[Senate Hearing 116-460]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 116-460

                       MEDICAID: COMPLIANCE WITH 
                        ELIGIBILITY REQUIREMENTS

=======================================================================

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON HEALTH CARE

                                 OF THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 30, 2019

                               __________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

            Printed for the use of the Committee on Finance

                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-826-PDF                  WASHINGTON : 2021                     
          
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                          COMMITTEE ON FINANCE

                     CHUCK GRASSLEY, Iowa, Chairman

MIKE CRAPO, Idaho                    RON WYDEN, Oregon
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia              SHERROD BROWN, Ohio
ROB PORTMAN, Ohio                    MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania      ROBERT P. CASEY, Jr., Pennsylvania
TIM SCOTT, South Carolina            MARK R. WARNER, Virginia
BILL CASSIDY, Louisiana              SHELDON WHITEHOUSE, Rhode Island
JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana                CATHERINE CORTEZ MASTO, Nevada
TODD YOUNG, Indiana

             Kolan Davis, Staff Director and Chief Counsel

              Joshua Sheinkman, Democratic Staff Director

                                 ______

                      Subcommittee on Health Care

               PATRICK J. TOOMEY, Pennsylvania, Chairman

CHUCK GRASSLEY, Iowa                 DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas                  MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming             ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia              SHERROD BROWN, Ohio
TIM SCOTT, South Carolina            ROBERT P. CASEY, Jr., Pennsylvania
BILL CASSIDY, Louisiana              MARK R. WARNER, Virginia
JAMES LANKFORD, Oklahoma             SHELDON WHITEHOUSE, Rhode Island
STEVE DAINES, Montana                MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana                  CATHERINE CORTEZ MASTO, Nevada

                                  (ii)
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Toomey, Hon. Patrick J., a U.S. Senator from Pennsylvania, 
  chairman, Subcommittee on Health Care, Committee on Finance....     1
Stabenow, Hon. Debbie, a U.S. Senator from Michigan..............     2

                               WITNESSES

Ritchie, Brian P., Assistant Inspector General for Audit 
  Services, Office of Inspector General, Department of Health and 
  Human Services, Washington, DC.................................     5
Yocom, Carolyn L., Director, Health Care, Government 
  Accountability Office, Washington, DC..........................     6
Purpera, Daryl G., CPA, CFE, Legislative Auditor, State of 
  Louisiana, Baton Rouge, LA.....................................     7
Solomon, Judith, senior fellow, Center on Budget and Policy 
  Priorities, Washington, DC.....................................     8

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Brown, Hon. Sherrod:
    ``The Number of Uninsured Children Is on the Rise,'' by Joan 
      Alker and Lauren Roygardner, October 2019, Georgetown 
      University Health Policy Institute, Center for Children and 
      Families...................................................    25
Casey, Hon. Robert P., Jr.:
    Statement of Teresa Miller, Secretary, Pennsylvania 
      Department of Human Services, October 30, 2019.............    45
Purpera, Daryl G.:
    Testimony....................................................     7
    Prepared statement with attachments..........................    46
    Responses to questions from subcommittee members.............    93
Ritchie, Brian P.:
    Testimony....................................................     5
    Prepared statement...........................................    94
    Responses to questions from subcommittee members.............   100
Solomon, Judith:
    Testimony....................................................     8
    Prepared statement...........................................   101
    Responses to questions from subcommittee members.............   107
Stabenow, Hon. Debbie:
    Opening statement............................................     2
    Prepared statement with attachments..........................   111
Toomey, Hon. Patrick J.:
    Opening statement............................................     1
    Prepared statement...........................................   116
Yocom, Carolyn L.:
    Testimony....................................................     6
    Prepared statement...........................................   117
    Responses to questions from subcommittee members.............   126

                             Communication

Center for Fiscal Equity.........................................   131

 
                       MEDICAID: COMPLIANCE WITH 
                        ELIGIBILITY REQUIREMENTS

                              ----------                              


                      WEDNESDAY, OCTOBER 30, 2019

                               U.S. Senate,
                       Subcommittee on Health Care,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 2 p.m., in 
Room SD-215, Dirksen Senate Office Building, Hon. Patrick J. 
Toomey (chairman of the subcommittee) presiding.
    Present: Senators Cassidy, Lankford, Daines, Young, 
Stabenow, Cantwell, Cardin, Brown, Casey, Hassan, and Cortez 
Masto.
    Also present: Republican staff: Alyssa Palisi, Staff 
Director for Senator Toomey; and Stewart Portman, Health Policy 
Advisor for Chairman Grassley. Democratic staff: Anne Dwyer, 
Senior Health Counsel for Ranking Member Wyden; Michael Evans, 
Deputy Staff Director and Chief Counsel for Ranking Member 
Wyden; Alex Graf, Staff Director for Senator Stabenow.

  OPENING STATEMENT OF HON. PATRICK J. TOOMEY, A U.S. SENATOR 
   FROM PENNSYLVANIA, CHAIRMAN, SUBCOMMITTEE ON HEALTH CARE, 
                      COMMITTEE ON FINANCE

    Senator Toomey. The committee will come to order. Welcome 
to the Senate Finance Subcommittee on Health Care hearing on 
``Medicaid: Compliance With Eligibility Requirements.''
    It is my pleasure to welcome our four witnesses today as we 
discuss recent evidence of eligibility errors in the Medicaid 
expansion population and other issues surrounding State 
compliance with Federal eligibility requirements.
    Our panel contains several nonpartisan government officials 
who have performed research relevant to today's topic. I look 
forward to hearing from them.
    But first I want to set the stage with a few staggering 
statistics. The Federal Government improperly spent over $36 
billion in the Medicaid program, giving the program an improper 
payment rate of 10 percent. It accounted for about 26 percent 
of government-wide improper payments in that fiscal year--that 
was last year. Federal taxpayers spent almost $12 billion on 
ineligible Medicaid recipients. And over the next 10 years, the 
expansion population alone will cost taxpayers a total of $925 
billion.
    Here is why this matters. Medicaid spending is already on 
an unsustainable path. Every decade since it was created, 
Medicaid has grown faster than our economy, a trend that the 
Congressional Budget Office projects to continue under current 
law. It is now a major driver of our Federal deficits and debt, 
and this trajectory cannot continue in perpetuity without 
eventually causing a crisis.
    Unfortunately, Medicaid's financial condition has worsened 
in the last decade because Obamacare created a new category of 
eligibility, working-age childless adults, and gave States a 
huge financial incentive to cover these working-age individuals 
over the traditional populations, which are the disabled, the 
indigent, and the elderly poor.
    For every working-age able-bodied adult who enrolls, a 
State gets 90 cents on the dollar, but just about 60 cents when 
it enrolls a disabled individual. It does not take a math 
wizard to figure out how States can game this formula.
    Making matters worse, in 2014 the Obama administration 
stopped auditing States' eligibility determinations. Payment 
Error Rate Measurement, or PERM audits, gave Congress insight 
into each State's eligibility errors. Without these reports, we 
do not have a complete picture of the Medicaid improper payment 
rate, meaning the estimated 30 percent of improper payments due 
to eligibility errors could in fact be much higher, resulting 
in much more perhaps than the $36 billion of taxpayer money 
being spent improperly.
    Ensuring that a taxpayer benefit like Medicaid goes to the 
intended recipient should not be a partisan issue. States must 
do a better job of adhering to Federal eligibility 
requirements, and the Federal Government must do a better job 
of enforcing the law.
    Given the precarious financial condition of Medicaid, if we 
cannot stop eligibility errors today, this safety net for 
millions of elderly and disabled may not be there for future 
generations.
    I now yield to the ranking member, Senator Stabenow, for 
the purpose of an opening statement.
    [The prepared statement of Senator Toomey appears in the 
appendix.]

          OPENING STATEMENT OF HON. DEBBIE STABENOW, 
                  A U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Well, thank you very much, Mr. Chairman.
    I first want to welcome all of the witnesses today. It is a 
very important topic, and today's hearing will focus on 
Medicaid eligibility and enrollment and, hopefully as well, the 
importance of providing health care to millions of Americans 
through Medicaid.
    So let me start by saying we have very different views of 
health care and the role of Medicaid, and so I respectfully 
acknowledge that as we move forward. But let me first say, 
where we have issues with eligibility and enrollment, we need 
to fix them. And we can agree on that.
    But right now, the number one threat to Americans who 
qualify for or would like to enroll in Medicaid is, frankly, a 
court case currently before the Fifth Circuit Court actively 
supported, unfortunately, by the Trump administration. Any day 
now, the Fifth Circuit Court of Appeals will rule on the Texas 
v. United States case. And everything is at stake here, 
including protections for people with preexisting conditions, 
coverage for preventative services like cancer screenings, the 
ability for children to remain on their parents' health plans 
until age 26, and the entire Medicaid expansion that covers 17 
million Americans.
    Thanks to a detailed evaluation by the University of 
Michigan, we know the facts about Michigan's Medicaid 
expansion. We call it ``Healthy Michigan.'' And it, first of 
all, has meant 654,000 people covered in my State. Those with 
Healthy Michigan coverage not only have better health-care 
outcomes, they are better able to work and to seek employment. 
Instead of choosing between staying home and having health care 
on Medicaid or working a minimum wage job, they now are able to 
work a minimum wage job and have health care--which is 
something that I would hope that we would all support.
    The expansion created more than 30,000 new jobs and 
increased economic activity by $432 million in 2017 alone. This 
was State revenue, revenues no longer needed to pay people 
sitting in emergency rooms, the most expensive kind of care, 
and other kinds of treatment options.
    Uncompensated care in Michigan hospitals was cut in half. 
That keeps private insurance rates down and helps our hospitals 
in rural areas stay open. So I repeat: unfortunately the Trump 
administration is weighing in, and if they succeed in the Fifth 
Circuit Court case and strike down the ACA, the expansion is 
gone in total and millions of Americans lose their health care 
entirely.
    So I would suggest for millions of Americans living in the 
States right now who are in what is called ``the coverage 
gap,'' that instead we should be focused on how they can in 
fact get expanded Medicare as well. And I know Senator Warner 
has a bill on that that I think is very important.
    Unfortunately, the court case and the coverage gap are not 
the only threats to Medicaid eligibility and enrollment right 
now, and I would ask, Mr. Chairman, unanimous consent to submit 
an article from last week's New York Times entitled ``Medicaid 
Covers a Million Fewer Children. Baby Elijah Was One of Them.''
    Senator Toomey. Without objection.
    [The article appears in the appendix beginning on p. 112.]
    Senator Stabenow. Thank you. And let me just read the first 
paragraph, which says: ``The baby's lips were turning blue from 
lack of oxygen in the blood when his mother, Christine Johnson, 
rushed him to an emergency room here last month. Only after he 
was admitted to the intensive care with a respiratory virus did 
Ms. Johnson learn that he had been dropped from Medicaid 
coverage.''
    So why was Elijah dropped from coverage? Why was he 
ineligible? Was this a case of fraud? No. According to The New 
York Times, Ms. Johnson missed a paperwork deadline, a 10-day 
window for providing proof of income to the State.
    Excessive paperwork and over-regulation are common concerns 
raised by colleagues when we talk about the interest of 
business and industry. Was excessive paperwork the reason Baby 
Elijah lost Medicaid coverage even though he qualified for it? 
I would say, yes.
    The story continued, ``All of Ms. Johnson's children are 
now re-
enrolled, but she has started receiving thousands of dollars in 
bills from the baby's hospital stay. Though she is counting on 
Medicaid to cover retroactively, she is haunted by what might 
have happened if the hospital where she took Elijah had 
considered the case non-urgent and turned them away.
    `` `I went to the ER thinking he had insurance. If the 
receptionist had not seen him turning blue, she might have said 
he is not covered, so we cannot see him today.' ''
    So the good news, in closing, Mr. Chairman, is that today 
in Michigan, Medicaid expansion means 97 percent of Michigan 
children can see a doctor and get the health care that they 
need. And after decades of progress toward universal coverage 
for children reached an all-time low uninsured rate of less 
than 5 percent in 2015 nationwide, we unfortunately are seeing 
this begin to move up in the wrong direction.
    Because of complex enrollment policies pushed by the 
administration and implemented by States, children, adults, and 
entire families are losing life-saving health-care coverage. 
Ms. Johnson had only 10 days with all of her children and all 
of the things in her life to juggle to reconcile paperwork with 
the State before her child was kicked off Medicaid.
    In some States, if you move and a piece of mail from the 
State Medicaid office gets returned from your old address, you 
lose coverage. So today, as we discuss ways to make sure that 
ineligible people are not being enrolled in Medicaid, which I 
support, I hope we will also take a hard look at policies that 
are actually kicking eligible children and families off of 
their health insurance. I look forward to the discussion.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Stabenow appears in the 
appendix.]
    Senator Toomey. Thank you, Senator Stabenow. Without 
objection, any other member's opening statement will be made 
part of the record.
    And now we will hear from our witnesses.
    First we will hear from Brian Ritchie, Assistant Inspector 
General for Audit Services at the Department of Health and 
Human Services' Office of Inspector General. He will highlight 
four reports that have found States that are not accurately 
determining Medicaid eligibility in the expansion or the newly 
eligible population.
    Next we will hear from Ms. Carolyn Yocom from the GAO. She 
will discuss the GAO's past findings on Medicaid ineligibility 
in the expansion population and highlight their ongoing work to 
help the Centers for Medicare and Medicaid Services prevent 
these improper payments.
    For our next witness, I will yield to my colleague from 
Louisiana for the introduction of Mr. Purpera.
    Dr. Cassidy, you are recognized to introduce your 
constituent.
    Senator Cassidy. Yes. It is a privilege to represent Mr. 
Purpera. He was unanimously elected by the legislature in 
Louisiana to serve as the Legislative Auditor for our State in 
2010, and has served since.
    He had previously served as the first Assistant Legislative 
Auditor for 3 years, and has 35 years of audit experience, 
including financial audits, investigative audits, forensic 
interviews, testifying before courts and legislative 
committees.
    He holds a BS degree in accounting from LSU and has been a 
Certified Public Accountant since 1985. He has many boards and 
commissions he has served on, but I will mention one just, 
again, to give a sense of the stature in which he is held by 
others in his field. He has been an executive committee member 
of the National State Auditors Association for 3 years and 
currently serves as president-elect. He has served as chairman 
of the National State Auditors Association's Performance Audit 
Committee from 2014 through 2019, and I could go on.
    I am proud to say that Mr. Purpera is dedicated to the 
fulfillment of the Louisiana Legislative Auditor's mission to, 
quote, ``foster the accountability and transparency of 
Louisiana Government for providing the legislature and others 
with audit services, fiscal advice, and other useful 
information.''
    I am pleased he is here today to provide that same service 
to us in the U.S. Congress. Daryl, good to have you here.
    Senator Toomey. Thank you, Senator Cassidy.
    And finally, we have Ms. Judith Solomon, a senior fellow at 
the Center on Budget and Policy Priorities.
    Welcome to each of you, and thank you for joining us. Due 
to Senate-wide business, we are going to need to limit our 
witness testimony a little bit. I am going to ask each of you 
to please try to keep your oral comments to no more than 3 
minutes so that we can hopefully get through all of our 
questions before virtually all of us will need to leave for the 
Senate-wide business.
    And with that, I would like to begin with our first 
witness. Mr. Ritchie, you are recognized for 3 minutes.

STATEMENT OF BRIAN P. RITCHIE, ASSISTANT INSPECTOR GENERAL FOR 
  AUDIT SERVICES, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF 
           HEALTH AND HUMAN SERVICES, WASHINGTON, DC

    Mr. Ritchie. Good morning, Chairman Toomey, Ranking Member 
Stabenow, and distinguished members of the subcommittee. Thank 
you for inviting me here today and for your longstanding 
commitment to ensuring that the Medicaid program's 
beneficiaries are well-served and the taxpayers' more than 
half-a-trillion-dollar investment is well-spent. OIG shares 
your commitment to protecting Medicaid from fraud, waste, and 
abuse and has an extensive body of work in this area. I will 
use my time today to focus on the need to accurately determine 
beneficiary eligibility.
    A strong program integrity strategy starts with prevention. 
Correctly determining eligibility prevents Medicaid from making 
improper payments for people who are not eligible for the 
program.
    OIG has conducted seven audits in four States: California, 
Colorado, Kentucky, and New York. Four focused on beneficiaries 
who were newly eligible after Medicaid expanded to low-income 
adults with dependent children. The other three audits focused 
on non-newly eligible beneficiaries. These are individuals who 
qualified under a traditional coverage group rather than the 
newly eligible group.
    We estimated almost $6.3 billion in Federal payments were 
made for beneficiaries who were not eligible or who may not 
have been eligible for Medicaid. This includes instances where 
beneficiaries qualified under a traditional coverage group but 
were incorrectly enrolled in the newly eligible adult group. 
Almost $1.3 billion of our estimate was for people determined 
to be newly eligible beneficiaries, while the remaining $5 
billion was for non-newly eligible beneficiaries.
    Generally, errors associated with both groups were due to 
States not properly verifying income or citizenship 
requirements, or beneficiaries being eligible for a different 
coverage group.
    In our reports, we recommended that these States ensure 
enrollment data systems are able to verify eligibility 
criteria, develop and implement written policies and 
procedures, and undertake redeterminations for the sample cases 
we reviewed, as appropriate.
    In conclusion, preventing improper payments starts by 
correctly determining who is eligible for the program. OIG will 
continue to prioritize Medicaid oversight to prevent and detect 
fraud, waste, and abuse and take appropriate action when it 
occurs. We are committed to ensuring that Medicaid pays the 
right amount to the right provider for the right service on 
behalf of the right beneficiary.
    Thank you for your ongoing leadership and for affording me 
the opportunity to testify on this important topic.
    [The prepared statement of Mr. Ritchie appears in the 
appendix.]
    Senator Toomey. Thank you, Mr. Ritchie.
    Ms. Yocom, you are recognized for 3 minutes.

     STATEMENT OF CAROLYN L. YOCOM, DIRECTOR, HEALTH CARE, 
        GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC

    Ms. Yocom. Chairman Toomey, Ranking Member Stabenow, and 
members of the subcommittee, I am pleased to be here today to 
discuss the importance of ensuring that only Medicaid-eligible 
people are enrolled in Medicaid.
    This Federal-State program finances medical and other 
health-related services for over 75 million people who are low-
income and medically needy. Medicaid's size and complexity make 
it particularly vulnerable to improper payments, including 
payments made for people not eligible for coverage.
    Today my testimony will focus on improvements needed to 
better ensure that Medicaid eligibility determinations are 
accurate. I will discuss CMS oversight of Medicaid eligibility 
and related expenditures, CMS's efforts to enhance Medicaid 
data, and the benefits of CMS collaborating with States and 
other partners, including State auditors.
    First, our work has identified improvements needed in CMS 
oversight of Medicaid eligibility determinations. As one 
example, in August 2018 we identified weaknesses in how CMS 
reviews States' expenditures that receive higher Federal 
matching rates, such as individuals newly eligible for Medicaid 
through the Patient Protection and Affordable Care Act. One of 
our recommendations focused on revising the sampling 
methodology for reviewing such expenditures. CMS initially 
agreed, but in 2018 stated the agency had no plans to revise 
its sampling methods. We continue to believe that action is 
necessary to better target areas of risk.
    Second, improvements in Medicaid data could aid program 
oversight, and CMS has acknowledged the need for better data. 
The T-MSIS initiative, Transformed Medicaid Statistical 
Information System, is CMS's primary effort to broaden the 
scope and improve the quality of State-reported expenditure and 
utilization data. These data are important for CMS oversight of 
States' Medicaid expenditures. Continued progress, however, 
will require a sustained multi-year effort.
    Finally, oversight could be improved further through 
collaborative efforts that leverage and coordinate oversight 
efforts. Since 2014, CMS has not publicly estimated improper 
payments due to errors in eligibility determinations. This 
means the bulk of the information provided comes from sources 
other than CMS--for example, from State auditors. State 
auditors are uniquely positioned to help CMS oversee Medicaid, 
and they have identified deficiencies in State oversight of 
managed care, eligibility determination processes, and other 
program components.
    Chairman Toomey, Ranking Member Stabenow, and members of 
the subcommittee, this concludes my prepared statement. I will 
be pleased to answer any questions you might have.
    [The prepared statement of Ms. Yocom appears in the 
appendix.]
    Senator Toomey. Thank you, Ms. Yocom.
    Mr. Purpera, you are recognized for 3 minutes.

