Medicaid

More Than 10 Percent of Federal Medicaid Payments Last Year Were Improper

Government watchdog finds yet another increase in wasteful Medicaid spending.

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redit: Images_of_Money via Foter.com / CC BY

Every year, the Government Accountability Office (GAO) releases a report putting a dollar figure on the amount of improper payments in Medicaid. And every year, it shows that the program, a jointly funded federal-state program for the poor and disabled and one of the nation's biggest budget items, spends a substantial portion of its annual budget in ways that it shouldn't: On fraud, on waste, on services not rendered, not medically necessary, or incorrectly billed.

Last year, for example, the GAO found that about 9.8 percent of federal Medicaid expenditures, or about $29 billion, was spent improperly. That was up from the previous year, and the increased error rate was the main driver of an overall increase in improper payments across the federal government.

This year, the total has risen once again. About 10.5 percent, or $36 billion, of federal spending on the program isn't up to snuff, according to a GAO report released this morning.

The program's sheer size, along with the variety of types of individual payments it makes, makes it particularly vulnerable to bad spending. And that's been the case for a long time. The GAO added Medicaid to its list of high-risk programs in 2003, and in the years since, government officials have been slow to implement the watchdog's list of suggested reforms intended to reduce unnecessary spending. This is an enduring problem for Medicaid, one that neither Republican nor Democratic administrations have figured out how to fix.

Among the problems that GAO highlights: Medicaid officials have not taken sufficient steps to make sure that "only eligible beneficiaries are enrolled in Medicaid." Basically, there are too many people signing up for coverage who don't actually qualify for coverage—especially with regard to Obamacare, which dramatically expanded the program in participating states. Today's report notes the GAO's own study showing that 9 of 12 fictitious applications were approved for coverage and subsidies under the health law during last year's special enrollment period. This isn't strictly limited to Medicaid, but it suggests how weak the controls are on application.

And although the federal government has taken some steps to review eligibility protocols, it has "excluded from review federal Medicaid eligibility determinations in the states that have delegated authority to the federal government to make Medicaid eligibility determinations through the federally facilitated exchange." In short, it has, rather conveniently, exempted the federally run exchange from the sort of oversight that the GAO says is necessary.

On the flip side, the GAO also warns that health officials aren't doing enough to make sure that only eligible providers are enrolled in the program. The report notes that "our prior work has identified hundreds of Medicaid providers who were potentially improperly receiving Medicaid payments"—basically, folks who are engaging in fraud, or something fairly close—and says that the Centers for Medicare and Medicaid Services (CMS) isn't doing nearly enough to weed out these bad actors.

The report also notes that there are not enough controls in place for Medicaid managed care, in which the program's services are contracted out to private companies, and that there's not enough coordination between Medicaid the Obamacare exchanges.

Beyond the bureaucratic details, what this report makes clear, yet again, is that Medicaid is not a particularly well-run program, and that its size, scope, and complex structure make it particularly susceptible to waste and fraud. And in its current state, the program has proven difficult to reform through better oversight and program management. Which means that folks who are looking to fix these problems ought to be thinking bigger, and looking for more substantial structural reforms that don't effectively have a 10 percent waste level built into the system.

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  1. Remember, though, that if people are on Medicaid, they have “health coverage” which is the same as “health care” which means everything is all right with the world.

    1. Even if they get bad or no service… what counts is that some moron can claim they got free healthcare!

    2. CBO predicted that repealing the ACA would cost $350B over 10 years. Or about what we currently spend in Medicaid fraud.

    3. Yeah, well, shitty taxpayer provided healthcare is a fundamental human right.

    4. Hey, at least there are no EVIL CORPORATE PROFIT MOTIVES to make the system inefficient.

      /sarc

    5. yea…i have TRICARE for life and it is shit. I have a PPO so i can actually go see a good doctor. Even with the PPO it took 5 gastrologists to find one that didnt suck…if i had tricare only my illness would have never improved.

