Au­dit finds mas­sive in­come fraud for Med­i­caid Ben­e­fits go to six-fig­ure house­holds

The Washington Times Weekly - - National - BY JAMES VAR­NEY

Louisiana’s leg­isla­tive au­di­tor wanted to know how the state’s ex­pan­sion of Med­i­caid un­der Oba­macare was do­ing, so he picked 100 peo­ple who were deemed el­i­gi­ble un­der the rules.

He found that 82 of them made so much money that they shouldn’t have qual­i­fied for the ben­e­fits they re­ceived.

Au­di­tor Daryl G. Purpera, who is­sued his find­ings last month to lit­tle fan­fare out­side of Louisiana, fig­ured if those statis­tics hold true for the rest of the ex­panded Med­i­caid pop­u­la­tion in his state, then the losses to in­el­i­gi­ble ben­e­fi­cia­ries could be as high as $85 mil­lion.

“This is huge. It re­ally is,” he told The Wash­ing­ton Times. “As more and more state au­di­tors re­al­ize what this is do­ing to them, it’s go­ing to come to a point where all 50 of them are go­ing to have to de­clare they can no longer say the state’s books are ac­cu­rate. I re­ally do be­lieve that day is com­ing.”

Louisiana may be an out­lier. A fed­eral in­spec­tor gen­eral’s re­port this year found 38 out of a sam­ple of 150 Med­i­caid ben­e­fi­cia­ries in Cal­i­for­nia were po­ten­tially in­el­i­gi­ble. Taken statewide, that would mean more than 350,000 ques­tion­able cus­tomers.

An­other re­port es­ti­mated nearly 50,000 ques­tion­able ben­e­fi­cia­ries in New York.

The fed­eral in­spec­tor gen­eral was look­ing broadly at el­i­gi­bil­ity, in­clud­ing res­i­dency problems and other dis­qual­i­fi­ca­tions.

In Louisiana, Mr. Purpera ob­tained in­come data from the state’s work­force com­mis­sion and com­pared it with what Med­i­caid cus­tomers told the health depart­ment they were mak­ing to qual­ify for the ben­e­fit.

He con­cluded that some should never have been ap­proved at all and most were low­balling their in­come at some point and should have been kicked out of the pro­gram for at least part of the time they were claim­ing ben­e­fits.

Two of the 100 peo­ple he ex­am­ined were us­ing Med­i­caid de­spite an­nual in­comes ex­ceed­ing $300,000.

Four other re­cip­i­ents had six-fig­ure in­comes. One of them, with an in­come of $111,785 per year, re­ceived $17,807 in Med­i­caid pay­ments. An­other, with an an­nual in­come of $126,284, spent 12 months on Med­i­caid and re­ceived nearly $11,000 in pay­ments, ac­cord­ing to the re­port.

“The re­port is stun­ning. It is breath­tak­ing. There are not words in English to de­scribe what our leg­isla­tive au­di­tor found,” said Sen. John Kennedy, Louisiana Repub­li­can. “The Depart­ment of Health just threw the money in the dirt.”

Mr. Kennedy has pro­posed leg­is­la­tion to re­quire ev­ery state Med­i­caid, wel­fare and food stamp pro­gram to use fed­eral in­come data to ver­ify el­i­gi­bil­ity.

“It’s the most ac­cu­rate in­come data we have out there. It would be a re­quire­ment. Right now, it’s op­tional,” the sen­a­tor said.

The Med­i­caid ex­pan­sion was a key part of Oba­macare. It made the fed­eral-state health care pro­gram avail­able to peo­ple whose in­comes put them slightly above the poverty line — enough to not qual­ify un­der the old pro­gram but too lit­tle to qual­ify for sub­si­dies to buy plans on Oba­macare’s mar­ket ex­changes.

Most states have ac­cepted the ex­pan­sion, which for the first three years was cov­ered 100 per­cent by the fed­eral gov­ern­ment. That per­cent­age be­gan to re­cede in 2017, and the cur­rent ar­range­ment re­quires states to pay 10 per­cent of the costs by 2020.

Louisiana of­fers a good ex­am­ple of the re­sult, Mr. Kennedy said. In 2008, the Pel­i­can State spent $6 bil­lion on Med­i­caid, or 18.6 per­cent of the state bud­get. Now, Louisiana is spend­ing $12.4 bil­lion on Med­i­caid, rep­re­sent­ing 36 per­cent of the bud­get. More than a quar­ter of the state’s pop­u­la­tion is on Med­i­caid.

Na­tion­wide, Med­i­caid ac­counts for roughly $1 of ev­ery $3 that states spend, ac­cord­ing to health care pol­icy an­a­lysts, and those fig­ures aren’t slow­ing. The fed­eral es­ti­mate for the growth in Med­i­caid spend­ing is 6.1 per­cent an­nu­ally for states and 5.7 per­cent for Wash­ing­ton, ac­cord­ing to the Cen­ters for Medi­care and Med­i­caid Ser­vices.

Any tool that can help of­fi­cials close loop­holes should be used, an­a­lysts said. Med­i­caid spend­ing has topped a halftril­lion dol­lars an­nu­ally, and us­ing the fed­eral gov­ern­ment’s own ad­mis­sion that up to 10 per­cent of all Med­i­caid spend­ing is im­proper, that would fix the amount in ques­tion at $50 bil­lion.

“Ev­ery dol­lar that’s stolen from the Med­i­caid sys­tem by a fraud­ster is a dol­lar that can­not go to help the truly needy,” said Ni­cholas Hor­ton, di­rec­tor of re­search at the Foun­da­tion for Gov­ern­ment Ac­count­abil­ity. “So states should ab­so­lutely be fo­cus­ing on closing gaps, and there is cer­tainly more states can and should do to pro­tect their wel­fare pro­grams and en­sure that re­sources are pre­served for folks who are truly needy.”

Mr. Kennedy ac­knowl­edged that Congress won’t be able to ad­dress his bill this year.

“I’ve had cur­sory dis­cus­sions about it with the lead­er­ship on both sides, but I haven’t re­ally started whip­ping it yet, so it’ll be af­ter the first of the year,” he said. “I’ll ob­vi­ously have to per­suade some of my Demo­cratic col­leagues, but the truth is it should be bi­par­ti­san. And if you sup­port Med­i­caid, you should be for it, be­cause we’re talk­ing about scarce re­sources and all the money that gets spent on in­el­i­gi­ble ben­e­fi­cia­ries means all the folks who do need help won’t get it.”

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