 STATEMENT OF DARYL G. PURPERA, CPA, CFE, LEGISLATIVE AUDITOR, 
              STATE OF LOUISIANA, BATON ROUGE, LA

    Mr. Purpera. Thank you, Chairman Toomey, Ranking Member 
Stabenow, distinguished members. I appreciate the opportunity 
to come here today.
    Three years ago the State auditors around the country 
responded to the rising costs of Medicaid by really robusting 
our audit processes as we look at Medicaid each year within our 
States. We looked at how to control infrastructures, and we 
also looked at uncovering fraud, waste, and abuse and other 
improper payments.
    In my State--I wanted to highlight three reports that I 
recently issued. In the first report, our message was basically 
that when a person is enrolled in Medicaid due to their current 
monthly income, they essentially receive Medicaid for an entire 
year, even though their income may have changed drastically. If 
the change is not voluntarily reported, the department would 
never know because they are relying solely on annual renewals.
    In this particular report we looked at a targeted sample. 
It was risk-based. We looked at the 19,000 highest wage 
earners. We found that 82 percent did not qualify for all or a 
part of the benefits that they received. The error was roughly 
$61 million to $85 million. We recommended the department begin 
to look at more frequent wage verification.
    In the second report we saw that the department had 
actually implemented our recommendation. But by the time this 
report was done, the department had conducted three quarterly 
wage checks and had removed 64,000 individuals from the rolls 
at an annual savings of $385 million.
    In the third report we looked at the modified adjusted 
gross income determination process. The department determines 
eligibility for a major portion of the recipients based upon 
modified adjusted gross income. And we found that there was an 
8-percent error rate, costing roughly $111 million per year, 
and that could be avoided if controls were put into place.
    We also found that the department was not using State or 
Federal tax data to verify critical factors such as tax filer 
status, household size, self-employment, unearned income, and 
retirement.
    Now why do these improper payments occur? Well, in the 
Medicaid eligibility verification plans, the States have way 
too much latitude. The States are not required to use Federal 
tax information. They are permitted, but not required to. The 
law is often counterproductive in that it allows the self-
attestation of income information and very little verification, 
and the regulations do not require frequent wage checks.
    State auditors also do not have access to Federal--let me 
say it a different way. State auditors do not have the usage of 
Federal tax information to audit the Federal program. This is a 
Federal program. The Federal Government asks State auditors to 
audit this program. And though we can look at Federal tax 
information on a regular basis, we cannot use Federal tax 
information to audit a Federal program.
    Mr. Chairman, Ranking Member Stabenow, thank you very much.
    [The prepared statement of Mr. Purpera appears in the 
appendix.]
    Senator Toomey. Thank you, Mr. Purpera.
    Ms. Solomon, you are now recognized for 3 minutes.