      TRICARE is awesome as secondary though. I almost never have a single medical bill because it picks up the tab left by my super over priced shit bronze PPO that i pay 300 a month for.

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  2. In short, it has, rather conveniently, exempted the federally run exchange from the sort of oversight that the GAO says is necessary.

    I wonder how much of the “decrease in uninsured” has come from this exact phenomenon…

    P.S. Thank you for not writing about that which shall not be named.

  3. $36 billion? That’s nothing to a man like Donald Trump. He wouldn’t even bother having a Russian prostitute piss on $36 billion.

    1. Wait… so you’re saying the prostitutes pay to piss on him?

      1. He’s only the President, not a pitch-man for Dos Equis.

      2. Yes and they’re very classy. Only the best.

        And they piss bigly. Lot of piss. They love it

  4. I’m confused – where do the refugees fit in?

  5. Yes, but what does this mean in regard to Trump’s EO?

      1. Well, it further evidence that the federal government is bloated and useless, which means that it can accurately vet potential refugees and/or secure the border as long as it is using the correct policy written by right-thinking people.

  6. How much goes to refugees and what is the percentage of refugees receive medicaid?

    1. How much wood could a refugee chuck if a refugee could chuck wood?

      1. With his bad elbow, I don’t think that refugee should be chucking any wood.

  7. Isn’t medicare on the order of 60B? Total 100B for both

  8. Whew, I was worried there for a moment with this article. But Matt Welch just posted another article on immigration so order is restored.

  9. Thanks Peter for not doing a Open Borders Meltdown article.

    1. yeah but Sudermannnn is losing his mind. Look at all the TDS babble in this article. I think Sudermann is losing his marbles. /John logic

      1. That’ll happen when the admin supports an Ocare repeal plan. Suderman is an Ocare dead ender in order to keep himself gainfully employed.

  10. Is 10% waste in a government program all that bad, though? Seems on the low side, if anything.

    1. That figure isn’t even a real accounting. They know they get ripped off, and they (rightly) assume there is even more going on, so the figure is one big fudge factor.

    2. I’m stupefied the official number is even that low, let alone the real number.

  11. What the hell does this have to do with refugees!

    I got a fever and the only cure is sixteen more hyperbolic articles about refugees!

  12. I say we just have the GAO run every Federal program!

    Who’s with me?

  13. A lot of Medicaid fraud involving providers either charging for services never rendered or wrongly coded so that the provider can obtain more money. Proof if any is needed that there are a lot of providers out there who make used car dealers look “honest” in comparison. Medicare also has the same problem. And I’d assume private insurance also gets defrauded from time to time.

    1. You describe an unfortunate symptom of the disease but not the disease itself.

    2. You describe an unfortunate symptom of the disease but not the disease itself.

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  15. We can’t afford $10 – $30 billion over 10 years for a wall (not saying it’s a good idea) but no problem never fixing a $30 billion annual leak. Makes sense.

    I expect that some of the errors were for services provided to eligible patients by ineligible providers but the services were necessary, as good as or better than eligible provider services, and priced within the Medicaid pricing structures. It would be interesting to see that amount, and any other pure administrative errors, subtracted from these figures to see how much is pure fraud, waste and abuse.

    1. The UK’s and Finland’s public systems spend about $4000/person/year. Medicare spends about $12000/person/year with no better outcomes. It’s a safe bet that about $8000/person/year are wasted (probably more, since the UK system is far from efficient either).

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  17. Medicare spends about $12000/person/year. Large amounts of spending are for useless end of life interventions, for proprietary drugs where generics would do, and for preventable medical conditions based on obesity and lifestyle. I’d say most Medicare spending is “improper”, since most of that spending should be eliminated.

    1. this. I dont understand why its everyone elses problem to pay for bad life choices (government taxes) If you join a health insurance plan that is voluntary. I dont have a choice about this.

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