Health Care

Kaitlyn Finley | May 4, 2020

Federal strings may abet Oklahoma Medicaid fraud, abuse

Kaitlyn Finley

As a response to the COVID-19 public health crisis, in March Congress passed the Families First Coronavirus Response Act (FFCRA) to direct more funds to state Medicaid programs. 

But along with the money comes additional federal regulation that may hamper states’ ability to determine eligibility, leaving the door open for more fraud and abuse in the program during a time when Medicaid programs will experience an influx of enrollees. 

Under the FFCRA, Oklahoma will automatically receive a 6.2 percent increase in reimbursement funding from the federal government, but in exchange, the state must adhere to strict guidelines that restrict them from changing any “eligibility standards, methodologies, or procedures” regarding the enrollment process. 

These restrictions contrast notably with an ongoing state audit of SoonerCare, Oklahoma’s Medicaid program. In his 2020 State of the State address, Gov. Kevin Stitt noted that state Auditor and Inspector Cindy Bird was set to finish conducting an audit of state Medicaid rolls. With nearly a million beneficiaries enrolled in SoonerCare, costing the state nearly $2.2 billion last year, Gov. Stitt has repeatedly stressed the importance of the state’s ability to properly determine eligibility and only spend funds on eligible individuals. 

Recent results of other states’ Medicaid audits have further emphasized the need for regular audits. A 2019 federal audit from the Office of Inspector General projected New York wasted $26.2 million of taxpayer funds on more than 47,000 ineligible individuals in its Medicaid program. Louisiana removed 30,000 enrollees from its Medicaid rolls last year, saving the state an estimated $14.7 million in January 2019 alone, according to the state’s latest audit report. 

According to correspondence from the state Auditor’s office, Oklahoma’s audit is set to be released by mid-May. But due to these restrictions in FFCRA, the state may not, in fact, be able to implement any recommendations from the audit while taking the increased federal funding.

“It’s going to box the state in significantly,” said Nic Horton, director for the Foundation for Government Accountability (FGA), regarding Oklahoma’s current Medicaid audit. 

According to a report released in April by FGA, provisions in another federal COVID-19 relief bill, the CARES Act, may also push more Oklahomans into Medicaid who were previously not eligible to join the program. 

“Under the CARES Act, individuals filing for unemployment can receive an additional $600 per week on top of their normal unemployment compensation. Although unemployment benefits are typically considered income for Medicaid eligibility, the CARES Act exempted this extra $600 per week from those rules.” This means more individuals receiving unemployment benefits will be able to enroll in Medicaid also. 

Due to the downturn in Oklahoma’s economy, as well as these looser federal unemployment benefit guidelines, Oklahoma's Medicaid rolls will swell considerably and any small and temporary increased funding from the federal government will not offset those costs. 

According to the latest annual report from the Oklahoma Health Care Authority (OHCA), one in four Oklahomans were enrolled in the program last year. With an influx of possible new enrollees under the current Medicaid system, program expenditures will likely increase this year.   

Notwithstanding these facts, and despite lacking the necessary funding from the Legislature, Governor Stitt is still moving forward to expand Medicaid to hundreds of thousands of able-bodied adults. In its expansion application to the federal government in March, the OHCA projected expansion could cost the state an additional $137 million in FY 2021. 

The state is already expected to face a $416 million shortfall this current fiscal year, with some officials expecting a $1 billion shortfall for the upcoming 2021 fiscal year. 

It’s clear that with the current economic outlook for Oklahoma, the state simply cannot afford to expand Medicaid. Governor Stitt must exercise fiscal restraint and rescind the state’s application to expand the program.

Kaitlyn Finley Policy Research Fellow

Kaitlyn Finley

Policy Research Fellow

Kaitlyn Finley currently serves as a policy research fellow for OCPA with a focus on healthcare and welfare policy. Kaitlyn graduated from the University of Science and Arts of Oklahoma in 2018 with a Bachelor of Arts in Political Science. Previously, she served as a summer intern at OCPA and spent time in Washington D.C. interning for the Heritage Foundation and the U.S. Senate Committee on Environment and Public Works.

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