 STATEMENT OF JUDITH SOLOMON, SENIOR FELLOW, CENTER ON BUDGET 
             AND POLICY PRIORITIES, WASHINGTON, DC

    Ms. Solomon. Thank you. Chairman Toomey, Ranking Member 
Stabenow, and members of the subcommittee, thank you for the 
opportunity to testify today.
    Today's discussion is focusing mostly on making sure only 
eligible people receive Medicaid, and I share that goal. But we 
should also be concerned that 7.5 million children and adults 
who are eligible for Medicaid remain uninsured and that 
enrollment of children has dropped by almost a million over 2 
years. If we do not focus on barriers that keep eligible people 
uninsured, we will see even more uninsured people. I have four 
points about how we can and should aim for accuracy in both 
directions.
    First, we need to deal with unnecessary churn of people 
going on and off of coverage. As we saw in last week's New York 
Times story about Baby Elijah, burdensome eligibility and 
verification processes cause eligible children and adults to 
lose coverage. Many reapply and eventually get their coverage 
back, but gaps in coverage hurt people when they cannot see a 
doctor or get their prescriptions filled, or are burdened by 
medical debt.
    Meanwhile, health-care providers cannot effectively manage 
care for people who churn in and out of coverage, and States 
have to do extra paperwork to re-enroll eligible people.
    Second, efforts to make Medicaid eligibility determinations 
more accurate must take volatile income and living situations 
into account. Monthly income for the typical low-wage Medicaid 
enrollee often varies with seasonal work, unsteady hours, and 
frequent job changes. When States check income by looking at 
lagged wage data, they do identify some people who are no 
longer eligible, but they also identify people with earnings 
from a job they have lost, or who worked overtime over the 
holidays. And many of these people end up losing coverage, even 
though they are still eligible.
    And many low-income people, including many families with 
children, have unstable housing and move frequently. So they 
lose coverage in States that terminate Medicaid coverage based 
on just one piece of returned mail.
    Third, we can find ways to reduce errors in both 
directions. First and foremost, States can take up the option 
for 12-month continuous eligibility. They can also adopt new 
and better ways to communicate, such as text messages, easier 
reporting through online portals, and outreach when mail is 
returned.
    Finally, we need to better understand what the studies and 
audits like the ones we are discussing today show and do not 
show. Some are misrepresenting the findings of recent audits by 
saying they show widespread beneficiary fraud. But as Mr. 
Ritchie testified, the audits show human and system errors that 
States are addressing.
    Thank you for the opportunity to testify. I would be 
pleased to answer any questions you may have.
    [The prepared statement of Ms. Solomon appears in the 
appendix.]
    Senator Toomey. Thank you, Ms. Solomon. And thank you all 
for your testimonies. We are going to now proceed to the 
question-and-answer phase, and members are reminded that we 
will each have 5 minutes for questions. And due to the time 
constraints that we have on the back end of this, please let's 
all keep our questions under 5 minutes.
    I will begin. My first question: Ms. Yocom, could you 
explain to us a little bit about the Payment Error Rate 
Measurement, known as PERM, audits--what they accomplish, the 
current status of those audits, and whether, and if so why, you 
believe they are important?
    Ms. Yocom. Sure. For the Medicaid program, there are three 
components that are measured. One is fee-for-service. The 
second is managed care. And the third is eligibility 
determinations.
    The States--these analyses are done for 17 States each 
year, and they are done on a rotating basis. So every 3 years 
you have covered all 51 States, if you count the District. And 
there are concerns in each of the areas. With eligibility, in 
particular, we just do not know the answer yet, and we have not 
known it since 2014.
    Senator Toomey. And why is that?
    Ms. Yocom. CMS made a choice to not publicly report any 
eligibility measures. They used a different system instead and 
worked internally with the States.
    Senator Toomey. My understanding is that that portion of 
the PERM audit has resumed, and we expect a report relatively 
soon. Is that your understanding?
    Ms. Yocom. Yes. Our understanding is, it usually comes out 
sometime in November.
    Senator Toomey. In the absence of that report, do we have 
less comprehensive, less accurate information about 
eligibility?
    Ms. Yocom. Yes.
    Senator Toomey. So it is plausible that the improper 
payment rate that has been estimated at $36 billion could 
actually be higher than that?
    Ms. Yocom. Yes, it could. We just do not know.
    Senator Toomey. Thank you.
    Mr. Purpera, in your home State of Louisiana, as I 
understand it, you uncovered 1,672 enrollees with over $100,000 
in annual income. And according to your testimony, in each case 
these individuals self-reported their income. Do you think 
there is any chance that there is any fraud involved among the 
1,672?
    Mr. Purpera. Chairman Toomey, yes, sir, I do think there is 
a chance. My office is currently investigating some of those 
situations as we speak. That work was where our Department of 
Revenue actually came out with that number. As I said earlier, 
State auditors cannot use tax information. But I was able to 
get my Department of Revenue to compare their taxing 
information to the database of the health department. And 
1,672, I believe it was, had incomes of over $100,000.
    Senator Toomey. And if a State allows individuals to self-
attest to their own income, what mechanism do they have to stop 
people from any level of income from signing up for Medicaid?
    Mr. Purpera. Well, the self-attestation is not the problem 
if the income is strictly wage income. When an individual works 
for a wage, they get a W-2. That information is reported to the 
Department of Labor in every State. The problem is, that is 
only a piece of the puzzle. You still have self-employment, 
rents, royalties; you have interest incomes. You have many 
different types of incomes that wage information does not 
cover. So you have to use tax information. You have to use 
other sources to go about getting that income.
    Senator Toomey. Thank you.
    Mr. Ritchie, the OIG's work in California found that 43 
percent of traditional enrollees, 43 percent, were potentially 
ineligible. An additional 11 percent are actually ineligible. 
And, if I understand your testimony correctly, within the 
Medicaid expansion population, 20 percent are ineligible.
    First, do I have these figures correct? And if so, how do 
we know that these are the numbers?
    Mr. Ritchie. That is correct. We picked a sample, and those 
are our estimates that we have projected. With our methods, we 
dug in and reviewed exactly what the State did in each case.
    So for each sample case we basically went back and we 
checked what the State did in order to verify the income, in 
order to verify each of the eligibility criteria. The potential 
ineligible rate was much higher in California than the other 
States. But in each State, we found potentially ineligible 
enrollees. And I think that is a big distinction that we tried 
to make in each of our reports and in our dollar figures 
overall.
    We presented the overall total of $6.3 billion to show the 
extent of the concern from a program integrity standpoint. From 
an actual ineligible standpoint, we found $1.8 billion across 
the States. And then we found $4.5 billion that was potentially 
ineligible. So from an IG and program integrity standpoint, the 
controls are not in place to tell that they did things 
appropriately. And when we found human and system errors, these 
are cases where they did not have the documentation.
    So tying back to Mr. Purpera's statement, they would have 
self-attested income, and they were supposed to verify that, 
and they did not have the documentation to show they verified 
it. Or they may have a system where they check citizenship in 
the data system, but the system did not have the capability to 
maintain the documents to show that they verified it. So there 
is no paper trail and audit trail to show that things were done 
properly.
    Senator Toomey. Thank you.
    Senator Stabenow?
    Senator Stabenow. Thank you, Mr. Chairman.
    First, I would ask unanimous consent that a letter to the 
subcommittee from the State of Louisiana's Health Secretary be 
submitted for the record.
    Senator Toomey. Without objection.
    [The letter appears in the appendix beginning on p. 115.]
    Senator Stabenow. Secretary Gee's letter highlights the 
tremendous success of the Medicaid expansion program in 
Louisiana. More than 450,000 people have gained coverage. 
Seventy-six thousand women have received mammograms. More than 
100,000 people have received mental health and substance abuse 
disorder treatment. And the expansion has created more than 
14,000 jobs. And not a single rural hospital has closed since 
Medicaid was expanded to cover more people, which is also good 
news.
    So, like I indicated in my opening statement, when we have 
issues with eligibility and enrollment, we certainly want to 
work together to fix them, but the decision to expand Medicaid 
was clearly the right one.
    So, Mr. Purpera, your November 2018 report on verifying the 
wages of Medicaid expansion enrollees evaluated the State's old 
enrollment and eligibility system. Correct?
    Mr. Purpera. Correct.
    Senator Stabenow. Okay; and the State implemented, as 
planned, a new system shortly after your report came out. Is 
that correct?
    Mr. Purpera. That's correct also, yes.
    Senator Stabenow. And I understand in your report that you 
made five main recommendations, and that you say that the 
Louisiana Department of Health agreed to all of them, including 
recommendations like the use of more frequent wage data 
matches, additional data sources, and staff training. Is that 
correct?
    Mr. Purpera. Yes, ma'am, that is correct.
    Senator Stabenow. Okay; thank you very much. It is also 
true, for the record, that the Trump administration approved 
the new enrollment system and even recognized Louisiana in 
February for their implementation of best practices to 
eliminate waste, fraud, and abuse. So we should be looking at 
what is now happening there.
    Let me turn to Ms. Solomon. We know that CMS is urging 
States to check their databases to see if people are over the 
income limit for Medicaid expansion, like Louisiana has done. 
Are there ways States can do this without kicking large numbers 
of people off coverage?
    I know you have touched on some of that, but how do we have 
that balance? We do not want people who are receiving services 
who are not eligible. But we also do not want to hurt families 
where they should be able to receive these services.
    Ms. Solomon. Yes; I mean, I think there are several things. 
And I would start, actually, with the people where they do find 
that they are over-income and do not qualify. What we have not 
really talked about is, many of those people should then be 
getting premium subsidies in the marketplace and should stay 
covered, and very little is being done to guarantee that. So 
for those, when they do identify people, I think there is an 
important step to take.
    For the others where you do not know, the problem is these 
notices give 10 days from the date of the notice. They do not 
reach people. Maybe they get 6 days. They are very unclear. 
They do not tell people what they really need to do. How do you 
prove you do not have a job anymore?
    And then sometimes they do not reach them because of moves. 
So I think it really is these new ways of reaching people: 
using text messages, using online portals, doing outreach when 
you get returned mail. We did a very quick look, and a tiny 
number of low-income people move out-of-State when they move. 
So these are people who are still there. There are things--
there is the National Postal Database that States can use. That 
works very well. So really----
    Senator Stabenow. So it is making sure that folks do not 
end up like little Elijah, who I mentioned, who was in this New 
York Times story, losing health-care coverage because they 
somehow did not get that notice and were not able to get the 
paperwork done.
    Ms. Solomon. Exactly. I think it is recognizing the lives 
of low-income people. And we have known for decades that 
increased paperwork is a barrier to coverage.
    Senator Stabenow. We hear concerns about increased 
paperwork all the time, and we need to address that, I think, 
in every area.
    And finally, Ms. Yocom, could you just talk for a moment 
about GAO's work comparing health-care outcomes in States with 
and without Medicaid expansion?
    Ms. Yocom. Sure. In particular, GAO did work that looked at 
the States that expanded Medicaid and the States that did not. 
We looked at things like unmet health-care needs and found 
that, across the board within a State, 26 percent of people in 
expansion States reported having unmet needs, in comparison to 
40 percent in non-expansion States.
    In terms of financial barriers to health care, we found 
that, for all individuals in expansion States, there were just 
9 percent who reported financial barriers to health care, and 
20 percent in non-expansion States.
    Senator Stabenow. Thank you, very much.
    Senator Toomey. Senator Cardin?
    Senator Cardin. Thank you very much, Mr. Chairman. I thank 
all four of our witnesses.
    Ms. Solomon, your statement is something that we all should 
be concerned about. And that is, we want to make sure that 
people are enrolled in the programs they are eligible for. So 
if they are enrolled in the wrong program, or they are 
ineligible for a particular program, we want to make sure that 
we have compliance. We all agree on that.
    But the numbers that you are telling us show that we are 
seeing a decline of people covered by Medicaid, and 
particularly the number of children we have seen decline. And 
we had bipartisan legislation to extend the CHIP program, and 
yet we are seeing that people who are eligible are not 
enrolling in the program.
    I saw one study that showed as many as 7.5 million of the 
uninsured would be eligible for Medicaid coverage, but they are 
not in the Medicaid program.
    So yes, we want to go after eligibility and make sure 
people are doing the right thing. The chairman asked a good 
question about fraud. We do not have those numbers. My gut 
tells me the number of fraudulent cases is probably very small. 
These are people who just do not have the information. The 
income varies during the year. They thought they were enrolling 
in one program, and they were put in a different program. The 
advice they got was--there are a lot reasons why. And States 
have all different types of inconsistencies on how they track 
people into the programs.
    I mention that because the State of Maryland, I believe, is 
starting the very first program in the country that, when you 
file your tax return, you can check a box and determine your 
eligibility based, upon your tax returns, for these programs.
    So what I guess I am asking is, can we not figure out a 
simpler way so that the people who are eligible can get into 
these programs? Their outcomes are going to be better, so it is 
better for our country. And quite frankly, we might not be 
doing what we need to, because people are enrolled who should 
not be. But we are not doing what we should, because too many 
people who are eligible are not enrolled.
    Ms. Solomon. Exactly. I think if we go to the intent of the 
Affordable Care Act, it really was to create that continuum of 
health coverage; that people could have coverage as their 
incomes changed.
    But what I think we have found is that it is very 
difficult. First of all, we have a number of States that still 
have not expanded Medicaid. So we have a coverage gap. But in 
the States that have, you are really looking at low-wage 
workers with volatile hours. And then you have this somewhat 
arbitrary 138 percent of the poverty line that takes not only 
income but family size into account.
    So, if a child grows up and leaves the home, if somebody 
gets divorced, all of those things really are going to affect 
eligibility, as are small fluctuations in income for people who 
are at the border. Which is why I think looking at continuous 
eligibility, which is now a State option, for children--and 
some States have done it for adults as well, where people can 
really stay put in coverage.
    If we think about it from a fiscal perspective, many of 
these people are eligible for marketplace coverage. And that 
costs Federal dollars as well. So if we let people stay put 
where they are, look at them at the end of the year, get them 
back into the same coverage, we are going to end up improving 
health, eliminating State paperwork, and making it easier for 
providers, who we more and more are expecting to be accountable 
for health outcomes. And you just cannot do that if your 
patients are in and out of coverage.
    Senator Cardin. And I will just add one last thing, Mr. 
Chairman, and that is, I think that was the intent of the 
Affordable Care Act, to provide a seamless system. We have not 
been working to make that a reality. Instead, we have been 
chipping away--not ``we,'' but some have been chipping away at 
the Affordable Care Act. And I think some of the consequences 
we see today are, as you point out, people who may be enrolled 
and not eligible for the Medicaid program may have been 
eligible for another program, and the government costs would 
have been comparable.
    And yet, we are showing that as misappropriation. And 
again, we want them in the right programs, absolutely. But we 
also want to make sure that people get the coverage that they 
are entitled to, and that they have access to health care in 
this country.
    Thank you, Mr. Chairman.
    Senator Toomey. Senator Brown?
    Senator Brown. Thank you, Mr. Chairman. I would say, 
``Welcome to the subcommittee.''
    Senator Stabenow already submitted this letter to the 
committee, and she already had it approved. I want to ask you a 
few true or false questions. And please, because of the 
shortness of time and that we have to get to the briefing----
    Louisiana's uninsured rate is the lowest it has ever been. 
True or false?
    Mr. Purpera. I am not really sure about that.
    Senator Brown. You are the auditor; you are not sure?
    Mr. Purpera. I do not know the answer, no.
    Senator Brown. Who might?
    Senator Cassidy. I do. It is.
    Senator Brown. Okay; thank you, Dr. Cassidy.
    Louisiana State University estimated that Medicaid 
expansion created more than 14,000 jobs in the State of 
Louisiana. True or false?
    Mr. Purpera. There is a report that indicates that. I have 
never audited that, so I cannot verify that.
    Senator Brown. Dr. Cassidy, do you know that?
    Senator Cassidy. I do not know that.
    Senator Brown. Because of Medicaid expansion, 76,000 women 
in Louisiana have received breast cancer screenings, and 43,000 
individuals have received colon cancer screenings. True or 
false?
    Mr. Purpera. That is not something I have audited, not 
something I have verified.
    Senator Brown. Well, this is like human beings, right? This 
is pretty important stuff.
    Mr. Purpera. Absolutely.
    Senator Brown. And you came to this committee understanding 
you would have at least some Democrats who support Medicaid 
expansion. I know what it has meant. When we had a Republican 
Governor expand Medicaid in my State, I know what it meant in 
terms of 900,000 people having insurance now who did not have 
it. And I could give you a whole litany of people who are under 
26 on their parent's plan and the consumer protections on 
preexisting conditions, and all the things that Senator 
Stabenow's lawsuit mentioned.
    Let me try something else. I thought you would be better 
prepared than that----
    Mr. Purpera. Senator, I do not mean not to answer your 
question, it is just--and I do not refute Dr. Gee's letter----
    Senator Brown. I just thought you would know these things. 
I mean, I know them. I have not been to Louisiana in many 
years.
    Mr. Purpera. I do not know the number of mammograms 
performed in Louisiana; I am sorry.
    Senator Brown. And you did not know the insurance rate was 
down, but fortunately your Senator does. So----
    Mr. Purpera. But I did know that the number of mammograms 
has increased. That is just an assertion.
    Senator Brown. During her opening statement, Senator 
Stabenow entered into the record a recent New York Times 
article on Medicaid coverage to a million fewer children. The 
article tells the story of a Texas family whose baby lost his 
Medicaid as a result of bureaucratic paperwork. The new 
Georgetown Center for Children and Families report that came 
out this morning--which I would like to submit to the record, 
Mr. Chairman, if I could----
    Senator Toomey. Without objection.
    [The report appears in the appendix beginning on p 25.]
    Senator Brown. It highlights some concerning trends as it 
relates to the uninsured rate for children. According to this 
report, over the past few years the number of uninsured 
children nationwide increased by 400,000. That number includes 
29,000 more uninsured children from my home State of Ohio. That 
is a 27-percent increase in the number of uninsured children 
between 2016 and 2018.
    Would you, Mr. Purpera, elaborate on the real-world 
consequences of these bureaucratic requirements? And you heard 
Ms. Solomon talk about the difficulty that these bureaucratic 
requirements and complex eligibility checks have on families 
who are eligible. What are the real-world consequences?
    Mr. Purpera. Sure. I probably look at it in an entirely 
different way. It is a $600-billion program estimated to grow 
to be a $1-
trillion program by 2025. We, roughly, in Louisiana, our per-
month pay is about $600 per month, $5,000 or $6,000 per year. 
In my book as an auditor, that means you need to submit the 
required documentation when asked.
    The issue with Baby Elijah--I understand that is a heart-
wrenching story, but that individual did get care. And the 
reason that it did not have insurance on that day is because 
the parent did not fill out the paperwork.
    The paperwork is not complex. The paperwork is very 
simple----
    Senator Brown. To you.
    Mr. Purpera. You can, in Louisiana--I do not know about in 
Texas--in Louisiana you can apply on the telephone, by 
Internet, or go in in person to many different offices.
    Senator Brown. Did you ever think about the lives of people 
who are kind of living on the edge, they make $10 or $11 an 
hour, they have to figure out how to get on the Earned Income 
Tax Credit, they have to figure out--you know, they do work 
that--they clean your hotel room when you come to Washington. 
And they are doing work, and you may not even ask them their 
names. Maybe you do. But their lives are not as ordered, and 
they do not have assistance. And we make these--we know what 
happens when we make the bureaucratic requirements more.
    You who believe in rejecting big government should 
understand that making individual people's lives, particularly 
low-income people's lives, harder, means a lot of them do not 
apply for these programs, right? Are there not human beings who 
do not apply because of these bureaucratic requirements?
    Mr. Purpera. I am not sure about that.
    Senator Brown. You ought to know--I know you are a numbers 
guy, but you ought to know the sort of human side of this. 
Fewer mammograms. Fewer colon cancer screenings. More people--I 
mean, more people die if you put more of these bureaucratic 
requirements in, right?
    Mr. Purpera. Actually, I do know the human side. In my 
other life, I am also a pastor of a church. So I very much 
understand the human side. But this is a government program. 
You have to have rules.
    Senator Brown. Okay. Thank you, Mr. Chairman.
    Senator Toomey. Senator Casey?
    Senator Casey. Thank you, Mr. Chairman.
    Mr. Chairman, I am going to start with asking consent to 
submit for the record a document entitled ``Comments of Teresa 
Miller, Secretary of the Department of Human Services'' in 
Pennsylvania dated October 30, 2019.
    Senator Toomey. Without objection.
    [The document appears in the appendix beginning on p. 45.]
    Senator Casey. Thank you, Mr. Chairman.
    And speaking about Medicaid expansion just in one State--it 
just happens to be our home State, Senator Toomey's State and 
mine that we represent--here is what Teresa Miller, the 
Secretary of the Department of Human Services, said. She said--
I am quoting now from the statement. I will not quote all of 
it.
    ``Over 680,000 individuals have health-care coverage 
because of Medicaid expansion,'' unquote. She also goes on to 
say that ``More than 1.4 million people, about one in seven 
Pennsylvanians under the age of 65, have been covered by 
Medicaid expansion since February of 2015,'' unquote.
    So in and out of the program--they are big numbers. Maybe 
more important than the numbers are what she says in the next 
paragraph, quote, ``It is a lifeline for people who otherwise 
cannot access or afford health insurance,'' unquote. She goes 
on to say in the next paragraph, quote, ``Medicaid expansion 
also saves lives,'' unquote. Referencing Senator Brown's 
indication of diagnoses, she says that ``3,596 people in 2017 
alone were diagnosed with just four forms of cancer.'' She goes 
on to cite individual examples of individual residents of 
Pennsylvania who have benefited from Medicaid expansion.
    She talks about uncompensated care and the positive impact 
that has had on our hospitals. And towards the end of her 
statement she says this, quote, ``Research is showing that the 
expansion is helping more people enter the workforce, including 
people with disabilities who formerly had to live in poverty to 
maintain Medicaid coverage.'' And she cites a footnote for that 
from the American Journal of Public Health. But that is in the 
document, if someone wanted to read it.
    So I guess one basic question I have--I have a strong 
belief that Medicaid itself has to be protected from the cuts. 
The administration has proposed cutting Medicaid itself by $1.5 
trillion over 10 years. So the administration believes, based 
upon I do not know what--they have never really indicated why 
they want to cut $150 billion a year for 10 years. The 
administration's position on health care is that a lawsuit or a 
repeal bill or some measure should be carried forward to wipe 
out the Affordable Care Act, including wiping out Medicaid 
expansion.
    It does not make much sense to me when you consider the 
people who are benefiting from Medicaid itself, and the many 
hundreds of thousands now just in one State who are benefiting.
    So, Ms. Solomon, I will start with you. On page 4 of your 
testimony you say, and I quote, ``Recent declines in Medicaid 
coverage for children and adults are due in part to a greater 
emphasis on frequent wage checks, more stringent documentation 
requirements, and terminations based on returned mail,'' 
unquote.
    If you could talk about that, the question of the paperwork 
leading to individuals losing coverage--and unfortunately, 
these individuals in many cases are children.
    Ms. Solomon. Yes. Thank you. You know, there are some 
findings from behavioral science that really explain this now. 
Because I started my career as a legal services lawyer and have 
been seeing this for decades. But there are studies that really 
show that low-income people have, you know, they have a lot on 
their plate, essentially. And these kinds of difficult 
situations we are putting them in--I have looked at these 
notices. They are long. They are complicated. They do not 
really tell people what they need to do.
    People are working. They cannot get their call center on 
the phone because it is during their working hours. Or they do 
not get the notice at all because they have moved and nobody 
bothers to follow up on the piece of returned mail.
    So all of that just contributes to a situation where we 
have large numbers of people who end up losing coverage when 
they are still eligible. We are not doing a good job. And we 
did--starting with the CHIP in 1997, and through the Affordable 
Care Act, there was a real effort to simplify and streamline.
    And unfortunately I think what we have seen, and what we 
are seeing in that increased number of ineligible children--of 
eligible children who are losing coverage--is a reversal of 
that and a push to do even more paperwork. And we know where 
that will go.
    Senator Casey. Thank you. And I know we are out of time, 
Mr. Chairman, but just one citation. The Georgetown study that 
Senator Brown put in the record, page 3 of that study tracks, 
in Figure No. 1, the number of uninsured children in the United 
States in millions 2008-2018. And the good news is, for a while 
it was going down, and now it is going up.
    We can disagree on a lot here, but I hope that people in 
both parties would be focused on getting that number down 
again. Thank you, Mr. Chairman.
    Senator Toomey. Senator Daines?
    Senator Daines. Thank you, Mr. Chairman.
    One of the most fundamental responsibilities that we have 
as United States Senators is to uphold the integrity as to how 
taxpayer dollars are spent. As we have heard today, the Federal 
Government improperly spent over $36 billion in the Medicaid 
program in fiscal year 2018. The sad reality is that every 
single one of those dollars that is lost due to waste, fraud, 
and abuse, means a lost investment in improving the health and 
well-being of vulnerable Montanans.
    In fact, according to a 2018 audit, Montana is more at risk 
for Medicaid fraud and abuse compared to other States. That is 
deeply concerning. So I am very glad we are taking the time to 
highlight these issues and discuss solutions that will protect 
taxpayers and safeguard this program for those who truly need 
it the most.
    Montana is one of only seven states--I guess I can count 
them on a hand and a couple of fingers here--to do post-
enrollment verification of income. This means that they are 
able to make someone eligible for Medicaid on attestation of 
income alone, with the understanding that they will check 
later.
    In 2018, a performance audit that was done by the Montana 
Legislative Audit Division had a sample of 100 cases that 
showed income errors in self-attested income in 24 percent of 
the cases. That is one in four. This audit also found that once 
the data was checked later, the discrepancies were not 
resolved.
    Mr. Purpera, how much variance among States is there in 
their verification plans?
    Mr. Purpera. Well, each State is allowed to set up their 
own verification plan. And CMS currently, they do not approve 
the verification plan. They accept the verification plan. But 
what I would tell you is that CMS allows far too much latitude 
in the verification plans and does not require things like the 
use of tax data. It does not require frequent wage checks and 
those type of things.
    If they would do so, they could reduce some of that 
improper payment you are talking about.
    Senator Daines. So could you speak a bit more about the 
importance of those plans and how CMS could help States have 
stronger eligibility check systems to these plans? How do you 
either incentivize it with a carrot or a stick to make this 
happen?
    Mr. Purpera. The plan, the verification plan, is the 
program that the State is going to use to verify eligibility. 
But what CMS currently does is allow the State too much 
latitude. They are able to choose maybe the easiest, or the 
least-intrusive methodologies, and that does not always result 
in determining whether the person truly is eligible or not.
    Senator Daines. Mr. Ritchie, OIG audited four States 
already, and your testimony notes that you are in the process 
of auditing two more, in fact, Louisiana and Ohio. Can you 
explain how OIG determines which States to audit? And are there 
indicators of risk that might suggest OIG should dedicate 
resources toward looking into another State?
    Mr. Ritchie. Yes. Typically, we try to do a risk-based 
analysis because we have limited resources, and we try to 
target our resources. In these particular audits, we actually 
did not do risk-based analysis. We were starting these early 
after ACA had expanded, and the criteria that we used for 
these, because we were just trying to target a handful of 
States, was that they had to have expanded eligibility. And we 
tried to do for almost all of them, both the expansion and the 
traditional population. Then we tried to get a mix 
geographically across the country, and a mix of sizes of large 
States, medium-sized States, and smaller States.
    The two that we have ongoing are Louisiana and Ohio, and 
then the four that we have out. And those are all that we have 
planned at this point.
    A key for us, really, in the fix is CMS, and the things 
that the chairman and others have talked about, the PERM and 
the MEQC process. Some of our work in the area is going to 
shift to looking at that now that CMS is back up and doing 
these, to make sure that they are working properly.
    Senator Daines. Did it surprise you in the case of Montana, 
where there's an audit done, that there were discrepancies that 
were found but there was not follow-up to resolve the 
discrepancies? I mean, I was in the private sector for 28 
years. The audit is step one, but that leads to, really, the 
outcome, which is to identify the action plan and resolve 
discrepancies.
    Mr. Ritchie. Yes. It is not worth doing if you are not 
going to follow through on it. You have to identify it, follow 
through with the action plan, and do that. That is what we are 
hoping to see.
    And in our reports, we make recommendations to the States 
and then follow up with them. I know some of ours are still 
recently out, but we had seen in both Kentucky reports and in 
one of the New York reports where they have actually 
implemented policies and procedures to follow up on those and 
make changes. We are hoping to see that in each of them, and we 
are hoping that our reports have a more sentinel effect, and 
that other States will see this and do it too, because we have 
seen consistent human and system errors that they can also 
correct.
    Senator Daines. All right; thank you. I am out of time. 
Thank you, Mr. Chairman.
    Senator Toomey. Thank you.
    Senator Cortez Masto?
    Senator Cortez Masto. Thank you, Mr. Chairman.
    I would like your help in putting something in perspective, 
and I am going to start with you, Ms. Yocom. In your report you 
state--and I have heard this echoed in this hearing--``In 
Fiscal Year 2018, the national Medicaid improper payment 
estimate was approximately $36 billion, which is nearly 10 
percent of Federal and Medicaid expenditures.''
    So that $36 billion in improper payment, which I am hearing 
is called ``fraud, waste, and abuse,'' is that all attributed 
to enrollees? Isn't some of that attributed to providers as 
well?
    Ms. Solomon. Correct.
    Senator Cortez Masto. And so let me just ask you this. So 
in sheer dollars, does Medicaid tend to see more fraud 
perpetrated by the providers, the industry, or by the low-
income patients?
    Ms. Yocom. Yes. With the caveat that we do not really know 
what is going on with eligibility right now, but if you go back 
in time to when all three were being measured, generally the 
improper payment rate for fee-for-service was much higher, and 
it continues to be.
    Senator Cortez Masto. And I can tell you, for 8 years when 
I was the Attorney General, the Medicaid fraud unit was under 
my control, and we went after the providers. And let us put 
that in perspective, because the providers that we are talking 
about, that we investigated or prosecuted, are hospitals, 
doctors, nursing homes, pharmacies, dentists--anyone else who 
was paid by Medicaid for a health-care service.
    And the number that I always heard--because it was hard to 
quantify--the total amount of abuse, fraud, and waste was 10 
percent of the expenditures. And that is what I see here now in 
2018. It is still 10 percent of expenditures that are paid on 
Medicaid.
    It has nothing to do with additional fraud because of the 
expansion States. And Nevada is an expansion State, but we have 
not seen that. And is that not true?
    Ms. Yocom. Yes. And actually, the fee-for-service improper 
payment rate is at about 14 percent.
    Senator Cortez Masto. Thank you.
    And so let me ask, Ms. Solomon, can you talk about the 
impact of administrative burdens on patients? We have also 
heard this. And if you would, put that in perspective for us 
and what that means to ensuring that, yes, we all want to 
address waste, fraud, and abuse. I think we do. We want more 
money to stay in the system so it can go to those who need it.
    But for those who are truly eligible, we want to make sure 
they have access to the money that they need. So can you talk a 
little bit about this?
    Ms. Solomon. Yes. And that was exactly what the ACA 
intended to do. I think there was an understanding this was not 
going to be easy to get everybody slotted into the right 
program.
    And I think in some ways it has been harder than we 
understood. You know, you are using an eligibility level that 
is somewhat arbitrary. And there was a study right before 
implementation that found that half of people with incomes 
below the level of 138 would have a change over the course of 
the year that would bring them above.
    So we have a really difficult task. States have a really 
difficult task if we are going to expect, on a monthly basis--
because Medicaid is determined based on monthly income--that 
everybody is always going to be in the right program. So it is 
very hard.
    The administrative burden, I think, of the wage checks in 
particular is that, while they do find some people who may no 
longer be eligible and should in many instances shift into the 
marketplace and remain covered, they also find people who were 
working overtime, or were working seasonally, or had a job, a 
second job that they do not have anymore.
    And then they are being asked to really prove that. And as 
I said earlier, the notices are very difficult. They do not 
really explain what you need to show to remain eligible. And 
that is really the burden of the paperwork.
    There are things we can do. I am not saying that we should 
stop the wage checks. What I am really saying is that we should 
think about what do those notices say? How do we communicate 
with people? How do we make it easy for them to report changes 
through the use of online portals, through phones that are 
answered when----
    Senator Cortez Masto. Let me cut you off, because I only 
have so much time, but I think what you said is important. 
Because I noticed--and listen, I think identifying an 
appropriate wage verification is key. But we have to be smart 
about it.
    And I know in the Louisiana report that I am seeing, it 
looks like the Louisiana Department of Health used a wage 
verification on application of renewal.
    Sir, Mr. Purpera, you actually looked at quarterly wage 
data to get your information. But the concern I have is that 
quarterly wage data--and let me ask you, Ms. Solomon--does it, 
could it include what you just said? Could it include a shift 
worker who took on additional hours around the holidays and now 
they are ineligible?
    Ms. Solomon. Yes, it----
    Senator Cortez Masto. Could it include someone who received 
an unexpected promotion and now they are ineligible? Right?
    Ms. Solomon. Yes, necessarily it is from a----
    Senator Cortez Masto. So just doing one snapshot, you are 
going to actually exclude people who actually need it even 
though they may have a one-time bump in their income, instead 
of looking at a full average in total income of an individual. 
Is that correct?
    Ms. Solomon. Exactly. It is not current. It is a lag; it is 
always a lag. You are always looking backwards.
    Senator Cortez Masto. Thank you. I notice my time is up. 
Thank you.
    Senator Toomey. Senator Cassidy?
    Senator Cassidy. Thank you. This is a weird hearing, 
because a lot of what we are hearing is nothing related to the 
topic of the conversation. No one is debating the Medicaid 
expansion. No one is debating whether Louisiana has these 
outcomes, which I am--Daryl, I am not sure I could attest to 
something which you have not personally looked at, as Senator 
Brown kind of rudely said that you should have been able to. 
But it is not about that.
    It is about, how do we make sure that hardworking taxpayers 
are supporting those who need support, but not otherwise being 
defrauded?
    And, Mr. Ritchie, I think I heard you say like 20 percent 
of the Medicaid expansion enrollees in California, you had 
problems with these enrollees? Did I get that right?
    Mr. Ritchie. Yes. For California we had found, in the 
dollars, we had $629 million that were newly and ineligible, 
and then $536 million that were non-newly and were ineligible.
    Senator Cassidy. So just an incredible number of people 
receiving taxpayer benefits--middle-class taxpayers paying for 
them, and yet they should not.
    Mr. Purpera, you and I had a conversation earlier. I think 
you mentioned one person on Medicaid was actually a Medicaid 
provider who had received $4 million in Medicaid payments as a 
provider? Do I remember that correctly?
    Mr. Purpera. Yes, sir, you do remember that correctly. And, 
Senator, I am not offended by being--somebody treating me rude. 
I am treated rude all the time.
    Senator Cassidy. Hang on. Hang on. I know that. So I am 
going to treat you rude right now, man. I've got to get through 
this.
    So I do not think this is an issue of Medicaid expansion, 
the value of that. I think it is an issue of making sure the 
taxpayers get their benefit. And there is an opportunity cost.
    I will point out that Medicaid or Medi-Cal payments are so 
low many providers do not see Medi-Cal patients. And they are 
so low because the program is spread so thinly. So if we are 
spreading it so thinly that payments are low and people cannot 
get access, that in itself is an opportunity cost.
    Ms. Solomon, I imagine if I were to propose the following, 
it would sound kind of attractive to you. I agree with you. If 
somebody has a bump in their wages because of overtime over 
Christmas, they should not lose health-care eligibility. Would 
it not be great if we had a seamless system in which they 
could, if they earned a little bit more, stay within the same 
system, kind of a standard set of benefits no matter what 
income scale you are, and the State would keep them in that and 
there would not be this kind of ongoing process. Would that not 
be good?
    Ms. Solomon. Yes, I mean----
    Senator Cassidy. I think you are a voter for Graham-
Cassidy. Unfortunately, none of these folks voted for Graham-
Cassidy. But Graham-Cassidy actually would have done that. And 
unfortunately it was never actually read by most of my 
colleagues who ended up vociferously criticizing it.
    Mr. Purpera, you actually mentioned a couple of things. 
Some suggestions--and I just want to emphasize by allowing you 
to comment on them--that right now auditors do not have 
permission to use income tax data in order to do an audit; that 
this should be required. As you mentioned, wages are one thing, 
but if you have rental property with income from that, that may 
move you out of eligibility, but it is never reported on wages.
    Will you elaborate on that, please?
    Mr. Purpera. Yes, sir, Senator. We often find that 
individuals have self-employment income that they do not 
report. Currently the rules say that if the Department of 
Health can verify the self-attestation by looking at the wage 
data, then they are to go no further.
    So if an individual reports no wages, they look at the wage 
data, and there is nothing there, they qualify. The problem 
could be they have a business that they are making considerable 
income in and they are just not reporting it.
    So tax information is key. You have to use the tax 
information, not only----
    Senator Cassidy. Tell me again why that is not routinely 
done. Because it seems like if we are spreading our Medicaid 
dollars so thinly that people cannot get in to see a doctor 
because doctors are paid below their cost of seeing a patient, 
and instead perhaps we could do something about that--but to do 
that, you need to focus benefits on those who need them.
    Explain how you could again do a more robust analysis in 
order to confirm that people are receiving only deserved 
receipts.
    Mr. Purpera. The rules currently permit it, but they do not 
require it. Twenty-seven States are doing that, but the 
remainder of the States are not. But if you had tax data, then 
you could look to see in the past--that is past information--
but you could look to see what were the types of income they 
were reporting at that point. And that gives you some beginning 
point to begin to ask questions about what income they have 
today.
    Senator Cassidy. Gotcha. And for every 1 percent of folks 
in Louisiana, for example, my own State, who are 
inappropriately enrolled, how much does that cost taxpayers?
    Mr. Purpera. It is roughly $70 million.
    Senator Cassidy. Seventy million dollars. And you say, I 
think, it is about 8 percent who are inappropriately enrolled?
    Mr. Purpera. That was one of our eligibility reports.
    Senator Cassidy. So roughly 40-what? Let's say times seven. 
You are the auditor.
    Mr. Purpera. Four hundred and something.
    Senator Cassidy. Over $400 million. That is real dollars, 
right?
    Mr. Purpera. Absolutely.
    Senator Cassidy. And in California, if you have that many 
people, Mr. Ritchie--I am not doing the math, but I can imagine 
similarly it would be in the billions that would be lost to 
California taxpayers because of people inappropriately 
enrolled.
    I am out of time. I yield back.
    Senator Cantwell. Mr. Chairman?
    Senator Toomey. Senator Cantwell?
    Senator Cantwell. I know we are all trying to get to a 
hearing, so I will be short and just say I am all for having a 
hearing about what savings we can get from Medicaid. I think 
the more important question in the law that we passed is, we 
included a provision for rebalancing. I think Louisiana 
originally took money to rebalance the Medicaid population off 
of nursing home care into community-based care.
    This is where we are going to get savings. My State did 
this, and we saved $2 billion. Why? Because if you can deliver 
home-based care services, they are going to be more affordable.
    So I hope we could have a hearing on that, since it has 
been several years since we implemented it, and many States, as 
I said, including Louisiana, originally participated by taking 
Federal dollars to do that efficiency. That is where we are 
going to find savings. That is where we are going to find 
efficiencies.
    Thank you, Mr. Chairman.
    Senator Toomey. Thank you. And I want to thank our 
witnesses for appearing before us today. These are important 
issues. Ensuring accuracy in Medicaid payments is an area where 
I think we have gotten some agreement on both sides, and we can 
work together to guarantee that all low-income families and 
individuals with disabilities have this important safety net to 
rely on in the future.
    I would like to submit Mr. Purpera's three reports to the 
record, without objection.
    [The reports appear in the appendix beginning on p. 50.]
    Senator Toomey. Please be advised that the members will 
have 2 weeks to submit written questions that can be answered 
later in writing. Those questions and your answers will be made 
part of the formal hearing record.
    And with that, the subcommittee stands adjourned.
    [Whereupon, at 3:10 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


