Collaboration in Civic Spheres

Medicaid fraud fixes top of mind in both Washingtons

by William McKee July 3rd, 2012

It was just weeks after Washington State enacted a landmark Medicaid anti-fraud measure, and only weeks before a U.S. Supreme Court ruling cleared the way for a sweeping federal health care bill that, as the Seattle Times reported, will boost Medicaid enrollment in Washington state by an estimated 42 percent within several years after its 2014 implementation. In other words, it was a good time for a top Washington state health care official to join national colleagues in testimony to a Congressional subcommittee that’s trying to help the federal bureaucracy and states better trace and reduce Medicaid fraud through improved data and data analytics. Douglas Porter, director of the Washington State Health Care Authority, which administers the Medicaid program here, testified recently to the Federal Financial Management Subcommittee of the U.S. Senate’s Homeland Security and Governmental Affairs Committee that, “There’s a lot of data and very little good information. Poorly collected and poorly analyzed data is what’s giving us the problem. The Medicaid Statistical Information System is not uniformly reported on by all states, making apples to apples comparisons very difficult.” The hearing was titled “Saving Taxpayer Dollars by Curbing Waste and Fraud in Medicaid.”

Other challenges facing the Medicaid system, Porter testified, are the loss of staff administrative resources and outdated and ineffective Medicaid fraud detection programs that give little return on investments. In Washington state, Medicaid programs funded by the state and federal governments pay for delivery of medical, dental, behavioral health, and long-term care to an 1.2 million low-income Washingtonians on average per month. Porter in his testimony to federal lawmakers had some additional suggestions for curbing improper Medicaid payments by better sharing information on “bad actors” bilking the system; adopting common technical standards; and using distance learning.

  • “…if we could do one thing that I think would take a big burden off states, (it) is to create a national level provider enrollment capacity that would screen out bad providers on the front end, and in the process of getting a national provider identification number, that would be a start. And then have them re-enroll every three years.That way a central observation could be made on the databases that currently exist as to who the bad actors are out there.”
  • “I think the Medicare databases…could be improved by having a single documented file format and one single set of confidentiality and privacy requirements. And we should use a return on investment analysis to evaluate the effectiveness of programs and fund them accordingly.”
  • “I would make a pitch, finally, to further enhance the Medicaid Integrity Institute by using distance education involving webinars to reach more state staff around the country. And I would suggest the establishment of a national certification process to credential state program integrity staff.”

The Deficit Reduction Act (DRA) of 2005 established the Medicaid Integrity Program to fight fraud and waste in the program. Organizations are contracted by Centers for Medicare and Medicaid Systems (CMS) to identify improper payments, first by reviewing claims data, and then through audits of the health care providers identified by review.

The U.S. Government Accountability Office continues to consider Medicaid as a “high risk” program for waste, fraud and abuse. GAO Director of Health Care Carolyn Yocom in her testimony to the subcommittee said the Centers For Medicare and Medicaid Services (CMS) estimates that in fiscal 2011 Medicaid federal expenditures nationally were $270 billion, of $21.9 billion or eight percent were improper payments. However total Medicaid expenditures per year, including payments to states, are estimated for (fiscal) 2012 at $457 billion by CMS and up to $100 billion of that amount may be improper expenditures, according to an April 2012 report on Medicaid fraud from the U.S. House Committee on Oversight and Government Reform.

As Washington State Senator Karen Keiser (D-33rd) blogged earlier this year, “Experts from the National Conference of State Legislatures estimate the cost of Medicaid fraud accounts for (between) 3 and 10 percent of total Medicaid expenditures. Washington spent $8.5 billion on Medicaid last year only to recover less than $20 million in fraud. At its most optimistic, the state’s recovery rate tops out at less than 1 percent.”

GAO defines an improper payment as one “…that should not have been made or that was made in an incorrect amount (including overpayments and underpayments)” including “any payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except where authorized by law), and any payment that does not account for credit for applicable discounts.”

Last month Washington state enacted an important Medicaid anti-fraud bill, ESSB 5978, that many hope will boost fraud recovery and accountability, and lower fraudulent claims. It includes a false claims provision creating a system to reward whistleblowers a portion of recovered funds. The bill also creates a Medicaid Fraud Penalty Account, into which funds reclaimed by the Health Care Authority are to be deposited, for the purposes of “Medicaid services, fraud detection and prevention, recovery of improper payments and other fraud enforcement activities.”

With increases in Medicaid enrollment expected across the country over the coming years, Congress is advancing “The Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars Act,” or FAST Act, at which the recent subcommittee hearing was aimed. Numbered S.1251, the bill was introduced a year ago. (Bill information page via Library of Congress; bill summary via Congressional Research Service).

In his an opening statement to the June 14 hearing, FAST Act sponsor and U.S. Sen. Thomas Carper (D-Delaware) stressed the legislation would strengthen “anti-fraud coordination between federal and state governments, increase criminal penalties for fraud, encourage seniors to report possible fraud and abuse in Medicare… and deploy cutting-edge data analysis technologies.”


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