Collaboration in Civic Spheres

WA scores well in one aspect of Medicaid fraud detection

by John Stang September 7th, 2012

Washington state is batting almost 1,000 in due diligence checks of Medicaid applicants for financial eligibility, but needs to run checks on their vehicle ownership to ensure it is properly weeding out those whose net assets are too high to qualify for the program, according to a recent U.S. General Accountability Office report. The report by GAO, which performs program evaluations and related investigations at the request of members of Congress, looked at how thoroughly all 50 states and the District of Columbia vet their long-term Medicaid applicants for one sub-category of eligibility standards. The feds list 13 potential categories of assets that can be checked to ensure applicants are not fraudulently transferring them or failing to report them, so they don’t count toward Medicaid eligibility. A 2007 Medicaid fraud conviction of a woman in New Hampshire accented the risks. As of July, Washington was doing the necessary checking in 12 of those 13 categories; the exception being vehicle ownership. Idaho too verifies 12 categories, also not tackling vehicles, while Oregon verifies all 13 categories for its long-term Medicaid applicants. It is one of 20 states to do so.

Overall, though, the state could do significantly better in detecting Medicaid fraud, say legislators. As reported earlier at Public Data Ferret, upon passage last spring of a new law effective this July 1, to ratchet up Medicaid fraud penalties, Washington State Sen. Karen Keiser (D-Kent) blogged, “Experts from the National Conference of State Legislatures estimate the cost of Medicaid fraud accounts for 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.”

Roughly 1.2 million Washington residents are on Medicaid, a number that the Seattle Times recently reported is expected to increase by 42 percent in several years after the federal Affordable Care Act goes into effect in 2014. Medicaid provides health care for qualified low-income individuals and some with disabilities. It is funded by the states and the U.S. government but managed by the states. It is separate from Medicare, which is a federal health insurance program for patients aged 65 and older and those with end-stage kidney disease.

In a cover letter accompanying the GAO report requested by Sens. Tom Coburn, R-Okla. and Orrin Hatch, R-Utah, the agency wrote “Nearly half of the nation’s $263 billion long-term care expenditures in 2010 were paid by Medicaid. …Medicaid spending for long-term care services is projected to increase. In light of the increased demand and associated burden that this places on already strained federal and state resources, it is important to ensure that only eligible individuals receive Medicaid coverage for long-term care.”

There does not appear to be a nationwide estimate of improper Medicaid payments annually due just to ineligibility of beneficiaries. However the Office of the Inspector General of the U.S. Department of Health and Human Services has released a series of audits estimating the extent of that problem in different states. A 2006 audit found that in the first half of 2005 the State of New York conveyed an estimated $230 million in unallowable Medicaid payments to ineligible beneficiaries, and another $2.8 billion to recipients whose case files lacked eligibility documentation. A 2007 HHS OIG audit of California showed that state made an estimated $132 million in improper payments to ineligible Medicaid beneficiaries in the first half of 2005, and paid another $117 million in the same period to those whose eligibility was not documented. After a 2008 audit estimating that in the one month of August 2003, states nationwide paid a total of $2.3 million in Medicaid funds to recipients who were ineligible specifically because they already had eligibility in another state, the Inspector General’s office conducted several state-by-state audits examining that problem. In one follow-up report Georgia was found to have made an estimated $4.3 million in payments from 2005 through mid-2006 to beneficiaries who were ineligible because they were already eligible in Florida. Similar problems, amounting to smaller dollar amounts, had already been reported in Michigan and Ohio.

One major eligibility criterion, central to the GAO report, is individuals’ assets being below certain levels. Beneficiary asset value caps vary from state to state, but still must meet federal criteria. These assets include income, savings, property, stocks and others. However, some states exclude vehicles from that vetting – such as Washington and Idaho – or primary homes and prepaid burial arragments.

Federal law, especially the Deficit Reduction Act of 2005, tackles attempts by people trying to transfer their assets to others in order to become eligible for long-term Medicaid care. Meanwhile, the states are responsible for verifying eligibility in a variety of ways, including ensuring no assets are improperly hidden, or the beneficiary is not already eligible to receive Medicaid payments in another state.

The GAO report of state-by-state differences in asset category eligibility checks found that 44 states require verification of either 12 or 13 of the 13 categories of assets. The report said some of the potential categories of assets include information about an applicant’s primary home, vehicles, life estates, long-term care fees, promissory notes and annuities.

The report also noted 31 states required less than five years of documentation on assets that could be potentially transferred. The 31 include Washington and Idaho, but not Oregon. State officals told the GAO that such extensive checks are too expensive to conduct in every case, and that they do them only when fraud is suspected, the report said.

The Washington State Attorney General’s Medicaid Fraud Control Unit notes that Medicaid fraud usually occurs when costs for services, drugs or supplies are reimbursed by the program but are not necessary; or not actually delivered; or are of lower cost or quality than billed for. Fraud can also occur when services, drugs or supplies are processed as being covered when they are not, or when beneficiaries manipulate eligibility qualifications.


Public Data Ferret is a news knowledge base program of the Seattle-based 501c3 public charity, Public Eye Northwest. Ferret In The News. Donate; subscribe (free)/volunteer.

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