       Submitted by Hon. Sherrod Brown, a U.S. Senator From Ohio

Georgetown University Health Policy Institute, Center for Children and 
                                Families

            The Number of Uninsured Children Is on the Rise

                  By Joan Alker and Lauren Roygardner

Key Findings

  The number of uninsured children in the United States increased by 
more than 400,000 between 2016 and 2018 bringing the total to over 4 
million uninsured children in the nation. Bipartisan initiatives and 
the Affordable Care Act that successfully reduced the child uninsured 
rate for many years have been undercut by recent policy changes, and 
the U.S. is now reverting backward on children's health coverage. The 
number of uninsured children and the child uninsured rate are now at 
the highest levels since 2014, when the ACA's major coverage expansions 
first took effect. This trend is particularly troubling as it occurred 
during a period of economic growth when children should be gaining 
health coverage. The child uninsured rate may increase more rapidly 
should an economic downturn occur.

  These coverage losses are widespread with 15 states showing 
statistically significant increases in the number and/or rate of 
uninsured children (Alabama, Arizona, Florida, Georgia, Idaho, 
Illinois, Indiana, Missouri, Montana, North Carolina, Ohio, Tennessee, 
Texas, Utah, West Virginia), and only one state (North Dakota) moving 
in the right direction. States where the uninsured rate for children 
has increased most sharply are Tennessee, Georgia, Texas, Utah, West 
Virginia, Florida, and Ohio. With respect to the number of uninsured 
children, West Virginia, Tennessee, Idaho, Alabama, Ohio, and Montana 
saw increases of 25 percent or more between 2016 and 2018.

  Loss of coverage is most pronounced for white children and Latino 
children (some of which may fall into both categories), young children 
under age 6, and children in low- and moderate-income families who earn 
between 138 percent and 250 percent of poverty ($29,435-$53,325 
annually for a family of three). Children whose families are in this 
income range also have the highest uninsured rates. American Indian/
Alaska Native children continue to have the highest uninsured rates by 
race. African American children saw a slight improvement in their 
coverage rates during the period examined.

  States that have not expanded Medicaid to parents and other adults 
under the Affordable Care Act have seen increases in their rate of 
uninsured children three times as large as states that have. Children 
in non-expansion states are nearly twice as likely to be uninsured as 
those in states that have expanded Medicaid.

Introduction

_______________________________________________________________________

For many years, the nation has been on a positive trajectory reducing 
the number and rate of uninsured children. Having health insurance is 
important for children as they are more likely to receive needed 
services, have better educational outcomes, and their family is 
protected from the financial risks associated with being uninsured--
even for a short period of time. Recently released data show that this 
progress is now in jeopardy. For the second year in a row, the 
uninsured rate and number of uninsured children moved in the wrong 
direction.\1\ This is unprecedented since comparable data began to be 
collected in 2008.
---------------------------------------------------------------------------
    \1\ Unless otherwise noted, all data in this report is based on a 
Georgetown University Center for Children and Families analysis of the 
U.S. Census Bureau American Community Survey data for the time period 
2016 to 2018. Please see the methodology for more information. Our 
analysis of last year's data found that the rate and number of 
uninsured children increased for a one-year period--2016 to 2017. See 
Alker and Pham, ``Nation's Progress on Children's Health Coverage 
Reverses Course,'' Georgetown University Center for Children and 
Families, November 2018.

The number of uninsured children now exceeds 4 million--wiping out a 
sizable share of the gains in coverage made following the 
implementation of the Affordable Care Act (ACA) in 2014 (see Figure 1). 
Coverage improvements for children began many years before the ACA was 
enacted through expansions of Medicaid and the creation of the 
Children's Health Insurance Program (CHIP). The ACA primarily improved 
children's coverage rates by increasing the likelihood that eligible 
children would be enrolled in Medicaid/CHIP when their parents obtained 
coverage, simplifying eligibility and enrollment procedures, funding 
new outreach and enrollment efforts, and establishing the individual 
mandate. Some children benefited from newly available subsidized 
---------------------------------------------------------------------------
coverage in the ACA Marketplaces as well.

While children's health coverage rates had been improving for many 
years prior to 2014, the ACA pushed uninsured rates and numbers for 
children to their lowest levels on record in 2016. However, since 2016 
the nation's progress has reversed course. Starting early in 2017, the 
new Administration and Congress made an unsuccessful attempt to repeal 
the Affordable Care Act and deeply cut Medicaid. At the end of 2017, 
Congress repealed the individual mandate penalty and delayed the 
extension of the Children's Health Insurance Program (CHIP) for many 
months--resulting in confusion for families and an ensuing delay in the 
distribution of CHIP outreach and enrollment grants missing the 
critical back-to-school outreach opportunity.\2\ At a time when 
families need more help navigating the confusing health coverage 
landscape, fewer resources are available for ACA outreach and 
enrollment efforts as a result of cuts made by the Administration in 
2017.\3\
---------------------------------------------------------------------------
    \2\ Brooks, T., ``CMS Awards $48 million in Outreach Funds for 
Children's Coverage,'' Georgetown University Center for Children and 
Families SayAhh! Blog, July 9, 2019.
    \3\ See Brooks, T., Park, E., and Roygardner, L., ``Medicaid and 
CHIP Enrollment Decline Suggest the Child Uninsured Rate May Rise 
Again,'' Georgetown University Center for Children and Families, May 
2019, Figure 11.

In addition, there are clear signs that efforts over many years to 
streamline Medicaid enrollment and renewal processes for children and 
their parents are slowing or turning around in many states with more 
frequent eligibility checks notably on the rise.\4\ These factors have 
contributed to a diminishing infrastructure to support families in need 
of coverage and an ``unwelcoming'' climate that is less focused on 
ensuring that eligible children are enrolled and remain enrolled. 
Children's participation rates in Medicaid/CHIP went down slightly from 
2016 to 2017--the first time that has happened since 2008, when 
participation began to be measured.\5\
---------------------------------------------------------------------------
    \4\ Artiga, S. and Pham, O., ``Recent Medicaid/CHIP Enrollment 
Declines and Barriers to Maintaining Coverage,'' Kaiser Family 
Foundation, September 24, 2019.
    \5\ Haley, J. et al., ``Improvements in Uninsurance and Medicaid/
CHIP Participation Among Children and Parents Stalled in 2017,'' Urban 
Institute, May, 2019.

Meanwhile, the Trump Administration has ramped up its rhetoric and 
policies targeting immigrant communities with a campaign of fear and 
hostility. These policies are now clearly deterring parents from 
enrolling their eligible children in Medicaid or CHIP--despite the fact 
that most of these children are U.S. citizens.\6\
---------------------------------------------------------------------------
    \6\ Bernstein, H. et al., ``With Public Charge Rule Looming, One in 
Seven Adults in Immigrant Families Reported Avoiding Public Benefit 
Programs in 2018,'' Urban Institute blog, May 2019.

From 2016 to 2018 there were more than 400,000 more children uninsured 
in the United States.\7\ These losses were widespread with 15 states 
showing statistically significant increases in the number or rate of 
uninsured children, and usually both. Only one state (North Dakota) 
showed improvement during this 2-year time period. The lack of forward 
progress suggests that even well-intentioned states are hard pressed to 
overcome a negative national climate which is reducing children's 
enrollment in public coverage programs.
---------------------------------------------------------------------------
    \7\ The Census Bureau's American Community Survey shows an increase 
of 406,000 children as noted in Appendix Table 1. The Census Bureau's 
Current Population Survey shows an increase of 425,000 uninsured 
children from 2017 to 2018. Berchik, E. and Mykta, L., ``Children's 
Public Health Insurance Coverage Lower Than in 2017,'' U.S. Census 
Bureau, September 11, 2019.

Over the 2-year period, according to the U.S. Census Bureau American 
Community Survey (ACS), the uninsured rate for children under 19 moved 
up half of a percentage point from 4.7 percent to 5.2 percent. Results 
from the Census Bureau's Current Population Survey show a similar jump 
in the uninsured rate for children from 2017 to 2018--from 5 percent to 
5.5 percent.\8\
---------------------------------------------------------------------------
    \8\ Berchik, E. and Mykta L., ibid.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
Sources of coverage

 In 2018, the largest source of coverage for children continued to be 
employer-
sponsored insurance, though there was no statistically significant 
change between 2017 and 2018 despite the continued strong economy and 
low unemployment rates.\9\ Medicaid/CHIP coverage also showed no 
statistically significant change for the one-year period 2017 to 2018, 
although administrative data clearly show that Medicaid/CHIP enrollment 
has declined substantially for children.\10\ Comparable information for 
2016 was not available because of a change in the age range used by the 
Census Bureau. In assessing the 2018 Current Population Survey, the 
Census Bureau stated in September that the increase in the rate of 
uninsured children was ``largely because of a decline in public 
coverage.'' That conclusion is consistent with our ACS findings from 
last year that found the increase in uninsured children from 2016 to 
2017 occurred as Medicaid/CHIP enrollment dropped substantially.\11\
---------------------------------------------------------------------------
    \9\ At this time, we are unable to calculate the two-year trend and 
have examined one-year trends from 2017 to 2018 in Figure 3. When 
additional data becomes available later this year, we will issue an 
updated version of this chart. This is also the case for the income and 
race/ethnicity data displayed in Figures 4 and 5 both of which are one-
year trends. Other figures represent two year trends, or longer, as 
indicated.
    \10\ Brooks, Park, and Roygardner, op. cit.
    \11\ Alker and Pham, op. cit., p. 3.

From 2017 to 2018, fewer children were enrolled in direct purchase (or 
non-group) coverage, which includes subsidized coverage through the 
federal and state Marketplaces established by the Affordable Care Act. 
That likely was the result of higher premiums in the non-group market 
inside and outside the Marketplaces due to actions taken by the 
Administration and elimination of the individual mandate penalty. The 
U.S. Centers for Medicare and Medicaid Services data show the number of 
children under age 18 in families selecting Marketplace plans 
nationwide during open enrollment actually declined by more than 64,000 
between 2017 and 2018.\12\ Data on children's enrollment in individual 
market plans purchased outside of the Marketplaces is not available, 
but the Congressional Budget Office recently estimated that overall 
non-elderly individual market enrollment outside of the Marketplaces 
fell by 1.1 million between 2017 and 2018, on top of a 1.4 million 
reduction between 2016 and 2017.\13\ As a result, the individual market 
inside and outside the Marketplaces likely did not provide an 
alternative coverage source for children losing their Medicaid and CHIP 
coverage in 2018.
---------------------------------------------------------------------------
    \12\ Georgetown University Center for Children and Families 
analysis of Centers for Medicare and Medicaid Services Marketplace Open 
Enrollment period public use files for 2017, 2018 and 2019, available 
at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-
Trends-and-Reports/Marketplace-Products/index.html. Enrollment in 
64,257 from 1,068,082 in 2017 to 1,003,825 in 2018, with a reduction of 
another 21,052 between 2018 and 2019.
    \13\ See Congressional Budget Office, ``Health Insurance Coverage 
for People Under Age 65: Definitions and Estimates for 2015 to 2018,'' 
op. cit. and Eibner, C. and Nowak, S., ``The Effect of Eliminating the 
Individual Mandate Penalty and the Role of Behavioral Factors,'' 
(Washington: The RAND Corporation, July 2018), available at https://
www.commonwealthfund.org/publications/fund-reports/2018/jul/
eliminating-individual-mandate-penalty-behavioral-factors.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


What are the demographic characteristics of uninsured children?
_______________________________________________________________________

Income: As seen in Table 1, children from low- and moderate-income 
families earning between 138 percent and 250 percent of the federal 
poverty level ($29,435-$53,325 annually for a family of three) had the 
sharpest increase in their uninsured rate and the highest uninsured 
rate compared to other children. Most of these children are likely 
eligible for Medicaid or CHIP but not currently enrolled. The national 
median eligibility level for Medicaid/CHIP across states is 255 percent 
of federal poverty line.\14\ However, there are some states whose CHIP 
eligibility is lower than this, which is likely contributing to the 
fact that they have large numbers of uninsured children--most notably 
Texas and Florida (see Figure 4).
---------------------------------------------------------------------------
    \14\ Brooks, T., Roygardner, L. and Artiga, S. et al., ``Medicaid 
and CHIP Eligibility, Enrollment, and Cost Sharing Policies as of 
January 2019: Findings From a 50-State Survey,'' Georgetown University 
Center for Children and Families, available at https://www.kff.org/
medicaid/report/medicaid-and-chip-eligibility-enrollment-and-cost-
sharing-policies-as-of-january-2019-findings-from-a-50-state-survey/.


Table 1. Percent of Uninsured Children by Census Poverty Threshold, 2017-
                                  2018
------------------------------------------------------------------------
        Poverty Threshold                2017                2018
------------------------------------------------------------------------
0-137%                                         6.8%                6.8%
138-250%                                       6.9%   7.3% *
250% or above                                  3.2%              3.5% *
------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis
  of the U.S. Census 2017-2018 American Community Survey (ACS) data
  using 1-year estimates from Data.Census.Gov (B27019).
* Change is significant at the 90% confidence level relative to the
  prior year.


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
  

Children from higher-income families are also seeing increases in their 
uninsured rates, though those rates are still considerably lower than 
the national average. This likely reflects the rapidly increasing cost 
of employer-sponsored family coverage,\15\ reduced participation in 
subsidized Marketplace coverage, and the repeal of the individual 
mandate penalty. The ``family glitch'' may be contributing to the 
difficulties that families are facing in accessing marketplace 
subsidies.\16\
---------------------------------------------------------------------------
    \15\ See Claxton, G. et al., ``Health Benefits in 2019: Premiums 
Inch Higher and Employers Respond to Federal Policy,'' Health Affairs, 
September 25, 2019.
    \16\ Whitener, K. et al., ``Future of Children's Health Coverage: 
Children in the Marketplace,'' Georgetown University Center for 
Children and Families, June 2016, p. 7.

Race and Ethnicity: While comparable 2016 data was not available for 
this indicator, the one-year trend from 2017 to 2018 shows a clear 
pattern that Hispanic children (who can be of any race) are seeing 
significant increases in their uninsured rates (see Figure 5). These 
children already have very high rates of uninsurance, and increases are 
likely the result of a ``chilling effect'' where mixed status and 
immigrant families with a parent who is an immigrant and a child who is 
a citizen are reluctant to enroll their child in public coverage for 
fear of deportation or being deemed a ``public charge.''\17\ (It is 
important to note that the proposed public charge rule changes have 
been temporarily blocked by courts.
---------------------------------------------------------------------------
    \17\ See Artiga, S., Garfield, R., and Damico, A., ``Estimated 
Impacts of Final Public Charge Inadmissibility Rule on Immigrants and 
Medicaid Coverage,'' Kaiser Family Foundation, September 18, 2019.

Even if the changes proceed, children's use of Medicaid, in and of 
itself, will not affect a parent's determination of being a public 
charge.) Similarly, the Census Bureau's Current Population Survey shows 
a very large increase of 1 percentage point in the rate of uninsured 
Hispanic children.\18\
---------------------------------------------------------------------------
    \18\ Berchick, E., op. cit.

