RALEIGH – It took many years to convince state officials to invest in a serious data-mining effort to expose fraud in North Carolina’s Medicaid program. Two Republican state lawmakers, Rep. John Blust of Guilford County and former Sen. Robert Pittenger of Mecklenburg, championed the idea against indifference from past Medicaid officials and resistance from current Medicaid vendors, some of which may have reason to be concerned if the state improves its enforcement efforts.
But when Gov. Beverly Perdue stood before reporters at Raleigh’s Rex Healthcare to announce a new anti-fraud partnership between IBM and the state, she seemed to be well aware of the significance of the issue. “It is pretty evident to us that we have to do more to root out the waste and crack down on the people that we know are out there who are abusing the system,” the governor said.
Perdue added that in a trial run of the new approach, IBM studied Medicaid records from 2007 and found many examples of questionable payments, including a provider billing Medicaid for 800 days of work in a single year.
I hope the system saves taxpayers many millions of dollars a year. But I’d urge policymakers on both sides of the aisle not to think that investing in anti-fraud software is a sufficient agenda for Medicaid reform. The problems in the program go far deeper, and will require redesigning it from the ground up.
Medicaid is the state’s second-largest expense, after public schools, and has been one of the major forces driving budget increases during the past two decades, in economic good times and bad. Its escalating price tag has been the result of program expansions, initiated both in Washington and North Carolina, as well as the program’s major role in paying for such expensive medical services as nursing homes and home-health care.
The passage of ObamaCare will make a difficult situation worse. Most of the expected decrease in the uninsured population will come from Medicaid expansion, not the better-publicized insurance regulations, mandates, and subsidies. Under the new law, individuals with household incomes up to 133 percent of the federal poverty line – about $14,400 for individuals or $29,300 for a family of four – will be eligible for Medicaid irrespective of other conditions once required for coverage, such as being a parent or having a serious disability.
While the federal government will finance – that is, borrow billions of dollars – to pay most of the direct cost of adding these new recipients into the Medicaid system on a temporary basis, states will bear higher administrative costs right off the bat and will later be expected to pick up a significant share of the cost of serving the new caseload. Many state governments are already up in arms about this latest unfunded mandate, including states such as California that are not likely to sign onto a lawsuit to strike down part of ObamaCare as unconstitutional.
Will better provider fraud detection and enforcement measures help save taxpayers some money? Indisputably. But in the long run, North Carolina leaders need to push for broader changes, including:
• Toughening the enforcement of eligibility rules on middle-income families that engage in long-term financial planning to shield assets while placing their elderly or disabled relatives on Medicaid. As Steve Moses of the Center for Long-Term Care Reform wrote in a 2008 paper for the John Locke Foundation, North Carolina stands to gain at least $60 million a year by matching the performance of the best states in recovering assets from families scamming the system in this way.
• Lobbying Washington to convert federal Medicaid funding into a block grant, adjusted annually for anticipated changes in medical prices, to better align the fiscal incentives so that states that game the matching funds system more aggressively than North Carolina does will stop getting a disproportionate share of the dollars.
• Integrating Medicaid dollars for healthy, low-income North Carolinians into a premium support system for mainstreaming them into the private market for health plans, reserving the Medicaid program itself for those with severe physical or mental disabilities and few family or communities resources to draw on.
Policing Medicaid fraud is a good idea. But it’s a first step, not the entire journey.
Hood is president of the John Locke Foundation