1.) 2.) For example, CMS may require  some states to report on the number of beneficiaries served, expenditure  data, information on grievances and appeals, or other requirements  specific to the state. 3.) Most Selected States Set Incentives for Community-Based Care, but Did Not Link Payment to Performance on MLTSS Goals

Five of our six selected states set financial incentives in their rate  structures for providing community-based care, which is a CMS  expectation for MLTSS programs. However, we also found that most of  the six states did not opt to link payments to MCO performance on  MLTSS program goals, such as enhancing the provision of community- based care. Beneficiaries with high-cost institutional care. In addition, federally led efforts to develop outcome  measures for long-term services and supports are in the early stages. CMS’s Oversight of MLTSS Payment Structures Is Limited

We found weaknesses in CMS’s oversight of states’ payment structures. Second, it is unclear whether new CMS  requirements will sufficiently address issues with the appropriateness and  reliability of the data used by states to set MLTSS rates. CMS Does Little to Monitor State Progress toward MLTSS Program Goals, and the Effectiveness of CMS’s Planned Efforts Is Unclear

CMS has not consistently required states to report data on whether their  MLTSS payment structures are achieving MLTSS program goals, such as  enhancing the provision of community-based care. For three of our  selected states—Texas, Arizona, and Delaware—CMS required reporting  on the provision of community-based care. Provisions in CMS’s new managed care rule could provide an opportunity  for more regular and standardized MLTSS data from states. According to federal internal control standards, federal agencies should  use quality information to achieve their objectives. Without consistently  requiring information on state progress toward MLTSS goals, CMS will  continue to approve programs and pay billions of dollars to states without  knowing whether the payment structures are providing sufficient  incentives for MCOs to provide community-based care. In addition, under the final rule, the agency will begin  to require states to meet additional standards for the appropriateness of  the data used to set rates beginning in July 2017. These new regulations also require  states to validate encounter data, which are the primary record of  managed care services and a key source of data for setting managed  care rates, and periodically audit those data, as well as financial data,  which states also may use in rate setting. To the extent that  states are using data that are not appropriate or reliable, the data may not  be a good predictor of expected costs, which could result in rates that are  too high or too low. Appropriateness of Data

In the rate certifications we reviewed and our interviews with state  officials, we found evidence of concerns with the appropriateness of data  used to set rates in two of our selected states:
State did not use recent data to set rates. Without specifying its criteria for what situations would  warrant exceptions, CMS may not be able to sufficiently minimize the  number of states using data of questionable appropriateness to set rates. We and the HHS Office of Inspector General (OIG) have found  evidence of reliability concerns with state encounter data. Similarly, in 2015, we  reported reliability issues with the encounter data, from calendar year  2010, reported by 6 states. While the new rule requires states to validate the completeness and  accuracy of encounter data, CMS has not issued guidance with minimum  standards for state data validation procedures and does not plan to do so. Without  minimum standards for such state validation efforts, it is unclear that  those efforts will be sufficient to minimize the risk of encounter data being  incomplete or inaccurate. Achieving these goals depends, in part, on  states establishing payment structures that align financial incentives for  MCOs with those goals, and setting rates that are adequate and  appropriate. 2. In  response to our second recommendation to establish criteria for what  situations would warrant exceptions to the federal standards that the data  used to set rates be no older than the three most recent and complete  years, HHS said it will consider whether additional clarifying guidance is  needed. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Health and Human Services,  and the Administrator of the Centers for Medicare & Medicaid Services. Appendix I: Characteristics of States’ MLTSS Programs Selected for Our Review

Our six selected states (Arizona, Delaware, Florida, Kansas, Minnesota,  and Texas) have managed long-term services and supports (MLTSS)  programs that varied in terms of cost and enrollment.
Why GAO Did This Study

The provision of long-term services and supports in Medicaid is a significant challenge, because of the vulnerability and service needs of beneficiaries, as well as the high cost of care. An increasing number of states have MLTSS programs, which can be used to expand community-based care and lower costs. However, whether these programs are an effective strategy depends, in part, on the design of the payment structures.
GAO was asked to review states' MLTSS payment structures and CMS's oversight. This report examines (1) how selected states structured their financial incentives, and (2) CMS policies and procedures for overseeing states' payment structures.
GAO reviewed relevant federal regulations, guidance, and internal control standards. For six states selected for variation in location and experience (AZ, DE, FL, KS, MN, and TX), GAO reviewed the contracts and rate certifications most recently approved by CMS, the terms and conditions set by CMS for the programs, and other payment documentation. GAO also interviewed CMS officials and Medicaid officials from the selected states.

What GAO Found

Out of six states with Medicaid managed long-term services and supports (MLTSS) programs that GAO selected for review, five set clear financial incentives in their payment rates for managed care organizations (MCO) to provide care in the community versus in an institution. However, most of the selected states did not opt to link payments or penalties to MCO performance on MLTSS goals. These goals, which include enhancing the provision of community-based care, are developed by states and the Centers for Medicare & Medicaid Services (CMS), the agency in the Department of Health and Human Services (HHS) responsible for overseeing Medicaid.
GAO found that CMS's oversight of state payment structures was limited. CMS expects states' MLTSS programs to enhance the provision of community-based care. However, GAO found CMS does not consistently require states to report on whether the payment structures—including payment rates, incentive payments, and penalties—are achieving MLTSS goals. For example, CMS required three of the selected states to report on the provision of community-based care, but did not require any such reporting from the other three states. According to federal internal control standards, federal agencies should use quality information to achieve agency objectives. Without requiring information on states' progress toward MLTSS goals, CMS will continue to pay billions of dollars to states without knowing if states have sufficient incentives for community-based care.
In addition, GAO identified risks with CMS's oversight of the data used to set MLTSS rates, specifically the appropriateness and reliability of those data. Under federal regulations, MLTSS rates must be appropriate and adequate. To the extent that states use data that are not appropriate and reliable to set rates, the resulting rates could be too low, which could provide an incentive for MCOs to reduce care, or too high, which results in more federal spending than necessary.
Appropriateness concerns: GAO found issues with the appropriateness of data used by two of the selected states. For example, one state used data from 2010 and 2011 to set rates for 2015. Beginning in July 2017, CMS will require rates to be based on the three most recent and complete years of data. Although CMS will allow exceptions, it has not specified criteria for what situations would warrant exceptions. Without specifying criteria, CMS's requirements may not sufficiently minimize the number of states using data of questionable appropriateness to set MLTSS rates.
Reliability concerns: GAO and the HHS Office of Inspector General previously found evidence of reliability issues with managed care encounter data, which are the primary record of managed care services and a key source of data used to set MLTSS rates. In addition, GAO's review of state documentation indicated variation in selected states' procedures for validating the reliability of their encounter data, specifically the completeness and accuracy of the data. Beginning in July 2017, CMS will require states to validate encounter data, but CMS has not issued guidance with minimum standards for state procedures. Without minimum standards for state validation efforts, it is unclear that CMS's efforts will sufficiently minimize the risk of encounter data being incomplete or inaccurate .

What GAO Recommends

GAO recommends CMS (1) require all states to report on progress toward achieving MLTSS program goals, (2) establish criteria for what situations would warrant exceptions to federal standards for data used to set rates, and (3) provide guidance with minimum standards for validating encounter data. HHS concurred with GAO's recommendations.