White children also saw a statistically significant increase in their 
uninsured rate from 4.9 percent to 5.2 percent, while African American 
children actually saw a slight improvement and have the lowest rate of 
uninsured children apart from Asian/Native Hawaiian/Pacific Islander 
---------------------------------------------------------------------------
children.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


Age: A disturbing trend is emerging for babies, toddlers and preschool 
age children whose uninsured rates are increasing. As Table 2 shows, 
from 2016 to 2018, their uninsured rate jumped from 3.8 percent to 4.3 
percent--an increase of over 13 percent. Similarly, the Current 
Population Survey shows a decline in Medicaid/CHIP for this age group 
and an even bigger increase in their uninsured rate--from 4.5 percent 
to 5.3 percent.\19\ Young children have long had the lowest uninsured 
rates but this positive trend has been reversed, and their rate now 
approaches the national average for all children. The importance of 
regular preventive care, immunizations, routine care and developmental 
screenings at this age underscores how essential it is for these young 
children to have continuous coverage.\20\ Older children (age 6 to 18) 
also saw a significant increase in their uninsured rate from 2017 to 
2018 moving up from 5.4 percent to 5.6 percent.
---------------------------------------------------------------------------
    \19\ Ibid.
    \20\ Georgetown University Center for Children and Families is 
preparing a companion report looking specifically at this age cohort.


              Table 2. Uninsurance Rates by Age, 2016-2018
------------------------------------------------------------------------
               Age                       2016                2018
------------------------------------------------------------------------
Under 6 years old                              3.8%              4.3% *
------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis
  of the U.S. Census 2017-2018 American Community Survey (ACS) data
  using 1-year estimates from Data.Census.Gov (B27001).
* Change is significant at the 90% confidence level and is significant
  relative to the prior year indicated.


Where do uninsured children live?

_______________________________________________________________________

Approximately half of the nation's uninsured children reside in six 
states (see Figure 6). More than one in five live in Texas alone. 
Florida, California, and Georgia all have more than 200,000 uninsured 
children. Appendix Table 1 shows the state-by-state breakdown of where 
the nation's 4,055,000 uninsured children reside.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


Uninsured children are much more likely to live in the South as Table 3 
shows. While 39 percent of the nation's children live in the South, 53 
percent of uninsured children do. No other region of the country has a 
larger share of uninsured children relative to their overall number of 
children.

                              Table 3. Share of Uninsured Children by Region, 2018
----------------------------------------------------------------------------------------------------------------
                                                           Number of      Share of  Nation's
        Geographic Region         Share of the Total       Uninsured           Uninsured       Uninsurance Rate
                                   Child Population        Children            Children
----------------------------------------------------------------------------------------------------------------
Midwest                                       21.0%             710,000               17.5%                4.3%
Northeast                                     15.9%             378,000                9.3%                3.1%
South                                         38.9%           2,142,000               52.8%                7.1%
West                                          24.2%             824,000               20.3%                4.4%
Total                                        100.0%           4,054,000              100.0%                5.2%
----------------------------------------------------------------------------------------------------------------
Midwest--IA, IN, IL, KS, MI, MN, MO, NE, ND, OH, SD, WI
Northeast--CT, ME, MA, NH, NJ, NY, PA, RI, VT
South--AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV
West--AZ, AK, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, WY
Source: Georgetown University Center for Children and Families analysis of the U.S. Census Bureau American
  Community Survey (ACS) Table HIC-5, Health Insurance Coverage by State--Children Under 19: 2008 to 2018 Health
  Insurance Historical Tables.
* Change is significant, at the 90% confidence level and is significant relative to the prior year indicated,
  Data may not sum due to rounding.

Six of the top 10 counties with the highest number of uninsured 
children are in the South (see Table 4).

                  Table 4. Top 10 Counties With the Highest Number of Uninsured Children, 2018
----------------------------------------------------------------------------------------------------------------
                                                                                                  County Rank by
                                                Total Child       Number of         Rate of       Highest Number
                   County                        Population       Uninsured        Uninsured      of  Uninsured
                                                                   Children         Children         Children
----------------------------------------------------------------------------------------------------------------
United States                                     77,817,110        4,055,370             5.2%                -
Harris County, TX                                  1,316,616          166,019            12.6%                1
Dallas County, TX                                    725,809          110,627            15.2%                2
Maricopa County, AZ                                1,111,591           91,989             8.3%                3
Los Angeles County, CA                             2,319,159           80,971             3.5%                4
Tarrant County, TX                                   579,751           62,622            10.8%                5
Cook County, IL                                    1,191,757           47,618             4.0%                6
Hidalgo County, TX                                   297,617           46,530            15.6%                7
Bexar County, TX                                     537,946           44,137             8.2%                8
Miami-Dade County, FL                                590,331           41,534             7.0%                9
Clark County, NV                                     541,860           38,863             7.2%               10
----------------------------------------------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis of the U.S. Census 2017-2018 Amercian
  Community Survey (ACS) data using 1-year estimates from Data.Census.Gov (B27010).

As Figure 7 shows, 10 states have child uninsured rates that are 
significantly higher than the national average. These states (in order 
of highest rates) are Texas, Alaska, Arizona, Oklahoma, Georgia, 
Nevada, Florida, Utah, Wyoming, and Indiana. Twenty-seven states are 
doing better than the national average.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


Which states have the worst trends?

_______________________________________________________________________

During the time period examined, no state except North Dakota, went in 
the right direction. This suggests that it will be very difficult for 
any state, especially for those with high rates of uninsured children, 
to continue moving in the right direction until the prevailing national 
climate changes. Twelve states (Alabama, Arizona, Florida, Georgia, 
Illinois, Missouri, North Carolina, Ohio, Tennessee, Texas, Utah, and 
West Virginia) saw statistically significant increases in both the 
number and rate of uninsured children from 2016 to 2018. Three 
additional states (Idaho, Indiana, and Montana) saw significant 
increases in either the number or rate during the same period (see 
Tables 5 and 6).

Table 5 shows the states with significant increases in their uninsured 
rate--which is the best indicator to compare across states to account 
for their different sizes. The states with increases in their uninsured 
rates of 1 percentage point or higher are: Tennessee, Georgia, Texas, 
Utah, West Virginia, Florida and Ohio.

Table 6 shows states with the biggest percentage jumps in the number of 
uninsured children. West Virginia, Tennessee, Idaho, Alabama, Ohio, and 
Montana all saw increases of 25 percent or more in their number of 
uninsured children.

              Table 5. 13 States With Significant Increase in Rate of Uninsured Children, 2016-2018
----------------------------------------------------------------------------------------------------------------
               State                          2016                      2018             Percentage Point Change
----------------------------------------------------------------------------------------------------------------
Tennessee                                              3.7%                      5.2%                      1.5%
Georgia                                                6.7%                      8.1%                      1.4%
Texas                                                  9.8%                     11.2%                      1.4%
Utah                                                   6.0%                      7.4%                      1.4%
West Virginia                                          2.3%                      3.4%                      1.1%
Florida                                                6.6%                      7.6%                      1.0%
Ohio                                                   3.8%                      4.8%                      1.0%
Missouri                                               4.8%                      5.7%                      0.9%
Alabama                                                2.7%                      3.5%                      0.8%
Arizona                                                7.6%                      8.4%                      0.8%
Illinois                                               2.6%                      3.4%                      0.8%
Indiana                                                5.9%                      6.6%                      0.7%
North Carolina                                         4.7%                      5.3%                      0.6%
----------------------------------------------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis of the U.S. Census Bureau American
  Community Survey (ACS) Table HIC-5, Health Insurance Coverage Status and Type of Coverage by State--Children
  Under 19: 2008 to 2018, Health Insurance Historical Tables.
* Change is significant at the 90% confidence level and is significant relative to the prior year indicated.


   Table 6. 14 States With Significant Increase in Number of Uninsured
                           Children, 2016-2018
------------------------------------------------------------------------
                                           2016-2018
                                         Change in the      2016-2018
                 State                     Number of     Percent  Change
                                           Uninsured
------------------------------------------------------------------------
West Virginia                                    4,000            44.4%
Tennessee                                       25,000            43.1%
Idaho                                            7,000            31.8%
Alabama                                          9,000            28.1%
Ohio                                            29,000            27.9%
Montana                                          3,000            25.0%
Illinois                                        20,000            24.4%
Utah                                            13,000            22.0%
Georgia                                         38,000            21.2%
Florida                                         51,000            17.7%
Missouri                                        12,000            16.9%
Texas                                          121,000            16.1%
North Carolina                                  15,000            13.0%
Arizona                                         14,000            10.6%
------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis
  of the U.S. Census Bureau American Community Survey (ACS) Table HIC-5,
  Health Insurance Coverage Status and Type of Coverage by State--
  Children Under 19: 2008 to 2018, Health Insurance Historical Tables.
* Change is significant at the 90% confidence level and is significant
  relative to the prior year indicated.

States that have not expanded Medicaid are lagging even further behind.

States that have not expanded Medicaid to parents and other adults 
earning 138 percent of the federal poverty level or below are more 
likely to have higher rates of uninsured children to begin with, and 
the situation in those states is worsening more rapidly (see Figures 8 
and 9). It is well established that when states offer coverage to the 
whole family, children are more likely to be enrolled.

As Figure 8 shows, the rate of uninsured children grew three times as 
fast from 2016 to 2018 in states that have not expanded Medicaid 
compared to states that expanded Medicaid. These results are generally 
similar to those found by the Census Bureau in its recent report using 
CPS data.

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


Conclusion

_______________________________________________________________________

The alarming increase in the number of uninsured children--up by more 
than 400,000 children between 2016 and 2018--reverses a longstanding, 
positive trend that was driven by a bipartisan commitment to children's 
health coverage and, more recently, implementation of the ACA. The 
state-by-state analysis found this reversal is widespread, with only 
one state showing improvement on this critical child health metric. 
This is particularly troubling as more children became uninsured during 
a period of economic growth when more people are working and earning 
more and children should be gaining coverage.

This serious erosion of child health coverage is likely due in large 
part to the Trump Administration's actions that have made health 
coverage harder to access and have deterred families from enrolling 
their eligible children in Medicaid and CHIP. These actions include 
attempting to repeal the ACA and deeply cut Medicaid, cutting outreach 
and advertising funds, encouraging states to put up more red tape 
barriers that make it harder for families to enroll or renew their 
eligible children in Medicaid or CHIP (or ignoring it when they do), 
eliminating the ACA's individual mandate penalty, and creating a 
pervasive climate of fear and confusion for immigrant families. That 
has left many of these families reluctant to enroll their (largely) 
citizen children in public coverage for fear of having this held 
against them.

Continuous health coverage is essential for children--improving their 
access to needed preventive and routine care, improving their health, 
educational and economic outcomes as adults, and protecting their 
families from medical debt and bankruptcy when a child breaks a bone, 
or worse, has cancer.

There are no signs that this disturbing trend in children's health 
coverage will abate unless national and state leaders fully rededicate 
themselves on a bipartisan basis to the goal of ensuring that all 
children have access to affordable, comprehensive health insurance.

Methodology

_______________________________________________________________________

Data Sources and Historic Changes to Age Categories for Children

The data presented in this brief derive from the U.S. Census Bureau's 
annual American Community Survey (ACS) as presented in two sources: (1) 
Health Insurance Historical Table HIC-05, Health Insurance Coverage 
Status and Type of Coverage by State--Children Under 19: 2008 to 2018; 
and (2) the Census Bureau's new data platform, Data.Census.Gov. Where 
only number estimates are available, percent estimates were computed 
based on formulas provided in the 2018 ACS's ``Instructions for 
Applying Statistical Testing to ACS 1-Year Data.''

In order to better align with the current health landscape, the age 
categories of the 2017 (and 2018) ACS health insurance tables (in 
American Fact Finder, now Data.Census.Gov) were updated so that the age 
group for children includes individuals age 18 and younger. In 2016 and 
previous years, the age group for children included individuals age 17 
and younger. Therefore, this report uses the HIC-05 table for analysis 
of 2-year data trends over the period 2016-2018, while using 
Data.Census.Gov for analysis of certain one-year data trends between 
2017 and 2018 (with the exception of children under 6 as the change in 
age range did not impact this group for purposes of 2016 data). Given 
that the second data source (Data.Census.Gov) is limited to exploring 
an annual trend from 2017-2018, we plan to release an addendum to this 
report in late Winter 2019 when the IPUMS microdata files become 
available to explore the two-year trend (2016-2018) for health coverage 
sources, race/ethnicity and FPL uninsurance changes.

For this report and most previous similar reports, we have examined 2-
year trends in the ACS data (in this case, 2016-2018). On two occasions 
we have departed from this methodology when a significant 1-year change 
occurred (2013-2014) after the Affordable Care Act was implemented; and 
2016-2017 when the number of uninsured children began increasing as a 
result of efforts to pull back coverage and when Census also changed 
the age category for children in the ACS).

Margin of Error

The published U.S. Census Bureau data provide a margin of error 
(potential error bounds for any given estimate) at a 90-percent 
confidence level. All significance testing was conducted using the 
Census' Statistical Testing Tool. Except where noted, reported 
differences of percent or number estimates (either between groups, 
coverage sources, or years) are statistically significant at a 
confidence level of 90 percent. Georgetown CCF does not take the margin 
of error into account when ranking states by the number and percent of 
the uninsured children by state. Minor differences in state rankings 
may not be statistically significant. Where estimates were combined to 
produce new estimates, margin of error results were computed following 
the U.S. Census' formulas in their April 18, 2018, presentation 
entitled, ``Using American Community Survey Estimates and Margins of 
Error'' by Sirius Fuller.

Geographic Location

We report regional data as defined by the Census Bureau. The ACS 
produces single-year estimates for all geographic areas with a 
population of 65,000 or more, which includes all regions, states 
(including the District of Columbia), and country and county 
equivalents.

Poverty Status

Data on poverty levels include only those individuals for whom the 
poverty status can be determined for the past year. Therefore, this 
population is slightly smaller than the total non-institutionalized 
population of the U.S. (the universe used to calculate all other data 
in the brief). The Census Bureau determines an individual's poverty 
status by comparing that person's income in the past 12 months to 
poverty thresholds that account for family size and composition, as 
well as various types of income. (Note that the Census definition of 
income may vary considerably from how state Medicaid and CHIP programs 
measure income for purposes of determining eligibility due to 
differences in how income is counted and household size is determined 
and other factors.)

Health Coverage

Data on sources of health insurance coverage are point-in-time 
estimates that convey whether a person has coverage at the time of the 
survey. Individuals can report more than one source of coverage, so 
such totals may add to more than 100 percent. Additionally, the 
estimates are not adjusted to address the Medicaid ``undercount'' often 
found in surveys when compared to federal and state administrative 
data, which, for example, may be accentuated by the absence of state-
specific health insurance program names in the ACS.

We report children covered by Medicare, TRICARE/military, VA, or two or 
more types of health coverage as being covered by an ``other'' source 
of health coverage. The Census Bureau provides the following categories 
of coverage for respondents to indicate sources of health insurance: 
current or former employer, purchased directly from an insurance 
company, Medicare, Medicaid or means-tested (includes CHIP), TRICARE or 
other military health coverage, VA, Indian Health Service (IHS), or 
other. People who indicate IHS as their only source of health coverage 
do not have comprehensive coverage according to ACS survey definitions 
and are therefore considered to be uninsured.

Demographic Characteristics

``Children'' are defined as those individuals age 18 and under. The ACS 
provides one-year health insurance coverage estimates for the following 
race/ethnicity categories in tables C27001A-I: (A-White alone, B-Black/
African-American, C-AI/AN, D-Asian, E-Native Hawaiian/Pacific Islander, 
F-Some other race, G-More than 1 race, H-White, Non-Hispanic, and I-
Hispanic). The Census Bureau recognizes and reports race and Hispanic 
origin (i.e., ethnicity) as separate and distinct concepts and 
variables. To report on an individual's race, we merge the data for 
``Asian alone'' and ``Native Hawaiian or other Pacific Islander 
alone.'' In addition, we report the ACS category ``some other race 
alone'' and ``two or more races'' as ``other.'' Except for ``other'', 
all racial categories refer to respondents who indicated belonging to 
only one race. We report ``Hispanic or Latino,'' as ``Hispanic.'' As 
this refers to a person's ethnicity, Hispanic and non-Hispanic 
individuals may be of any race. For more detail on how the ACS defines 
racial and ethnic groups, see ``American Community Survey and Puerto 
Rico Community Survey 2015 Subject Definitions.''

                     Appendix Table 1. Number of Uninsured Children Under Age 19, 2016-2018
----------------------------------------------------------------------------------------------------------------
                                                2016 Number       2016 State      2018 Number       2018 State
                    State                        Uninsured         Ranking         Uninsured         Ranking
----------------------------------------------------------------------------------------------------------------
United States                                      3,649,000                -        4,055,000                -
Alabama                                               32,000               22           41,000               26
Alaska                                                20,000               14           18,000               13
Arizona                                              132,000               47          146,000               47
Arkansas                                              30,000               20           34,000               21
California                                           300,000               50          299,000               49
Colorado                                              57,000               33           62,000               33
Connecticut                                           23,000               17           20,000               15
Delaware                                               7,000                4            8,000                5
District of Columbia                                   4,000                2            2,000                1
Florida                                              288,000               49          339,000               50
Georgia                                              179,000               48          217,000               48
Hawaii                                                 8,000                5            8,000                5
Idaho                                                 22,000               16           29,000               19
Illinois                                              82,000               40          102,000               40
Indiana                                               99,000               41          109,000               43
Iowa                                                  20,000               14           21,000               16
Kansas                                                34,000               23           38,000               23
Kentucky                                              35,000               24           40,000               25
Louisiana                                             39,000               26           39,000               24
Maine                                                 13,000               10           15,000               11
Maryland                                              49,000               29           47,000               28
Massachusetts                                         15,000               12           18,000               13
Michigan                                              71,000               36           78,000               35
Minnesota                                             46,000               27           45,000               27
Mississippi                                           37,000               25           35,000               22
Missouri                                              71,000               36           83,000               37
Montana                                               12,000                9           15,000               11
Nebraska                                              25,000               18           26,000               17
Nevada                                                50,000               30           58,000               32
New Hampshire                                          8,000                5            7,000                4
New Jersey                                            78,000               38           80,000               36
New Mexico                                            28,000               19           27,000               18
New York                                             113,000               44          107,000               42
North Carolina                                       115,000               45          130,000               45
North Dakota                                          15,000               12           11,000                8
Ohio                                                 104,000               43          133,000               46
Oklahoma                                              79,000               39           83,000               37
Oregon                                                31,000               21           33,000               20
Pennsylvania                                         126,000               46          124,000               44
Rhode Island                                           5,000                3            5,000                3
South Carolina                                        50,000               30           56,000               31
South Dakota                                          11,000                8           13,000                9
Tennessee                                             58,000               34           83,000               37
Texas                                                752,000               51          873,000               51
Utah                                                  59,000               35           72,000               34
Vermont                                                2,000                1            2,000                1
Virginia                                              99,000               41          102,000               40
Washington                                            46,000               27           47,000               28
West Virginia                                          9,000                7           13,000                9
Wisconsin                                             50,000               30           51,000               30
Wyoming                                               13,000               10           10,000                7
----------------------------------------------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis of the U.S. Census Bureau American
  Community Survey (ACS) Table HIC-5, Health Insurance Coverage Status and Type of Coverage by State--Children
  Under 19: 2008 to 2018, Health Insurance Historical Tables.
* Change is significant at the 90% confidence level and is significant relative to the prior year indicated.


