Report: Medicaid And Obamacare May Be Incentivizing Opioid Trafficking And Abuse

Steve Birr | Vice Reporter

One of the largest entitlement programs in the country is incentivizing prescription drug trafficking and exacerbating the national opioid epidemic, according to a Senate report.

The Senate Committee on Homeland Security and Governmental Affairs released a Major Staff report Wednesday, which details how Medicaid policies governing prescription drug prices, expanded at the state level through the Affordable Care Act (ACA) in 2014, “perversely” incentivize opioid abuse and illicit sales, as well as larger scale trafficking operations involving both criminal drug lords and respected doctors.

The report, commissioned by committee Chairman Sen. Ron Johnson of Wisconsin, notes the causes of the opioid epidemic are wide ranging and multifaceted, and says the committee does not, “deny the benefits that federal spending on healthcare provides to millions of Americans,” or claim Medicaid is the primary force behind the addiction crisis. (RELATED: How One Painkiller Ignited The Addiction Epidemic)

The Majority Staff Report presents evidence that financial incentives provided through Medicaid are negatively contributing to the ongoing addiction crisis, contradicting the common media narrative that Medicaid expansion under the ACA is essential to combating the epidemic because of its funding for addiction treatment programs.

It offers Clay County, Kentucky, as an example, where the number of residents on Medicaid rose from 35 percent to 60 percent in the three years following Medicaid expansion under the ACA. Over that same time period, opioid abuse increased, as did wait lists for inpatient drug treatment centers.

The report notes that roughly 70 million people are covered under Medicaid, “more than one fifth of the U.S. population,” which has created, “a series of incentives for potential abuse of opioids, which are rooted in federal law itself.” It points out Medicaid patients usually do not not pay for “covered medical expenses,” and that federal law mandates additional costs such as co-payments be kept small for lower income groups.

The incentives were made worse, according to the report, through an Obama administration rule mandating that states could charge no more than $4 to Medicaid patients for certain groups of prescription drugs, including opioid painkillers. In some states patients on Medicaid pay as little as a $1 co-payment for up to 240 prescription pills that carry a street value of roughly $4,000.

“Many people are falling victim to these temptations, a trend that is potentially destructive for Medicaid recipients, who can be especially susceptible to opioid addiction and abuse,” officials said in the Majority Staff Report. “In courts across the country—overwhelmingly in Medicaid expansion states—prosecutors are identifying Medicaid fraud involving opioids. …The criminal schemes range from simplistic—beneficiaries selling opioids obtained through Medicaid—to complex health care fraud involving Medicaid reimbursement.”

Specifically detailed in the report are 298 criminal cases involving Medicaid fraud related to opioids. It notes roughly 1,072 people have been charged or convicted of defrauding Medicaid to secure opioids since 2010, and that the number of criminal defendants has increased by 18 percent since Medicaid expansion in 2014. Officials stress the number of cases are likely a low representation of opioid Medicaid fraud because the crimes tend to be under-reported and have low prosecution rates.

In one case highlighted by the report, a Louisiana doctor threatened to kill federal agents investigating him for over-prescribing opioids and billing the costs to Medicaid, reportedly saying, “They won’t even be able to have an open casket funeral.” Another case involved a drug dealer who used Medicaid beneficiaries to divert hundreds of thousands of dollars worth of oxycodone pills. Police investigating the operation said, according to the report, “Absolutely, Medicaid is what allowed him to make so much money.”

While evidence of fraud concerning opioids exists in many other federal programs, the authors of the Majority Staff Report argue, “that Medicaid is the federal program most prone to abuse, and the primary government funding source for the epidemic.” More than 80 percent of the cases presented in the report are from states participating in ACA Medicaid expansion.

Residents of expansion states are also dying from drug overdoses at nearly twice the rate of states that opted out of expansion, according to the report.

Nationally, drug overdoses are now the leading cause of accidental death for Americans under age 50, killing 63,600 people in 2016. Opioids claimed 42,249 lives in 2016, a 28 percent increase over the roughly 33,000 lives lost to opioids in 2015, according to data released Dec. 21 by the Centers for Disease Control and Prevention.

President Donald Trump declared the opioid epidemic a “public health emergency” Oct. 26, giving states hit hard by opioid addiction flexibility on how they direct federal resources to combat rising drug deaths.

Opioid overdose made up a staggering 66 percent of all drug overdose deaths in 2016, surpassing the annual number of lives lost to breast cancer.

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