Health Care

Kaitlyn Finley | November 5, 2018

New Medicaid audits save taxpayers $250 million in Massachusetts

Kaitlyn Finley

Necessity is often the mother of invention. Massachusetts’ improvements to its Medicaid audit system are a shining example.

Last week, the Pioneer Institute released a report detailing how Massachusetts’ Medicaid program, Mass Health, saved taxpayers hundreds of millions of dollars by improving their Medicaid eligibility audit system.  Massachusetts was forced to improve its process to determine Medicaid eligibility after its number of enrollees on MassHealth skyrocketed.

In 2014, due to a combination of government error and a botched initial rollout of the Massachusetts Health Insurance Exchange program and website, Massachusetts Gov. Deval Patrick allowed new exchange applicants to freely enroll in MassHealth. This opened MassHealth up to an influx of new enrollees, people who were previously not eligible to sign up due to their income level. MassHealth saw nearly 321,000 new enrollees sign up during this period, increasing its number of medical welfare beneficiaries to more than 2 million.

Once the Massachusetts Health Insurance Exchange program was operational, Massachusetts’ new governor, Charlie Baker, directed MassHealth to stop extending coverage to ineligible enrollees. In order to determine which MassHealth beneficiaries were truly eligible for the program, MassHealth administrators conducted 1.2 million manual redeterminations over five months.

After many time-consuming manual checks, MassHealth decided to carefully implement automation within their redetermination process. They were able to use software which could automatically fill in some application fields with previously stored data. According to the report, this adoption of automation “decreased staff labor and member time to process a redetermination. It also improved the accuracy of information by assuring that the redetermination record already coincided with information MassHealth had access to electronically.”

The report highlights that these key changes in the redetermination process resulted in estimated savings of $250 million to Massachusetts taxpayers. “The Commonwealth believes this is an ongoing savings. It allows Massachusetts to better prioritize healthcare funding, helps preserve resources for those who need them, and improves the sustainability of the program.”

In its report, the Pioneer Institute shares ways in which new analytical technology could be harnessed to reduce administrative costs for eligibility checks for state programs. It explains new artificial intelligence software has the ability to self-sort thousands of applicants, identity potential abnormal patterns in data, and red flag households that may have errors in information or be ineligible for benefits.

Another innovation, blockchain technology, could better comb through mountains of eligibility data scattered throughout different government-housed databases as well. The report explains, “blockchain overcomes the challenges of combining distributed data sources by creating chains of data blocks in a distributed ledger. Each ‘block’ is a history of an individual’s transactions with … [the] departments of Labor, Revenue, Motor Vehicles, and Child Support.” All the transaction data is encrypted into an unchangeable data block that can be used to identify an individual’s profile. When fully implemented, this could eliminate the need to keep large virtual warehouses that are susceptible to hacking.

The report also offers lessons learned regarding how to implement these new automated systems and technologies in a more agile and cost-effective way. MassHealth found that organizations testing new system capabilities should implement changes in a small “batch mode.” They should first apply any new processes to a small number of applicants rather than applying the untested changes to thousands of applicants. This way, glitches can be addressed before much time and administrative resources are wasted.

The Pioneer Institute’s report includes more ways states could increase accountability and efficiency for vetting their welfare programs, including increasing the frequency and quality of enhanced social security number checks, residency checks, and passive asset checks.

Earlier this year, Gov. Mary Fallin signed a bill to increase the frequency of audits for Oklahoma’s Medicaid rolls. The Hope Act requires the Oklahoma Health Care Authority (OHCA) to review Medicaid enrollees for eligibility now on a quarterly basis; OHCA will bring in a private contractor to assist with the eligibility checks. Full implementation of the law is expected in 2019.

Massachusetts’ rocky but overall fruitful experience with Medicaid audit reform serves as a good reminder that seeking out more responsible solutions to increase accountability and efficiency of government programs should be a top priority. Saving taxpayers hundreds of millions of dollars along the way is a bonus.

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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