                       Appendix Table 2. Percent of Uninsured Children Under 19, 2016-2018
----------------------------------------------------------------------------------------------------------------
                                                2016 Percent      2016 State      2018 Percent      2018 State
                    State                        Uninsured         Ranking         Uninsured         Ranking
----------------------------------------------------------------------------------------------------------------
United States                                            4.7                -              5.2                -
Alabama                                                  2.7                9              3.5               18
Alaska                                                  10.3               51              9.4               50
Arizona                                                  7.6               46              8.4               49
Arkansas                                                 4.0               26              4.5               25
California                                               3.1               13              3.1               11
Colorado                                                 4.3               27              4.6               26
Connecticut                                              2.8               12              2.6                6
Delaware                                                 3.1               13              3.6               19
District of Columbia                                     3.1               13              1.8                2
Florida                                                  6.6               43              7.6               45
Georgia                                                  6.7               44              8.1               47
Hawaii                                                   2.5                5              2.6                6
Idaho                                                    4.9               36              6.1               40
Illinois                                                 2.6                7              3.4               14
Indiana                                                  5.9               41              6.6               42
Iowa                                                     2.6                7              2.7                9
Kansas                                                   4.5               30              5.1               30
Kentucky                                                 3.3               17              3.8               21
Louisiana                                                3.3               17              3.4               14
Maine                                                    4.8               33              5.5               36
Maryland                                                 3.4               19              3.3               12
Massachusetts                                            1.0                1              1.2                1
Michigan                                                 3.1               13              3.4               14
Minnesota                                                3.4               19              3.3               12
Mississippi                                              4.8               33              4.7               27
Missouri                                                 4.8               33              5.7               37
Montana                                                  4.9               36              6.1               40
Nebraska                                                 5.1               39              5.2               32
Nevada                                                   7.0               45              8.0               46
New Hampshire                                            2.7                9              2.6                6
New Jersey                                               3.7               22              3.9               23
New Mexico                                               5.3               40              5.3               34
New York                                                 2.5                5              2.5                5
North Carolina                                           4.7               31              5.3               34
North Dakota                                             8.0               48              6.0               39
Ohio                                                     3.8               25              4.8               29
Oklahoma                                                 7.7               47              8.2               48
Oregon                                                   3.4               19              3.6               19
Pennsylvania                                             4.4               29              4.4               24
Rhode Island                                             2.2                3              2.2                4
South Carolina                                           4.3               27              4.7               27
South Dakota                                             4.7               31              5.9               38
Tennessee                                                3.7               22              5.2               32
Texas                                                    9.8               50             11.2               51
Utah                                                     6.0               42              7.4               44
Vermont                                                  1.5                2              2.0                3
Virginia                                                 5.0               38              5.1               30
Washington                                               2.7                9              2.7                9
West Virginia                                            2.3                4              3.4               14
Wisconsin                                                3.7               22              3.8               21
Wyoming                                                  8.8               49              7.1               43
----------------------------------------------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis of the U.S. Census Bureau American
  Community Survey (ACS) Table HIC-5, Health Insurance Coverage Status and Type of Coverage by State--Children
  Under 19: 2008 to 2018, Health Insurance Historical Tables.
* Change is significant at the 90% confidence level and is significant relative to the prior year indicated.


              Appendix Table 3. Change in the Number of Uninsured Children Under 19, 2016 and 2018
----------------------------------------------------------------------------------------------------------------
                                                                                   2016-2018
                                                2016 Number      2018 Number       Change in        2016-2018
                    State                        Uninsured        Uninsured        Number of      Percent Change
                                                                                   Uninsured
----------------------------------------------------------------------------------------------------------------
United States                                      3,649,000        4,055,000        406,000 *            11.1%
Alabama                                               32,000           41,000          9,000 *            28.1%
Alaska                                                20,000           18,000          (2,000)           -10.0%
Arizona                                              132,000          146,000         14,000 *            10.6%
Arkansas                                              30,000           34,000            4,000            13.3%
California                                           300,000          299,000          (1,000)            -0.3%
Colorado                                              57,000           62,000            5,000             8.8%
Connecticut                                           23,000           20,000          (3,000)           -13.0%
Delaware                                               7,000            8,000            1,000            14.3%
District of Columbia                                   4,000            2,000          (2,000)           -50.0%
Florida                                              288,000          339,000         51,000 *            17.7%
Georgia                                              179,000          217,000         38,000 *            21.2%
Hawaii                                                 8,000            8,000                -               0%
Idaho                                                 22,000           29,000          7,000 *            31.8%
Illinois                                              82,000          102,000         20,000 *            24.4%
Indiana                                               99,000          109,000           10,000            10.1%
Iowa                                                  20,000           21,000            1,000             5.0%
Kansas                                                34,000           38,000            4,000            11.8%
Kentucky                                              35,000           40,000            5,000            14.3%
Louisiana                                             39,000           39,000                -               0%
Maine                                                 13,000           15,000            2,000            15.4%
Maryland                                              49,000           47,000          (2,000)            -4.1%
Massachusetts                                         15,000           18,000            3,000            20.0%
Michigan                                              71,000           78,000            7,000             9.9%
Minnesota                                             46,000           45,000          (1,000)            -2.2%
Mississippi                                           37,000           35,000          (2,000)            -5.4%
Missouri                                              71,000           83,000         12,000 *            16.9%
Montana                                               12,000           15,000          3,000 *            25.0%
Nebraska                                              25,000           26,000            1,000             4.0%
Nevada                                                50,000           58,000            8,000            16.0%
New Hampshire                                          8,000            7,000          (1,000)           -12.5%
New Jersey                                            78,000           80,000            2,000             2.6%
New Mexico                                            28,000           27,000          (1,000)            -3.6%
New York                                             113,000          107,000          (6,000)            -5.3%
North Carolina                                       115,000          130,000         15,000 *            13.0%
North Dakota                                          15,000           11,000        (4,000) *           -26.7%
Ohio                                                 104,000          133,000         29,000 *            27.9%
Oklahoma                                              79,000           83,000            4,000             5.1%
Oregon                                                31,000           33,000            2,000             6.5%
Pennsylvania                                         126,000          124,000          (2,000)            -1.6%
Rhode Island                                           5,000            5,000                -               0%
South Carolina                                        50,000           56,000            6,000            12.0%
South Dakota                                          11,000           13,000            2,000            18.2%
Tennessee                                             58,000           83,000         25,000 *            43.1%
Texas                                                752,000          873,000        121,000 *            16.1%
Utah                                                  59,000           72,000         13,000 *            22.0%
Vermont                                                2,000            2,000                -               0%
Virginia                                              99,000          102,000            3,000             3.0%
Washington                                            46,000           47,000            1,000             2.2%
West Virginia                                          9,000           13,000          4,000 *            44.4%
Wisconsin                                             50,000           51,000            1,000             2.0%
Wyoming                                               13,000           10,000          (3,000)           -23.1%
----------------------------------------------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis of the U.S. Census Bureau American
  Community Survey (ACS) Table HIC-5, Health Insurance Coverage Status and Type of Coverage by State--Children
  Under 19: 2008 to 2018, Health Insurance Historical Tables.
*Change is significant at the 90% confidence level and is significant relative to the prior year indicated.


 Appendix Table 4. Change in the Percent of Uninsured Children Under 19,
                                2016-2018
------------------------------------------------------------------------
                                                            2016-2018
        State            2016 Percent     2018 Percent      Percentage
                          Uninsured        Uninsured       Point Change
------------------------------------------------------------------------
United States                     4.7              5.2            0.5 *
Alabama                           2.7              3.5            0.8 *
Alaska                           10.3              9.4             -0.9
Arizona                           7.6              8.4            0.8 *
Arkansas                          4.0              4.5              0.5
California                        3.1              3.1                0
Colorado                          4.3              4.6              0.3
Connecticut                       2.8              2.6             -0.2
Delaware                          3.1              3.6              0.5
District of Columbia              3.1              1.8             -1.3
Florida                           6.6              7.6            1.0 *
Georgia                           6.7              8.1            1.4 *
Hawaii                            2.5              2.6              0.1
Idaho                             4.9              6.1              1.2
Illinois                          2.6              3.4            0.8 *
Indiana                           5.9              6.6            0.7 *
Iowa                              2.6              2.7              0.1
Kansas                            4.5              5.1              0.6
Kentucky                          3.3              3.8              0.5
Louisiana                         3.3              3.4              0.1
Maine                             4.8              5.5              0.7
Maryland                          3.4              3.3             -0.1
Massachusetts                     1.0              1.2              0.2
Michigan                          3.1              3.4              0.3
Minnesota                         3.4              3.3             -0.1
Mississippi                       4.8              4.7             -0.1
Missouri                          4.8              5.7            0.9 *
Montana                           4.9              6.1              1.2
Nebraska                          5.1              5.2              0.1
Nevada                            7.0              8.0              1.0
New Hampshire                     2.7              2.6             -0.1
New Jersey                        3.7              3.9              0.2
New Mexico                        5.3              5.3                0
New York                          2.5              2.5                0
North Carolina                    4.7              5.3            0.6 *
North Dakota                      8.0              6.0           -2.0 *
Ohio                              3.8              4.8            1.0 *
Oklahoma                          7.7              8.2              0.5
Oregon                            3.4              3.6              0.2
Pennsylvania                      4.4              4.4                0
Rhode Island                      2.2              2.2                0
South Carolina                    4.3              4.7              0.4
South Dakota                      4.7              5.9              1.2
Tennessee                         3.7              5.2            1.5 *
Texas                             9.8             11.2            1.4 *
Utah                              6.0              7.4            1.4 *
Vermont                           1.5              2.0              0.5
Virginia                          5.0              5.1              0.1
Washington                        2.7              2.7                0
West Virginia                     2.3              3.4            1.1 *
Wisconsin                         3.7              3.8              0.1
Wyoming                           8.8              7.1             -1.7
------------------------------------------------------------------------
Source: Georgetown University Center for Children and Families analysis
  of the U.S. Census Bureau American Community Survey (ACS) Table HIC-5,
  Health Insurance Coverage Status and Type of Coverage by State--
  Children Under 19: 2008 to 2018, Health Insurance Historical Tables.
* Change is significant at the 90% confidence level and is significant
  relative to the prior year indicated.

Endnotes

1. Hudson, J.L. and Moriya, A.S. (2017), ``Medicaid expansion for 
adults had measurable `welcome mat' effects on their children,'' Health 
Affairs, 36, n.p. Retrieved from https://www.healthaffairs.org/doi/
10.1377/hlthaff.2017.0347; also see Committee on the Consequences of 
Uninsurance, Institute of Medicine, and Burak, E.W. (2019), ``Parents' 
and caregivers' health insurance supports children's healthy 
development,'' Society for Research in Child Development Child Evidence 
Brief, 4. Retrieved from https://www.srcd.org/sites/default/files/
resources/
%E2%80%A2FINAL%20Child%20Evidence%20Brief%20No4_HealthInsurance.pdf.
2. Berchick, E., op. cit.

                                 ______
                                 
                Submitted by Hon. Robert P. Casey, Jr., 
                    a U.S. Senator From Pennsylvania

                  Medicaid Expansion in Pennsylvania 

    Comments of Teresa Miller, Secretary of the Department of Human 
                                Services

                            October 30, 2019

Thank you for the opportunity to submit these comments on the impact of 
Medicaid expansion in Pennsylvania.

Governor Tom Wolf announced in February 2015 that Pennsylvania would 
join what was then 31 states and the District of Columbia in expanding 
Medicaid as permitted under the Patient Protection and Affordable Care 
Act. Since then, Medicaid expansion has had an overwhelmingly positive 
impact on Pennsylvanians across the commonwealth.

Presently, over 680,000 individuals have health care coverage because 
of Medicaid expansion. More than 1.4 million people--or about 1 in 7 
Pennsylvanians aged 19-64--have been covered by Medicaid expansion 
since February 2015. The expansion has also contributed to historic 
lows in Pennsylvania's uninsured rate, which fell from 8.9 percent in 
2014 before expansion to 5.5 percent in 2018.

Medicaid expansion provides quality health-care coverage to working 
Pennsylvanians, students, and Pennsylvanians not yet eligible for 
Medicare. It is a lifeline for people who otherwise cannot access or 
afford health insurance. Expanding Medicaid helped people who had gone 
uninsured for years to access basic health care, opening access to 
routine health screenings and prescription coverage that allow people 
to manage their health.

Medicaid expansion also saves lives. Services covered by Medicaid help 
people maintain their health, access treatment for a substance use 
disorder, and identify potentially life-threatening illnesses and treat 
them without fear of financial ruin. In 2017, Medicaid expansion 
covered 485,151 doctor's office visits, 79,997 cervical cancer 
screenings, 54,061 breast cancer screenings, 31,042 colon cancer 
screenings, and 22,401 prostate cancer screenings in Pennsylvania. 
These cancer screenings resulted in 1,598 breast cancer diagnoses, 843 
cervical cancer diagnoses, 386 colon cancer diagnoses, and 769 prostate 
cancer diagnoses. That's 3,596 people in 2017 alone diagnosed with just 
these four forms of cancer--people who might not have been able to 
afford these screenings and subsequent treatment without Medicaid 
expansion. Again, Medicaid expansion saves lives. Don't just take my 
word for it.

Brian, a resident of Bucks County, gained coverage because of Medicaid 
expansion in March 2015 after being uninsured for nine years. Before he 
was able to access Medicaid, he relied on free clinics with limited 
capabilities for care. In 2016, he was diagnosed with stage three colon 
cancer. Medicaid expansion allowed him to go through surgery, 
chemotherapy, and post-treatment screenings knowing that he could focus 
on his health and not the fear of a bill that might put him in 
financial ruin. Where would he be without Medicaid expansion?

Shelagh, a resident of Allegheny County, had several injuries that 
progressed to chronic health conditions because she had very spotty 
access to health insurance before the Affordable Care Act passed. She 
had painful attacks she later learned were a result of an inflamed 
gallbladder, but it took 10 years for her to get a diagnosis. When she 
was uninsured, she had access to sliding scale clinics, but their 
diagnostic capabilities were limited because they didn't have equipment 
like MRIs. It wasn't until she qualified for Medicaid through the 
expansion that she was able to get a formal and was able to have her 
gallbladder removed. Before Medicaid expansion, she was not able to 
qualify for Medicaid and her pre-existing conditions made it impossible 
for her to get insurance through the private market.

Cindy, a resident of Lancaster County, had health insurance through her 
husband's job until their marriage ended and she was left uninsured and 
caring for a son with disabilities. She qualified for Medicaid because 
of the expansion, and while covered, had pre-cancerous polyps removed 
following a routine colonoscopy. Eventually, Cindy was able to become a 
professional caregiver for her son and now has insurance through her 
employer. Medicaid expansion was a lifeline when she needed it most, 
and she credits it with saving her family.

These are just three of the many stories of how the Medicaid expansion 
helped Pennsylvanians, and they are three of the reasons why Governor 
Wolf and I will always fight any attempt to scale back or limit 
Medicaid expansion. I think these stories are important because 
sometimes we forget the human faces behind our programs, but it would 
be irresponsible and reprehensible to forget about these stories when 
making policy. Former Senator and Vice President Hubert Humphrey said 
the moral test of government is how it treats those who are in the dawn 
of life, the children; those who are in the twilight of life, the aged; 
and those in the shadows of life, the sick, the needy, and individuals 
with disabilities. If we in government are not constantly looking for 
ways to help the people we serve achieve better, healthier lives, then 
what are we doing?

When our people are healthier, our commonwealth is healthier. I can say 
confidently that Medicaid expansion is making Pennsylvania a better 
place to live. Make no mistake--any action that reverses the progress 
made by Medicaid expansion will risk the health and financial well-
being of at least 680,000 people.

The effects of Medicaid expansion extend further than just helping 
people lead healthier lives. Hospitals cannot deny care even if a 
patient is uninsured. Costs associated with this--known as 
uncompensated care--are typically made up in rates for care paid by 
private insurance and other costs. These costs drive rising health-care 
costs for all patients and payers. From 2001 to 2014, the amount of 
uncompensated care increased each year. However, this trend was 
reversed in the first year of Medicaid expansion, when uncompensated 
care costs experienced by hospitals in Pennsylvania fell by $92 
million. Uncompensated care has continued in each year since Medicaid 
expansion was first implemented. This has resulted in a 30 percent or 
$317 million reduction from 2014 through 2018 in uncompensated care. As 
we in Pennsylvania and states around the nation look for opportunities 
to bend the health-care cost curve for government, hospitals and health 
systems, self-funded employers, and people in the private insurance 
market, we must acknowledge the value Medicaid expansion provides for 
hospitals' financial stability, especially in rural communities.

We also know that Medicaid expansion is helping people get healthy 
enough to maintain a job and succeed in employment. If we want people 
to work, we need a healthy, vibrant workforce. Research is showing that 
the expansion is helping more people enter the workforce, including 
people with disabilities, who formerly had to live in poverty to 
maintain Medicaid coverage.\1\
---------------------------------------------------------------------------
    \1\ Jean P. Hall, Adele Shartzer, Noelle K. Kurth, Kathleen C. 
Thomas, ``Effect of Medicaid Expansion on Workforce Participation for 
People With Disabilities,'' American Journal of Public Health 107, no. 
2 (February 1, 2017): pp. 262-264. https://ajph.aphapublications.org/
doi/abs/10.2105/AJPH.2016.303543.

As we move forward, I hope we can celebrate the success of the 
Affordable Care Act's Medicaid expansion and continue to make quality, 
affordable health care accessible to more people. We've made tremendous 
progress, but there is still more work to be done. Let's build on this 
progress and not return to a world where people went without care they 
---------------------------------------------------------------------------
needed out of fear of financial ruin.

                                 ______
                                 
           Prepared Statement of Daryl G. Purpera, CPA, CFE, 
                Legislative Auditor, State of Louisiana
    Chairman Toomey, Ranking Member Stabenow, and distinguished members 
of the committee, my name is Daryl Purpera, and I serve as Legislative 
Auditor for the State of Louisiana. I was elected by the Louisiana 
Legislature to serve as Louisiana's Legislative Auditor in 2010 and 
have a total of 35 years of government auditing experience. My office 
is constitutionally within the Legislative branch of Louisiana 
government. I serve as an executive committee member for the National 
Association of State Auditors, Comptrollers, and Treasurers (NASACT), 
as well as the National Association of State Auditors (NSAA). What I 
will be relating to you today is this:

        1.  The Medicaid program, as designed does not require all 
        practical practices that are proven to reduce improper 
        payments.
        2.  State Medicaid departments are not required to incorporate 
        robust, cost-
        effective controls to reduce improper payments.
        3.  State Auditors continue to desire to be a part of the 
        solution of reducing improper payments but do face obstacles.
                     louisiana medicaid audit unit
    Three years ago, we decided that traditional audit efforts were not 
enough to curb the nationally reported 10% rate of fraud, waste, and 
abuse in the Louisiana Medicaid program. With Medicaid increasingly 
taking a larger portion of the State budget, currently more than 40%, 
we began to develop a Medicaid Audit Unit, more than doubling our audit 
resources for Medicaid. For example, the Medicaid expenditures in 
Louisiana have increased from $8.3 billion in 2016 to $12 billion in 
2019 and are expected to increase another $1.3 billion in 2020.

    Over the past 3 years, our Medicaid Audit Unit has issued 16 
reports, with 8 reports on Medicaid Eligibility and four of those 
covering the Medicaid Expansion population. We have provided links to 
three audit reports addressed in my testimony. Our initial expanded 
audit efforts focused on eligibility due to our assessment of risk. 
Louisiana is a managed care State with over 90% of the Medicaid 
enrolled population, or about 1.4 million recipients included. Under 
managed care as implemented in Louisiana Medicaid, the Louisiana 
Department of Health makes a per-member-per-month payment, essentially 
a premium, to a managed care organization for each Medicaid member 
enrolled. These premium rates vary by demographics and risk group and 
range from about $187 to $643, with an average rate of about $500 per 
month. Under this arrangement, eligibility becomes the cost driver for 
Medicaid rather than claims experience. The total Medicaid cost equals 
the number of enrolled recipients times an applicable rate. Considering 
the number of recipients and the current rates in Louisiana, a 1% error 
in the Medicaid rolls results in approximately $70 million in waste of 
Medicaid dollars.
   medicaid audit reports on eligibility and the expansion population
    I want to highlight three of our reports on Eligibility and the 
Expansion population. The first report is Medicaid Eligibility: Wage 
Verification Process of the Expansion Population, issued on November 8, 
2018.

