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How states have gamed Medicaid for hundreds of millions of dollars
By Josh
Hicks
September 15 at 6:00 AM
States have developed various ways to avoid paying their fair
share of Medicaid expenses over the years, in some cases costing the federal
government hundreds of millions of dollars in extra funding for the program.
The Department of Health and Human Services, which runs Medicaid through its
Centers for Medicare and Medicaid Services (CMS), has known about the
issue for more than a decade, but states still find ways to game
the system. The agencyfs inspector general this year listed the issue
among 25 key problems the agency needs to address.
In a report this year, the watchdog
agency highlighted one of the more common schemes that states have
used to dodge Medicaid costs.
Federal auditors found that Pennsylvania taxed health-care
providers and used the new revenue to give those providers
greater Medicaid reimbursements. This would trigger higher
Medicaid payments to the state, since the federal government
matches state contributions to the program.
In short, the Keystone State was using a shell game to make money off of
Medicaid.
Pennsylvania is hardly alone. North Carolina used a similar scheme to
add $60 million in federal funding to its coffers, according to a report this year in the Raleigh News & Observer.
The inspector general said in a report this year that it has seen gnumerous
examples in which states then redirected that additional money for other
purposes while medical facilities remain underfunded.h
CMS in July issued guidance to state medicaid directors and health
officials to clarify its policy on permissible health-care-related
taxes, an attempt to prevent further gaming of the system.
CMS and Congress have also taken steps to cap Medicaid payments for
health-care providers, helping restrict the ability of states to collect
excessive reimbursements through federal matching. Those policies have
helped save $79 billion over 10 years, according to the HHS inspector
general.
But other schemes have emerged. In one example, auditors found that New York had used
a flawed formula to report higher Medicaid costs than it actually incurred,
snagging more than $1 billion in extra funding from the U.S. Treasury
in 2009 and about $700 million extra in 2010.
New York agreed in 2012 to work with the CMS to ensure that its rates
meet federal requirements, according to the inspector general.
The watchdog agency has recommended that Congress and CMS implement policies
that link Medicaid payments to the actual cost of service.