By Tom Newell
If robbers pulled off a $19 billion heist, the story would be on the front page of every major news source. Unfortunately, a similar scheme occurs every year—and few people are talking about it.
Annually, billions of dollars are lost—and stolen—from taxpayers and the truly needy through spending on ineligible Medicaid recipients. Some of the dollars are lost through outdated systems and auditing practices by the state, others through blatant fraudulent and criminal behavior.
But this massive fraud can be prevented. In Oklahoma, more rigorous auditing of Medicaid rolls could save taxpayers an estimated $86 million each year, preserving money for education, public safety, infrastructure, and the truly needy.
And states that have implemented this bipartisan reform have seen just that.
Within 10 months of implementing more rigorous auditing procedures to check Medicaid eligibility, Pennsylvania identified more than 160,000 individuals who were receiving welfare benefits despite being deemed ineligible. When those individuals—including millionaire lottery winners and individuals in prison—were removed from the rolls, taxpayers saw nearly $300 million in savings before the end of the program’s first year.
Illinois followed Pennsylvania’s lead with its own program-integrity initiative, bringing in a third-party vendor to verify income, residency, and other eligibility criteria of the state’s Medicaid enrollees. By the end of the first year, more than 300,000 individuals found to be ineligible had been removed from the program. In the second year, the state removed an additional 400,000 individuals. And while state officials had projected that the initiative would save taxpayers nearly $350 million per year, based on the success of the program, actual savings was estimated to be between $390 and $430 million each year.
Medicaid audits do not remove deserving recipients from Medicaid rolls. Instead, these audits use enhanced tools and existing state data to verify an enrollee’s income, residency, and more. These factors are frequently monitored to ensure enrollees are still eligible for benefits; if they are found to no longer be eligible, they are removed. Also removed are those individuals found to be abusing the system through welfare fraud.
The importance of up-to-date auditing and eligibility checks for Medicaid recipients is underscored by the fact that Medicaid, like most social welfare programs, relies on self-reported data. Potential enrollees are supposed to report accurate data in income, residency, identity, employment, and other factors—and are supposed to report any subsequent changes to these factors.
But relying on self-reporting is like asking a bank robber to pay taxes—it’s frequently a recipe for disaster.
In a recent audit, one state found that 93 percent of all eligibility errors were due to enrollees not reporting information or reporting incorrect information. In Michigan, more than 7,000 lottery winners were still collecting welfare benefits. In Illinois, more than 14,000 dead people were found on the Medicaid rolls—sometimes for decades after they died. And in Arkansas, more than 20,000 Medicaid enrollees had high-risk identities, meaning many were using fake or stolen social security numbers.
These audits will not only mean an end to fraudsters, but they ensure that deserving Oklahomans remain on the Medicaid rolls—and that the funds are there to provide for them.
There are some who do not think Oklahoma needs more stringent Medicaid audits. These people choose to believe that this fraud isn’t occurring within our state. But I assure you, it is. It’s happening everywhere.
According to data from the U.S. Department of Health and Human Services, nearly 10 percent of all Medicaid spending is improper. Given that Medicaid is the single largest line-item in states’ budgets, that 10 percent represents a massive amount of money. And it’s money that cannot be spent on critical public services like education and public safety—services that are vital to Oklahoma’s success.
Unfortunately, the reality of Medicaid fraud reaches beyond stolen money from public services. When money is being spent on criminal behavior, less funds are available for those who truly rely on Medicaid services to survive. The truly needy suffer the most at the hands of Medicaid fraud. By not implementing rigorous audits to check eligibility, we are turning our backs on our most vulnerable neighbors.
In Oklahoma today, one in four citizens receive some sort of Medicaid benefits. Rigorous, frequent audits to check eligibility will help prevent fraud and misuse, and will better preserve resources for public services and needy Oklahomans. We owe it to the taxpayers and the truly needy to conduct audits to ensure these benefits are going to people who need them.
Tom Newell is a senior fellow at the Foundation for Government Accountability. A former member of the Oklahoma House of Representatives, he served as chairman of the Government Oversight and Accountability Committee and vice chairman of the Appropriations and Budget Committee.