Senate GOP Report Blasts Officials for Improper Medicaid Payments

Sen. Ron Johnson, R-Wis., blames CMS for flawed audits, but stirs politics by faulting Obamacare. Sen. Ron Johnson, R-Wis., blames CMS for flawed audits, but stirs politics by faulting Obamacare. Jacquelyn Martin/AP

Anti-fraud specialists at the joint federal-state Medicaid program are failing to effectively combat improper payments, which have risen by 157 percent since 2013, according to a report released Wednesday by the chairman of the Senate Homeland Security and Governmental Affairs Committee.

The $37 billion that annually goes to fraudsters represents 26 percent of governmentwide improper payments and shows that the Centers for Medicare and Medicaid Services is a “poor steward” of Medicaid dollars, wrote Sen. Ron Johnson, R-Wis., in the report released by the majority staff in time for a hearing that ended up being postponed.

“CMS has not taken basic steps to fight Medicaid fraud, including reviewing federal eligibility determinations for accuracy and even creating an antifraud strategy,” Johnson said, citing multiple Government Accountability Office reports showing a continuing problem. “CMS must take proactive steps and make a serious commitment to reduce Medicaid fraud and improve program integrity,” he said, pointing to tools provided under updates to the improper payments statutes and the 2010 Affordable Care Act.

“Since 2015, GAO has made 11 separate anti-fraud recommendations to CMS,” the report said. “CMS has implemented none.” Johnson accused the agency of “conducting only irregular, highly flawed audits of Medicaid providers and failing to meet annual deadlines for program integrity reporting to Congress.”

Watchdogs have documented fraudulent Medicaid payments totaling more than $1 billion just in eight states—California, New York, Kentucky, Illinois, Arizona, Florida, Michigan, and New Jersey, the report noted.

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Johnson called Medicaid fraud “rampant,” noting that GAO warned in its most recent high risk report that “CMS’s improper payment rate estimates may be inaccurate.”

Johnson’s report—which was not signed by committee Democrats—comes as the Trump administration is raising alarms about high spending on Medicare and Medicaid. CMS Administrator Seema Verma last month told the American Hospital Association that Medicare “spending on prescription drugs is growing more quickly than spending on any other area. Spending is also on the rise in Medicaid, with expensive new therapies putting a strain on state budgets. The status quo simply is unsustainable.”

In his report, Johnson heaps some blame for undetected fraud on Obamacare. “With the [Affordable Care Act’s] reimbursement formula giving states an incentive to enroll more beneficiaries to obtain more federal money, CMS has allowed certain states to game the system,” he said. “California, for example, has received a share of Medicaid expansion dollars vastly disproportionate to other states, even while California officials gave Medicaid money to ineligible people.”

In 2015, GAO reported that while CMS had helped state Medicaid programs implement systems to detect overpayments,” it had failed to require states to measure whether those systems worked,” Johnson’s report said. “With no requirement, most states did not implement metrics to measure success. Around that time, Medicaid improper payments began rising, going from $14.4 billion in 2013—the year before Obamacare took effect—to $37 billion in 2017—a 157 percent increase.

In another criticism of the health law, Johnson back in April wrote to Verma urging CMS to review the practice of “dues skimming,” in which states allow unions to classify home health care workers as government employees for purposes of collecting union dues from Medicaid payments. Dues skimming "allows states to take an estimated $200 million each year in union dues—money that would otherwise help for the care of Medicaid beneficiaries,” Johnson wrote. Verma said in a June 13 letter that CMS is reviewing possible changes in enforcement.

A new survey of CMS and other federal employees involved in combating improper payments showed that agencies believe they are understaffed, and acknowledge they don’t have a handle on the long-standing problem of maintaining program integrity.

"We wholeheartedly agree with Chairman Johnson that taxpayers deserve to know that their hard-earned money is not being wasted," Verma said in a statement to Government Executive. "Medicaid expenditures have grown rapidly and are consuming ever-increasing shares of state budgets. We have a responsibility to make sure that federal dollars are spent only on those who are truly eligible, even as we return greater control of the Medicaid program to the states. This is why our vision for transforming the Medicaid program is grounded on three principles: greater flexibility, stronger accountability and enhanced program integrity." 

Survey results published on Wednesday by Government Executive Media Group’s Government Business Council suggest that successful program integrity frameworks are the exception, not the rule, in health agencies. The survey, which was underwritten by KPMG, showed that only 36 percent of respondents acknowledge and approve of the framework their agency has in place, while as many as 28 percent do not believe it has been effective.

Confidence in their ability to curb improper payments differed greatly between respondents who feel their agency has a clear program integrity framework. As many as 54 percent of those citing such a framework are confident in their ability to prevent such payments, while only 32 percent of those without such a framework expressed confidence.

Of all respondents, 53 percent said their agency does not possess sufficient personnel to run program operations effectively, 35 percent said they lacked the required information technology, and 35 percent pointed to a lack of organizational collaboration.

Senate committee staffers did not responded to inquiries about why Wednesday’s hearing was postponed. It was to feature as witnesses Comptroller General Gene Dodaro and Health and Human Services Department Inspector General Daniel Levinson.

Sen. Tom Carper, D-Del., just a week earlier had hailed the committee’s approval of two bipartisan bills to curb improper payments.

The Stopping Improper Payments to Deceased People Act (S. 2374) would provide agencies with more accurate data through greater information sharing between agencies. And the Payment Integrity Information Act of 2018 (S. 2948) would require agencies to undertake additional efforts and develop plans to prevent improper payments and improve the way they identify programs with the highest risks.

This story was updated with a statement from CMS Administrator Seema Verma.

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