Medicaid ended, and the amount that Medicaid paid each provider for services performed after the provider’s termination for cause from another State program. We obtained information about challenges in implementing the termination requirement from State Medicaid agency staff.


Despite the ACA requirement that States terminate any providers already terminated for cause in another State, we found continued participation from such providers in other States’ Medicaid programs. Specifically, we found twelve percent (295 of 2,539) of providers terminated for cause in 2011 continued participating in other States’ Medicaid programs as late as of January 2014. These Medicaid programs paid $7.4 million to 94 providers for services performed after each provider’s termination for cause by the initial State. The challenges States face meeting the intent of the ACA legislation include not having a comprehensive data source for identifying all terminations for cause and difficulty differentiating these terminations from other administrative actions that a State reports. Further complicating a State’s ability to terminate providers is the challenge created by those States that do not enroll providers participating in its Medicaid managed care organizations (MCO). Without enrollment, for example, States are unable to take action to terminate the participation of the problem provider and may even lack an awareness of its MCOs’ network providers. Also challenging for some States is their misunderstanding that active licensure status precludes terminating the provider for cause.


In March 2014, OIG recommended that CMS require State Medicaid agencies to report all for cause terminations. We reiterate this prior recommendation as we found the lack of a comprehensive data source of providers terminated for cause creates a challenge for State Medicaid agencies. To address the remaining issues identified in this report, we recommend that CMS (1) work with States to develop uniform terminology to clearly denote for cause terminations, (2) require that State Medicaid programs enroll all providers participating in Medicaid managed care, and (3) furnish guidance to State agencies that termination is not contingent upon the provider’s active licensure status. CMS concurred with our recommendations.

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