News: CJ Exclusives

Cooper order would cut Medicaid red tape but could encourage fraud

N.C. Health and Human Services Secretary Mandy Cohen, during a May 2020 COVID-19 briefing. (Pool photo)
N.C. Health and Human Services Secretary Mandy Cohen, during a May 2020 COVID-19 briefing. (Pool photo)

The Cooper administration may be inviting Medicaid fraud, thanks to an executive order the governor issued Tuesday, May 12.

Among other things, the order lets state officials suspend or modify checks that ensure people who apply for Medicaid — the government health insurance program for low-income parents, children, the elderly, and the disabled — are entitled to get benefits. The order allows a form of the honor system. Taxpayers may wind up providing insurance coverage to people who say they’re qualified for Medicaid coverage but aren’t. The state will continue making sure applicants are citizens or legal residents.

Gov. Roy Cooper’s order cites fears that keeping quality checks in place would slow an expected flood of Medicaid applications, as hundreds of thousands of North Carolinians have lost their jobs and medical insurance as a result of the COVID-19 pandemic. But while the order may relieve pressure on local health departments that process applications, it invites fraud and makes it tougher to control spending, experts say. 

North Carolina’s Medicaid program covered almost 2.2 million low-income parents, children, seniors, and people with disabilities before the pandemic began. More than a million people have filed for unemployment benefits in the eight weeks since the pandemic and lockdowns hit North Carolina.

“It’s fair and right to say there’s going to be more Medicaid applications. That always happens in an economic downturn,” said John Locke Foundation Health Policy Analyst Jordan Roberts. “But this comes at a price for program integrity and costs. It hamstrings the ability of the auditor to verify spending … and creates more opportunity for people who are ineligible to get on the program.”

State Auditor Beth Wood warned the order puts the state at risk for spending Medicaid dollars on ineligible beneficiaries.  

“I’m thankful that care will be there for people who need it and need it fast,” Wood said. “But I know it opens the door for more mistakes — and, worse, people who are intentionally taking advantage of this pandemic to game the Medicaid program.” 

Federal regulations prevent Wood from checking applicants’ claims about income or eligibility when people apply for coverage.

“We have problems with verifying people and their income,” Roberts said. “It’s a troubling provision. It makes it harder for them to verify in a time we need to make sure we’re spending every dollar as wisely as possible. This could lead to higher costs and less integrity in the program.”

Carolina Journal tried to ask Secretary of Health and Human Services Mandy Cohen about the quality checks during her Wednesday news briefing. The person screening calls again passed over CJ during the question period.

The order also allows the Department of Health and Human Services to waive any legal or regulatory barriers blocking care in nursing homes, adult care homes, hospitals, and ambulatory surgery centers, as well as hospice and home health care.

“That’s good,” Roberts said. “If [Cohen] can identify any other regulations that are getting in the way of private businesses serving patients, those absolutely should be waived, and we hope the secretary does that.”