Optional Reporting Protocols Create Billions in Medicaid Waste
Taxpayers have a right to be concerned when the state and federal government continue to spend more on Medicaid, and it is one of the largest sources of fraud.
Since 2003, Medicaid has appeared on the Government Accountability Office’s list of high-risk programs. Ranking second among federal programs with high improper payment rates, it has accounted for $161 billion, or 17 percent of the federal government’s improper payments since 2008.
Improper payments occur in the Medicaid for a number of inexcusable reasons:
-Laws and regulations require much effort on Medicaid’s part to verify every piece of information.
-Patients provide false information regarding their eligibility for Medicaid.
-Patients file false claims.
-Patients see multiple providers for the same condition.
-Patients may alter prescriptions, allowing them to aid an addiction or illegally resell the drugs.
-False providers excluded from the program may give false information and may bill Medicaid for false or duplicate services.
-States use taxes on providers or local government taxes to foot the 40 percent state share of Medicaid funding.
-New Affordable Care Act regulations do not require reporting on improper payments, although contracts with the states do.
The broken program barely attempts to curb its problem. Reporting protocols to prevent fraud and improper payments are optional. The states are mainly responsible for the protocols, but they have little incentive to use them. In addition to having limited resources, they have to return more than half of recovered improper payments to the federal government.
The Affordable Care Act created a new reporting requirement, but it leaves an alarming hole open for more fraud to escape through. States must report information on terminated providers on a web portal, but they are not required to check the portal when screening the providers. As a result, 12 percent of providers terminated in a state in 2011 were found to be practicing in another state in 2012.
Technological advances are helping to detect and prevent fraud, but they need federal approval to do so. Yet only seven states had their applications approved to use data mining since 2013.
In light of the many optional reporting protocols, Rep. Larry Bucshon (R-Ind.) introduced H.R. 3716, which would require providers to register with the state and report any terminated providers to the Centers for Medicare and Medicaid Services in a database. The bill would inflict a repayment penalty to states that do not return improper payments to the federal government after a provider’s termination has been in the database for two months. H.R. 3716 unanimously passed the House and was referred to the Senate Committee on Finance.
The federal government needs to carry more of the load for combating waste, since it funds about 60 percent of Medicaid expenses, while the state funds 40 percent. At the same time, the states should not brush off the importance of monitoring Medicaid waste. They should not fund Medicaid with burdensome local taxes and provider fees, solely for the reason of receiving more federal funds.
As many states opt to increase Medicaid funding while cutting other state services, they struggle to balance their budgets. For example, New Mexico recently passed the 2017 budget without raising taxes but expanding Medicaid. Now with higher-than-expected enrollment, the state faces a $417 million deficit.
Complying with reporting protocols could help both the states and the federal government alleviate deficits. The Congressional Budget Office recently estimated that eliminating the fraud and abuse in Medicaid alone would reduce the federal deficit by about 11.4 percent. State and federal governments have no right to impose a higher Medicaid burden on the taxpayers if they do not work to eliminate the billions of waste and fraud slipping through the cracks.