    In this audit, our message was that when a person is enrolled in 
Medicaid due to their current monthly income, they essentially get 
Medicaid for an entire year, even though their income may have changed 
drastically in the next month. If the change is not voluntarily 
reported, the department would never know because of relying solely on 
annual renewals.

    In this audit, we tested two selections from the expansion 
population for only one eligibility factor, the income reported to the 
Louisiana Workforce Commission, which is the State's labor department 
where employers are required to report any wages earned in the State.

    Our selections tested were not a random sample from the entire 
expansion population, but more targeted using data analytics to 
identify and test a high risk population. We identified the expansion 
population with a household size of one, then ran a data match between 
this group and the workforce commission income data. Through this 
match, we identified 19,000 recipients who appeared to earn too much 
income to be eligible for Medicaid.

    From the group of 19,000 recipients, we selected 100 of the highest 
earners to test. Our testing found that 93% did not qualify for 
Medicaid for at least some of the eligibility period. We identified 
$538,705 in improper payments.

    We then randomly selected 100 of the remaining untested population 
to test for income eligibility. We found 82% did not qualify for at 
least part of the eligibility period and identified $382,420 in 
improper payments. Since this group was randomly sampled, we projected 
results to the remaining untested population and identified between 
$61.6 million and $85.5 million in improper payments.

    At the time of our audit, the department only checked wages at the 
initial application and at annual renewal. We recommended that the 
department conduct more frequent checks of workforce commission wages, 
suggesting risk-based quarterly checks.

    On May 1, 2019, we issued a follow up report titled Update on Wage 
Verification Process of the Medicaid Expansion Population. In this 
audit we noted that the Department of Health acted upon our 
recommendation from the first report and developed a risk-based process 
to do quarterly checks between the Medicaid reported income and the 
workforce income data. As a result of the first income check, the 
department identified 30,051 ineligibles and removed them from the 
program for a projected cost avoidance of $14.7 million per month. The 
Louisiana Medicaid department has now performed 3 quarterly checks and 
removed 64,228 from the roles resulting in an estimated $385 million in 
annual cost avoidance.

    The third audit on the expansion eligibility population is titled 
Medicaid Eligibility: Modified Adjusted Gross Income Determination 
Process and was issued December 12, 2018. In this audit, we tested a 
random sample from an expansion population totaling 220,292 recipients 
and identified an error rate of 8%. We projected $111 million in annual 
cost avoidance if controls are implemented to eliminate case workers 
errors.

    Also in this audit, we noted that the department does not use 
Federal and/or State tax information to verify critical eligibility 
factors. The department accepted self-attested answers on critical 
eligibility factors including tax filer status, household size, self-
employment income, unearned income, and some retirement income. Federal 
and/or State tax information is the only electronic data sources that 
the department could use to verify these factors. Since the department 
does not use tax data and auditors cannot use tax data to audit 
Medicaid eligibility, we identified a scope limitation in our audit of 
Medicaid because we could not obtain sufficient appropriate audit 
evidence to complete our audit.
              significant medicaid issues to be addressed
    From the work of our Medicaid Audit Unit and discussion with other 
State auditors, we have identified several ongoing issues that could be 
addressed to help improve the State Medicaid programs.
Medicaid Eligibility Verification Plans
    Mandatory verification plans--At this time, Medicaid Eligibility 
Verification Plans are required to be submitted to CMS. The 
verification plan identifies each required eligibility factor and notes 
how the State addresses the requirement. However, these plans are 
accepted by CMS, but not approved. The States are granted latitude on 
which eligibility factors are verified and how. While some of the 
factors may be fully verified through data systems, others may not. For 
example, Louisiana notes it does not accept self-attestation for income 
and identifies certain data sources used to verify. However, the data 
sources are not all-inclusive of possible income sources. While the 
Louisiana plan notes that self-attestation is not accepted for income, 
it also notes it accepts self-attestation of income if there is not a 
data source to verify it. For self-employment income, Louisiana does 
not use possible data systems, such as tax data, and asks for hard copy 
documentation to verify self-employment income. However, without the 
use of a data system, Federal and/or State tax data, Louisiana would 
not be able to determine when self-employment income and other types of 
unearned income, like rents, royalties, and retirement payments exist 
but are omitted from the application.

    Louisiana also accepts self-attested information on the applicant's 
tax filer status and household size. Because no tax data is used, 
Louisiana has no data source to verify these critical eligibility 
factors. Tax filer status is critical because it drives whether States 
use CMS ``tax filer rules'' or ``non-tax filer rules'' to determined 
household size. Household size is critical because it sets the 
allowable income level for the applicant.

    Since the verification plans are permissive for the State Medicaid 
agency, auditors lack criteria to identify and report on insufficient 
policies and practices, and weaknesses in internal control. If CMS 
would set firm criteria, like mandatory verification plans with the 
mandatory use of data systems for all critical eligibility factors, 
State health departments would have much improved processes to reduce 
improper payments, and auditors would have stronger tools to audit 
Medicaid eligibility.
Required Use of Federal and/or State Tax Data
    Currently, 27 States use Federal tax data in eligibility 
determinations and renewals while others do not. Since the modified 
adjust gross income determination rules are based on tax rules and tax 
data, administering and auditing the State Medicaid program without 
using tax data is insufficient. We acknowledge changes in this area 
would require changes in law and/or rule. As noted previously, for 
critical eligibility factors including tax filer status, household 
size, self-employment income, some retirement income, and certain other 
unearned income, like rents and royalties, tax data is the only data 
source available to use for verification. If data verification is not 
available to verify critical eligibility factors, States may allow 
self-attestation. If CMS would set firm criteria mandating the use of 
tax data, eligibility determination processes would be strengthened and 
improper payments decreased.

    Some maintain that the use of tax data is not helpful because it 
represents the past not the present. However, the Louisiana Department 
of Health (LDH) recently compared 2017 State tax data to 2017 Medicaid 
recipients and found that 1,672 individuals had incomes that varied 
from their self-attested income by more than $100,000. Another 8,474 
individuals had income that varied between $50,000 and $100,000. After 
seeking additional information, LDH concluded that 4,227 were no longer 
receiving Medicaid as of April 2019 post 2017 and another 3,175 had to 
be removed indicating that 73% of the 10,146 with incomes that varied 
by more than $50,000 may not have been eligible. This examination by 
the LDH shows that tax data can be helpful in identifying recipients 
who have not correctly reported their income.
Verification Law Can Be Counter-Productive
    The code of Federal regulation, 42:435.916 provides that the 
Medicaid agency must make a redetermination of eligibility without 
requiring information from the individual if able to do so based upon 
reliable information including electronic databases. However, in the 
case of non-wage income, such as self-employment, the use of databases 
will not reveal all income and are therefore insufficient.
More Frequent Wage Verification
    As shown in our reports and the department's new process to perform 
quarterly wage verification checks noted above, more frequent wage 
checks through a data match with the State labor department can provide 
positive results, especially for the risky expansion population made up 
of working adults who can experience more frequent changes in income. 
According to our survey results, 20 States conduct wage checks more 
frequently than just annual renewals. Checks vary with States reporting 
interim checks daily, monthly, quarterly, and semi-annually. If CMS 
required more frequent wage verification, the Medicaid programs would 
see some positive cost savings.
      improper payments, claims experience data, and rate setting
    In Louisiana, the State Medicaid agency contracts with five managed 
care organizations to provide Medicaid services for about 90% of the 
Medicaid recipients. The managed care plans are identified as full-risk 
bearing arrangements. However, improper payments and poor 
identification and tracking of added service and enhanced payments can 
skew claims experience data in 1 year and actually result in rate 
increases in future years. In April of 2014, the Washington State 
Auditor's Office issued an audit report on managed care oversight. In 
this report, the auditor's analysis ``showed that for every $1 million 
in overpayments in 2010, the State potentially paid an additional $1.26 
million in premiums in year 2013.'' Valid claims experience data and 
efforts to eliminate improper payments are both critical elements for 
an efficient managed care program. Any errors can affect future rates.
State Auditors Do Not Have Access to Federal Tax Information
    Access to the MAGI data is restricted by Federal law. 26 USCA 
6103(d)(2) restricts the State auditor's access to Federal tax 
information (FTI) to ``. . . for the purpose of, and only to the extent 
necessary in, making an audit of the . . .'' State tax agency. As a 
result, my office may access Federal tax data when, and only when, 
auditing the Louisiana Department of Revenue. I cannot use this same 
tax data to audit Medicaid, SNAP, or TANF. What this means is the 
information I can hold in my right hand while auditing our tax agency, 
I cannot let my left hand use while auditing our Medicaid agency. This 
is a significant, counterproductive restraint placed upon the 
independent State auditor.
                    successes in the past few years
    Over the past few years, the State Auditors have worked with the 
Governmental Accountability Office, the Office of Management and 
Budget, the Centers for Medicare and Medicaid Services, and the U.S. 
Department of Health and Human Services--Office of Inspector General to 
improve current practices. This collaboration will result in more 
comprehensive audits by State Auditors that I am sure will result in a 
positive impact and reduced improper payments. In addition, we are 
continuing our discussions to make further improvements for the future 
as State Auditors desire to be part of the solution.
                conclusion from an auditors' perspective
          The Medicaid improper payment rate is unnecessarily high and 
        can be reduced by implementation of improved eligibility 
        determination practices and enhanced audit procedures.
          The Medicaid program, as designed, is too permissive and 
        does not require all practical practices that are proven to 
        reduce improper payments.
          State Medicaid departments should be required to incorporate 
        robust, cost-
        effective controls to reduce improper payments.
          State Medicaid departments should use all available 
        resources to verify eligibility and not be restricted from 
        requiring additional information.
          State Auditors should be allowed to use Federal tax 
        information to audit this Federal/State program.
          The Patient Protection and Affordable Care Act increased the 
        individuals eligible for the program and vital health care, but 
        did so without proper controls to reduce to a minimum the 
        number of individuals who would intentionally, or 
        unintentionally, receive the benefits but truly not qualify 
        under the Act.

    Thank you for the opportunity to testify today, and I look forward 
to answering any questions you may have.

                                 ______
                                 

                Medicaid Eligibility: Wage Verification 
                  Process of the Expansion Population

                     Louisiana Department of Health

                          Medicaid Audit Unit

                        Issued November 8, 2018

                     Louisiana Legislative Auditor

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                          Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

         Assistant Legislative Auditor for State Audit Services

                   Nicole B. Edmonson, CIA, CGAP, MPA

                 Director of Performance Audit Services

                     Karen LeBlanc, CIA, CGAP, MSW

 For questions related to this performance audit, Contact Chris Magee, 
              Performance Audit Manager, at 225-339-3800.

Under the provisions of state law, this report is a public document. A 
copy of this report has been submitted to the Governor, to the Attorney 
General, and to other public officials as required by state law. A copy 
of this report is available for public inspection at the Baton Rouge 
office of the Louisiana Legislative Auditor and at the office of the 
parish clerk of court.

This document is produced by the Louisiana Legislative Auditor, State 
of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 
in accordance with Louisiana Revised Statute 24:513. Twelve copies of 
this public document were produced at an approximate cost of $9.00. 
This material was produced in accordance with the standards for state 
agencies established pursuant to R.S. 43:31. This report is available 
on the Legislative Auditor's website at www.lla.la.gov. When contacting 
the office, you may refer to Agency ID No. 9726 or Report ID No. 
80180130.

In compliance with the Americans With Disabilities Act, if you need 
special assistance relative to this document, or any documents of the 
Legislative Auditor, please contact Elizabeth Coxe, Chief 
Administrative Officer, at 225-339-3800.

                                 ______
                                 

                     LOUISIANA LEGISLATIVE AUDITOR

                       DARYL G. PURPERA, CPA, CFE

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                             www.lla.la.gov

                           Phone 225-339-3800

                            Fax 225-339-3870

                            November 8, 2018

The Honorable John A. Alario, Jr.,
    President of the Senate
The Honorable Taylor F. Barras,
    Speaker of the House of Representatives

Dear Senator Alario and Representative Barras:

    This report evaluates and identifies areas in which the Louisiana 
Department of Health (LDH) can strengthen its process of using wage 
data to determine eligibility of the Medicaid expansion population. 
Without a sufficient process to determine recipient eligibility, LDH 
cannot ensure that Medicaid dollars are spent appropriately.

    The report contains our findings, conclusions, and recommendations. 
Appendix A contains the LDH's response to this report. I hope this 
report will benefit you in your legislative decision-making process.

    We would like to express our appreciation to the management and 
staff of the LDH for their assistance during this audit.

            Sincerely,

            Daryl G. Purpera, CPA, CFE
            Legislative Auditor

                                 ______
                                 

                     Louisiana Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

            Medicaid Eligibility: Wage Verification Process 
                      of the Expansion Population

                     Louisiana Department of Health

November 2018
                                            Audit Control #80180130
_______________________________________________________________________

                              Introduction

    The Louisiana Department of Health (LDH) administers the Medicaid 
program to provide health and medical services for uninsured and 
medically-indigent citizens. In 2012, LDH began moving from a fee-for-
service (FFS) model, where LDH paid all claims submitted by Medicaid 
providers for each service performed, to Healthy Louisiana, a full-risk 
prepaid managed care model.\1\ Under LDH's current full-risk prepaid 
managed care model, it pays a fixed per-member per-month (PMPM) fee to 
the Managed Care Organization (MCO) for the administration of health 
benefits and payment of all claims. LDH contracted with five \2\ MCOs 
to operate the Healthy Louisiana Medicaid program through December 31, 
2019. However, LDH is responsible for determining Medicaid recipient 
eligibility and enrolling applicants into Medicaid programs.
---------------------------------------------------------------------------
    \1\ Healthy Louisiana was previously called Bayou Health. A managed 
care model is an arrangement for health care in which an organization, 
such as an MCO, acts as a gatekeeper or intermediary between the person 
seeking care and the physician. FFS still covers some Medicaid 
recipients who are not eligible for managed care.
    \2\ LDH contracted with AmeriHealth Caritas Louisiana, Inc., Aetna 
Better Health, Inc., Healthy Blue, Louisiana Healthcare Connections, 
Inc., and UnitedHealthcare Community Plan of Louisiana, Inc. on 
February 1, 2015. AmeriHealth Caritas, Healthy Blue, and Louisiana 
Healthcare Connections originally contracted with LDH on February 1, 
2012.

    We evaluated LDH's process for using state wage data from the 
Louisiana Workforce Commission (LWC) when determining eligibility for 
the Medicaid expansion population. Federal law (42 CFR 435.948) states 
that agencies must request information related to wages from state 
agencies to the extent the agency determines such information is useful 
to verifying the financial eligibility of Medicaid recipients and 
applicants. According to LDH's verification plan, caseworkers are 
required to verify wages at application and upon renewal. This report 
is the first in a series of two reports where we tested the eligibility 
of a sample of Medicaid recipients. The second report, scheduled to be 
issued later this month, evaluates the department's overall process for 
making eligibility determinations, not just the state wage verification 
---------------------------------------------------------------------------
process.

    Medicaid Expansion and Eligibility. On July 1, 2016, Medicaid 
expansion, which provides full Medicaid benefits to individuals from 
age 19 to 65 years old making income below or equal to 138% \3\ of the 
federal poverty level (or $16,395 per year a for single-person 
household), was implemented in Louisiana. Prior to Medicaid expansion, 
only individuals who were low-income persons and who were either 65 
years or older, disabled, parents of dependent children, qualified 
pregnant women, or children were qualified for full Medicaid benefits. 
According to LDH, approximately 500,000 individuals who did not 
previously qualify for full Medicaid benefits were enrolled through 
Medicaid expansion in fiscal year 2017. Because income is the primary 
determinant for the eligibility of this population, it is important 
that LDH have a sufficient process to verify the wages of Medicaid 
recipients.
---------------------------------------------------------------------------
    \3\ From July 1, 2016, through February 28, 2017, 138% of the 
federal poverty level for a single-person household was $1,367 per 
month, or $16,395 annually. From March 1, 2017, through February 28, 
2018, 138% of the federal poverty level for a single-person household 
was $1,387 per month, or $16,644 annually. Effective March 1, 2018, 
138% of the federal poverty level for a single-person household is 
$1,397 per month, or $16,764 annually.

    Medicaid Enrollment Process. LDH enrolls individuals in Medicaid in 
various ways. LDH accepts Medicaid applications \4\ via the Internet, 
telephone, mail, in-
person, and certified application centers. When applying for Medicaid, 
an applicant must attest to information regarding their residence, 
demographics, and income. LDH verifies the applicant's attested income 
using various data sources, such as quarterly wage data from the 
Louisiana Workforce Commission (LWC). LDH also accepts eligibility 
determinations from the federally facilitated marketplace (FFM) in 
which individuals needing health insurance can find and purchase health 
insurance plans operated by the U.S. Department of Health and Human 
Services. Beginning July 1, 2016, if the FFM determines that the 
applicant is eligible for Medicaid, LDH automatically enrolls them in 
Medicaid. In addition, when LDH expanded Medicaid beginning July 1, 
2016, it streamlined enrollment for individuals participating in the 
Supplemental Nutrition Assistance Program (SNAP) and automatically 
enrolled certain populations, including individuals already 
participating in certain Medicaid fee-for-service (FFS) programs. These 
enrollment methods and whether LDH verifies wage information for each 
method are summarized in Exhibit 1.
---------------------------------------------------------------------------
    \4\ Medicaid applications are considered to be the official agency 
document used to collect information necessary to determine 
eligibility.

 Exhibit 1. Medicaid Expansion Enrollment Method and Income Verification
------------------------------------------------------------------------
      Enrollment Method                       Description
------------------------------------------------------------------------
Online/Paper Application      Applicants apply online or on a paper form
                               for Medicaid benefits. LDH checks the
                               wages for these applicants prior to
                               determining their eligibility for
                               Medicaid.
Federally Facilitated         The FFM determines that the applicant is
 Marketplace (FFM)             eligible for Medicaid and Louisiana
 Determination                 accepts the eligibility determination
                               made by the FFM without further data
                               checks. Louisiana used this methodology
                               from January 2015 through October 2015
                               and then again from July 2016 through
                               present day. LDH does not check the wages
                               for these applicants prior to determining
                               their eligibility for Medicaid.
Fee-for-Service (FFS)         Recipients who were in fee-for-service
                               plans prior to Medicaid expansion
                               received services from providers
                               primarily contracted directly with the
                               state. These Medicaid recipients were
                               automatically enrolled in Medicaid
                               expansion. LDH did not check wages for
                               these recipients prior to determining
                               their eligibility for Medicaid expansion.
Supplemental Nutrition        After answering four questions on a
 Assistance Program (SNAP)     questionnaire appropriately, individuals
                               who qualified for the SNAP program were
                               enrolled in Medicaid expansion. LDH did
                               not check wages for these individuals
                               prior to determining their eligibility
                               for Medicaid expansion.
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from
  LDH and the Centers for Medicare and Medicaid Services (CMS).

    The purpose of our analysis was as follows:

To evaluate the sufficiency of LDH's process of using wage data to 
determine the eligibility of the Medicaid expansion population.

    Our results are summarized on the next page and in detail 
throughout the remainder of the report. Appendix A contains LDH's 
response to this report, Appendix B details our scope and methodology, 
Appendix C shows the enrollment types and eligibility of the 100 
Medicaid recipients in our targeted selection, Appendix D shows the 
enrollment types and eligibility of the 100 Medicaid recipients in our 
random sample, Appendix E provides a profile of each recipient in our 
targeted selection, Appendix F provides a profile of each recipient in 
our random selection, and Appendix G lists previously-issued Medicaid 
Audit Unit reports.

Objective: To evaluate the sufficiency of LDH's process of using wage 
data to determine the eligibility of the Medicaid expansion population.

