GAO Says Medicaid’s Size, Complexity Prompt Fraud, Duplication

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Ethan Barton Editor in Chief
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Medicaid is inherently risky for fraud due to its massive size and bureaucratic complexity – and thanks in part to Obamacar the program is growing quickly, according to the investigative arm of Congress.

Medicaid’s “size and diversity make it vulnerable to improper payments,” the Government Accountability Office reported. These include “payments for treatments or services that were not covered by the program, that were not medically necessary or that were billed for but never provided.”

More than $508 billion was spent on Medicaid in 2014, with an estimated $17.5 billion of that funding improper payments. Expenditures are expected to increase to $529 billion this year.

There were around 72 million participants in 2013 – “roughly one-fifth of the U.S. population,” the report said.

“In 2003, GAO designated Medicaid as a high-risk program due to its size, growth, diversity of programs and concerns about gaps in oversight – and more than a decade later, those factors remain,” the report said.

“The bottom line is that this is a critical program for low-income individuals,” said the report’s co-author, GAO Health Care Director Carolyn Yocom, in a podcast released in connection with the report.

“However, it is also a big part of federal and state budgets, and we have a responsibility to ensure that the money goes to where it’s most needed. We need better data and better information in order to accomplish that,” Yocom said.

Medicaid – which turned 50 July 30 – operates through a partnership between the federal and state governments. The Centers for Medicare and Medicaid issues regulations and manages the programs, enforces oversight and provides more than half of the program’s funding through reimbursements, while state governments handle administration.

“There is an inherent tension between states’ efforts to design programs that best meet their local needs and federal efforts to oversee the states’ programs,” the report said. “Attention to the issues facing Medicaid and the effectiveness of its federal-state partnership will be important for ensuring that Medicaid is both effective for the enrollees who rely on it and accountable to the taxpayers.”

The task is particularly challenging, as CMS must coordinate oversight with unique Medicaid programs for each state and Washington, D.C.

“Responsibility for program integrity activities is spread across multiple state and federal entities, resulting in fragmented efforts, creating the potential for unnecessary duplication … as well as program areas not being covered,” the report said.

In other words, the state and federal entities’ fraud-prevention efforts will be redundant in some areas and nonexistent in others, leaving gaps in oversight.

“The combined federal and state efforts have recovered only a small portion of the estimated improper payments in Medicaid, and the Medicaid improper payment rate has recently increased,” the report said.

Additionally, Obamacare’s Medicaid expansion and the increasing population of seniors “are likely to exacerbate the challenges in federal oversight,” the report said.

As Medicaid spending and enrollees grow, so does the likelihood of improper payments, according to the GAO.

Expenditures are expected to increase to around $700 billion by 2020 with 10 million additional enrollees.

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