    We found that LDH's current process of using wage data at 
application and renewal to determine the eligibility of the Medicaid 
expansion population is not sufficient. To evaluate LDH's process, we 
compared Medicaid data obtained from LDH to quarterly wage data 
obtained from LWC to determine if LDH paid PMPMs for recipients in 
single-person households when their wages appeared to exceed the 
allowable amounts \5\ to qualify for Medicaid. Our comparison 
identified a population of 19,789 Medicaid recipients who had average 
wages that appeared to exceed the allowable amount to qualify for 
Medicaid.
---------------------------------------------------------------------------
    \5\ From July 1, 2016, through February 28, 2017, 138% of the 
federal poverty level for a single-person household was $1,367 per 
month, or $16,395 annually. From March 1, 2017, through February 28, 
2018, 138% of the federal poverty level for a single-person household 
was $1,387 per month, or $16,644 annually. Effective March 1, 2018, 
138% of the federal poverty level for a single-person household is 
$1,397 per month, or $16,764 annually.

    To evaluate LDH's process and identify any weaknesses, we first 
pulled a targeted selection of 100 single-person household Medicaid 
expansion recipients with the highest wage amounts and reviewed their 
electronic case records \6\ to determine if they were eligible in the 
period during which they were enrolled in Medicaid from July 1, 2016, 
through March 31, 2018. We chose this specific population because they 
had wages that were higher than the allowable amount based on LWC wage 
data and because other states use a similar risk based methodology to 
test for changes in recipient wages. Because of the high ineligibility 
rate we found in this targeted selection, we pulled a random sample \7\ 
of 100 single-person Medicaid expansion recipients, to determine the 
projected impact of the weaknesses identified in LDH's use of wage data 
in the eligibility process. We found the following:
---------------------------------------------------------------------------
    \6\ Documentation related to eligibility determinations is 
contained in the electronic case record for each Medicaid recipient. 
This includes applications, results of LWC wage data checks, and 
communication with the Medicaid recipient.
    \7\ There were two individuals from our targeted selection that 
were randomly selected to be included in the random sample.

          93 (93.0%) of the 100 Medicaid recipients in the targeted 
        selection did not qualify for $538,795 (66.3%) of the $813,023 
        in PMPMs LDH paid on their behalf at some point during their 
        Medicaid coverage. This happened, in part, because LDH relies 
        on Medicaid recipients to self-report changes in their wages 
        rather than proactively using LWC wage data to identify changes 
        in recipient wages that occur during the 12 months between 
        application and renewal. LDH's policy decision to be a FFM 
        determination state and caseworker errors also contributed to 
        these ineligible recipients. At least 20 other states indicated 
        on their CMS verification plans that they check for changes in 
        recipient wages on an interim basis.
          82 (82.0%) of 100 Medicaid recipients in the random sample 
        did not qualify for $382,420 (47.3%) of the $808,341 in PMPMs 
        LDH paid on their behalf.

        Because this sample was random, we were able to project these 
        results to the entire population of 19,226 single-person 
        household Medicaid expansion recipients. Based on this 
        projection, it appears that LDH may have paid between $61.6 
        million and $85.5 million in PMPMs for Medicaid recipients who 
        did not qualify at some point during their Medicaid coverage. 
        More frequent checks of LWC wage data could prevent a portion 
        of these PMPMs from being paid on their behalf.

    Our findings, along with recommendations to help LDH strengthen its 
wage verification process when determining eligibility for the Medicaid 
expansion population, are discussed in more detail on the following 
pages.
_______________________________________________________________________

93 (93.0%) of the 100 Medicaid recipients in the targeted selection did 
not qualify for $538,795 (66.3%) of the $813,023 in PMPMs LDH paid on 
their behalf. This happened, in part, because LDH relies on Medicaid 
recipients to self-report changes in their wages rather than 
proactively using LWC wage data to identify changes in recipient wages 
that occur during the 12 months between application and renewal. LDH's 
policy decision to be a FFM determination state and caseworker errors 
also contributed to these ineligible recipients.

    When applying for the Medicaid program, applicants attest that the 
information they have provided on their application is true and that 
they will report any changes, including increases in income, to LDH. 
Although Federal law \8\ requires that LDH have procedures to ensure 
that beneficiaries report any changes that may affect their eligibility 
to LDH in a timely and accurate manner, we found that the majority of 
the recipients we reviewed did not report increases in their income to 
LDH even though they had wages that exceeded 138% of the federal 
poverty level after being qualified for Medicaid.
---------------------------------------------------------------------------
    \8\ 42 CFR 435.916(c).

    We found that, based on their wages reported to LWC, 93 (93.0%) of 
these Medicaid recipients did not qualify at some point during their 
Medicaid coverage. We also found that these Medicaid recipients did not 
qualify for $538,795 (66.3%) of the $813,023 in PMPMs LDH paid on their 
behalf. Of the 93 Medicaid recipients who did not qualify for Medicaid 
at some point during their coverage, 55 (59.1%) received services 
through MCOs totaling $164,913 during the months in which they were not 
eligible. The remaining 38 recipients received no services during the 
months in which they were not eligible, including at least four who did 
---------------------------------------------------------------------------
not appear to know they were on Medicaid.

    LDH, similar to 16 other states, checks wage data only at 
application and at renewal 12 months later.\9\ In contrast, at least 20 
other states \10\ indicated on CMS verification plans that they check 
for changes in recipient wages on an interim basis, including daily, 
monthly, quarterly, or on a semi-annual basis, as shown in Exhibit 2. 
For example, Pennsylvania and Wisconsin perform quarterly data matches 
to identify discrepancies between eligibility files and wage data and 
then require caseworkers to review the recipient's case. Nine states 
indicated they check wages on a quarterly basis, which was the most 
common interim check time interval. In addition, the verification plans 
for five states indicated that they receive ``new hire'' alerts from 
their LWC equivalent to determine if any Medicaid recipients recently 
began a new job.\11\
---------------------------------------------------------------------------
    \9\ There are certain instances where Medicaid recipients are 
administratively renewed, meaning their wages, among other items, are 
not analyzed to renew eligibility for multiple years.
    \10\ Seven states indicated that they check wage data when changes 
are reported by Medicaid recipients.
    \11\ LWC receives wage information from employers on a quarterly 
basis. Using this information, LDH could identify new hires.

                Exhibit 2. Frequency of Wage Data Checks
------------------------------------------------------------------------
                                                            Number of
                       Frequency                              States
------------------------------------------------------------------------
Daily                                                                 1
Monthly                                                               2
Quarterly                                                             9
Semi-annually                                                         1
Interim basis, but frequency not specified                            7
    Total                                                           20
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from
  state's Medicaid verification plans.

    According to LDH staff, it does not verify Medicaid recipient wages 
at all during the 12-month period between initial enrollment and 
renewal due to the cost. Because it uses a manual system, LDH 
previously estimated that it would cost approximately $5 million to 
perform bi-annual wage checks on Medicaid recipients and $14.5 million 
to perform quarterly wage checks.\12\ LDH's cost projections assume 
that LDH caseworkers will manually check approximately 750,000 
applications during each interim check. However, using a risk-based 
approach similar to the targeted selection we performed would not 
require the department to check all Medicaid recipients. LWC wage data 
is reported quarterly by employers, which means LDH could check the 
eligibility of its Medicaid recipients on a quarterly basis to identify 
Medicaid recipients with high wages. Our analysis used data matches to 
identify Medicaid recipients with wages higher than the allowable 
amount over multiple quarters of LWC wage data and focused on a 
targeted selection of 100 of them instead of manually checking the 
entire Medicaid population. Other states use a similar risk-based 
methodology. Therefore, LDH should use a risk-based model that matches 
Medicaid eligibility data with LWC wage data to identify those Medicaid 
recipients whose wages consistently exceed the eligible amounts. 
According to LDH staff, the department has developed a new eligibility 
system planned to begin in November 2018 that will allow it to perform 
wage checks on the entire Medicaid population on a quarterly basis. LDH 
staff stated that these types of checks cannot be performed for the 
entire population with its current system. Without the new system, 
staff would need to work these cases manually. While LDH states that it 
will be able to do this in the new system, we have not audited the 
design of the system and cannot verify system capabilities at this 
time.
---------------------------------------------------------------------------
    \12\ LDH's cost estimates included analyst and supervisor salaries, 
equipment, lease space, furniture, and supplies. It includes hiring 107 
staff for bi-annual checks and 313 staff for quarterly checks.

    LDH's policy decision to become an FFM determination state resulted 
in 10 (10.0%) of the 100 Medicaid recipients in our targeted selection 
to initially be determined as eligible even though the use of LWC wage 
data would have indicated that they were not eligible. As part of the 
Affordable Care Act, individuals needing health insurance can apply 
through the Federally Facilitated Marketplace (FFM). If the FFM 
determines that an individual's income qualifies them for Medicaid, 
their case is sent to the state in which they reside. However, the FFM 
does not have access to LWC wage data, meaning it is making eligibility 
determinations without a full picture of the applicant's wages.\13\ All 
states have the option to accept the FFM's eligibility determinations 
(called a ``determination state'') or to perform their own verification 
of the applicant's eligibility using criteria such as income (called an 
``assessment state''). At the beginning of Medicaid expansion on July 
1, 2016, LDH made a policy decision to switch from being an assessment 
state to a determination state because it believed that significant 
improvements were made to the FFM data and expected an increase in the 
number of cases for caseworkers due to Medicaid expansion. As a result, 
LDH did not check the LWC wage data of these Medicaid recipients who 
applied through the FFM until their annual renewal. If LDH had remained 
an assessment state and checked LWC wage data prior to enrolling 
applicants received from the FFM, LDH would have determined that these 
10 applicants did not qualify for Medicaid.
---------------------------------------------------------------------------
    \13\ FFM has access to other income sources such as data from the 
Social Security Administration and Internal Revenue Service, among 
others, to make Medicaid eligibility determinations.

        November 2015: LDH changed from a determination state to an 
        assessment state due to an ongoing unacceptable error rate in 
---------------------------------------------------------------------------
        decisions made by the FFM.

        July 2016: LDH changed from an assessment state to a 
        determination state because according to LDH, there were 
        significant improvements in the FFM data and an expected 
        increase in the number of cases for caseworkers due to Medicaid 
        expansion.

    LDH caseworkers did not always make correct eligibility 
determinations because of caseworker errors. This resulted in 
caseworkers enrolling individuals who did not apply for the program and 
allowing individuals to qualify for Medicaid when they should not have. 
In our review of the 100 Medicaid applicants in our targeted selection, 
we found six instances where caseworkers enrolled individuals who did 
not apply for Medicaid, did not act upon information they received that 
affected an applicant's eligibility, and did not document reasons for 
determining eligibility per LDH policy. Examples of caseworker errors 
include:

          In two separate instances, LDH caseworkers enrolled 
        individuals in Medicaid who did not apply. In both of these 
        instances, the caseworkers received an application, but keyed 
        in the wrong Social Security numbers to enroll the individuals. 
        In both of these instances, there is no documentation 
        indicating that the individuals were aware they were enrolled 
        in Medicaid, and neither received services through Medicaid.

          In one instance, a Medicaid recipient completed two 
        applications: the first was an online application with LDH 
        Medicaid and the second was an application submitted through 
        the FFM. The FFM application was referred to LDH, meaning that 
        LDH had to make the eligibility determination because at that 
        time LDH was an FFM assessment state. Although the applicant 
        reported no wages, the caseworker identified wages in the 
        applicant's LWC wage data and documented it, reached out to the 
        applicant for more information, did not receive a response, and 
        therefore did not enroll the applicant in Medicaid. However, 
        another caseworker approved the applicant's online application 
        without verifying LWC wages and enrolled the applicant in 
        Medicaid.

          In one instance, the applicant reported income that was not 
        reasonably compatible with what the caseworker found in LWC 
        data within 25% of reported income. Instead of seeking to 
        obtain a reasonable explanation as to why the income amounts 
        differed, the caseworker accepted the attested income without 
        documenting why they did so, which is a violation of LDH 
        policy.

          We also identified two instances where LDH caseworkers did 
        not cancel Medicaid coverage when applicants self-reported 
        changes in wages. For example, a Medicaid recipient who was 
        enrolled in FFS prior to Medicaid expansion became employed and 
        notified a caseworker of their income and that they had 
        obtained private health insurance. Although the recipient's 
        notification was documented in their case file, they were not 
        removed from Medicaid and instead were automatically enrolled 
        into Medicaid expansion. When LDH tried to renew their case one 
        year later, the recipient stated that they did not know that 
        they were on Medicaid and that they were still employed. LDH 
        then canceled their coverage. We also found an example where a 
        Medicaid recipient called a caseworker to cancel coverage 
        because they had found a job. However, the recipient's coverage 
        was not canceled until renewal, 10 months after the call, 
        because LDH requires recipients to request case closure in 
        writing.

        Recommendation 1:  LDH should conduct more frequent wage data 
        matches to identify Medicaid recipients with incomes that 
        exceed amounts allowable to be eligible for Medicaid. Using 
        these results, LDH should develop a risk-based methodology to 
        identify and review high-risk cases.

        Summary of Management's Response: LDH agreed with this 
        recommendation and stated that while its current eligibility 
        data system limits LDH's ability to perform more frequent wage 
        verification, its new eligibility system, which will be 
        implemented in mid-November 2018, will allow LDH to verify wage 
        data on a more frequent basis. LDH stated it plans to use LWC 
        data to replicate the method developed by LLA to identify high-
        risk cases for review in early 2019.

        Recommendation 2: LDH should use LWC wage data and other data 
        sources to verify wages of applicants received from the FFM to 
        ensure more accurate eligibility determinations.

        Summary of Management's Response: LDH agreed with this 
        recommendation and stated that it will verify eligibility 
        determinations made by the FFM and terminate coverage for 
        individuals found to be ineligible by the following months once 
        its new eligibility system is implemented.

        Recommendation 3: LDH should ensure that its caseworkers re-
        determine eligibility when they receive information that may 
        affect eligibility of the recipient acting upon all 
        information.

        Summary of Management's Response: LDH agreed with this 
        recommendation and stated that it will reinforce training on 
        agency policy that requires caseworkers to consider all 
        information available and promptly re-determine eligibility.

        Recommendation 4: LDH should ensure that caseworkers document 
        information used to make eligibility decisions.

        Summary of Management's Response: LDH agreed with this 
        recommendation and stated that it will reinforce caseworker 
        training on agency policy that requires documentation of 
        information used to make eligibility decisions. LDH stated that 
        its new eligibility system will automatically store information 
        available to the system for use in eligibility decision-making.

        Recommendation 5: LDH should determine if it should allow 
        Medicaid recipients to verbally cancel their coverage using the 
        same methods as when an applicant verbally applies for 
        Medicaid.

        Summary of Management's Response: LDH agreed with this 
        recommendation and stated that it is currently evaluating 
        options for allowing applicants to verbally cancel their 
        coverage similar to how applicants verbally apply for Medicaid.
_______________________________________________________________________

82 (82.0%) of 100 Medicaid recipients in the random sample did not 
qualify for $382,420 (47.3%) of the $808,341 in PMPMs LDH paid on their 
behalf. Because this sample was random, we were able to project these 
results to the entire population of 19,226 \14\ single-person household 
Medicaid expansion recipients. Based on this projection, it appears 
that LDH may have paid between $61.6 million and $85.5 million in PMPMs 
for Medicaid recipients who did not qualify at some point during their 
Medicaid coverage.
---------------------------------------------------------------------------
    \14\ We removed 563 individuals who did not appear to be accurate 
matches on Social Security number due to having different names in the 
LWC and LDH data. After removing the 563 individuals who did not appear 
to be true matches, we had a population of 19,226 Medicaid expansion 
recipients.

    Due to the issues identified within the targeted selection, we 
performed the same review on a random sample of Medicaid recipients to 
project the effects of the identified issues on the entire population 
of 19,226 \14\ single-person household Medicaid expansion recipients. 
To accomplish this, we selected a random sample of 100 single-person 
household Medicaid expansion recipients whose average quarterly wages 
were higher than 138% of the federal poverty level and reviewed their 
electronic case records to determine if they were eligible in the 
---------------------------------------------------------------------------
period during which they were enrolled in Medicaid.

    We found that, based on their wages, 82 (82.0%) of these Medicaid 
recipients did not qualify at some point during their Medicaid 
coverage. We also found that these Medicaid recipients did not qualify 
for $382,420 (47.3%) of the $808,341 in PMPMs paid on their behalf, and 
the average PMPM paid per ineligible recipient was $3,824. Of these 82 
recipients who did not qualify for Medicaid at some point during their 
coverage, 64 (78.0%) received services through MCOs totaling $173,540 
during the months in which they were not eligible. When projecting the 
average PMPM paid for ineligible recipients ($3,824) to the entire 
population of 19,226, we found that from July 1, 2016, through March 
31, 2018, between $61,570,417 and $85,477,710 in PMPMs may have been 
paid for Medicaid recipients who did not qualify due to their income 
exceeding 138% of the federal poverty level. More frequent checks of 
wages could have prevented a portion of these PMPMs from being paid.

                   Appendix A: Management's Response

John Bel Edwards                                Rebekah E. Gee MD, MPH
GOVERNOR                                                      SECRETARY

                           State of Louisiana

                     Louisiana Department of Health

                    Office of Management and Finance

                           Bienville Building

                           628 N. Fourth St.

                              P.O. Box 629

                   Baton Rouge, Louisiana 70821-0629

                         Phone: (225) 342-6726

                          Fax: (225) 342-5568

                             www.ldh.la.gov

November 2, 2018

Daryl G. Purpera, CPA, CFE
Legislative Auditor
P.O. Box 94397
Baton Rouge, Louisiana 70804-9397

Re: Medicaid Eligibility--Wage Verification Process

Dear Mr. Purpera:

Thank you for the opportunity to respond to the findings of your 
Medicaid Audit Unit on the Medicaid eligibility wage verification 
process. The Bureau of Health Services Financing (BHSF), which is 
responsible for administration of the Medicaid program in Louisiana, is 
committed to ensuring the integrity of the Medicaid eligibility 
determination process through appropriate management controls.

We have reviewed the audit findings and provide the following response 
to the recommendations documented in the report.

Recommendation 1: LDH should conduct more frequent wage data matches to 
identify Medicaid recipients with income that exceeds amounts allowable 
to be eligible for Medicaid. Using these results, LDH should develop a 
risk-based methodology to identify and review high-risk cases.

LDH Response: LDH agrees with this recommendation. The capabilities of 
the current Louisiana Medicaid Eligibility Data System (MEDS) are 
limited, making eligibility determination a manual, labor intensive 
task. Given the limits of MEDS and a work force supply that is 
outstripped by workload demands, wage data verification on a basis more 
frequent than annual has been resource prohibitive. However, the new 
eligibility system, LaMEDS, to go live in mid-November, will be highly 
automated, enabling LDH to verify wage data on a more frequent basis. 
Specifically, LDH plans to use Louisiana Workforce Commission (LWC) 
data to replicate the method developed by LLA to identify high-risk 
cases for review by our Recipient Fraud Unit beginning in early 2019.

Recommendation 2: LDH should use LWC wage data and other data sources 
to verify wages of applicants received from the FFM to ensure more 
accurate eligibility determinations.

LDH Response: LDH agrees with this recommendation. Following LaMEDS go 
live, LDH will verify eligibility determinations made by the FFM and 
terminate coverage for individuals found to be ineligible by the 
following month.

Recommendation 3: LDH should ensure that its caseworkers re-determine 
eligibility when they receive information that may affect eligibility 
of the recipient acting upon all information.

LDH Response: LDH agrees with this recommendation. LDH will reinforce 
training on agency policy that requires caseworkers to consider all 
information available and promptly re- determine eligibility when 
indicated.

Recommendation 4: LDH should ensure that caseworkers document 
information used to make eligibility decisions.

LDH Response: LDH agrees with this recommendation. LDH will reinforce 
caseworker training on agency policy that requires documentation of 
information used to make eligibility decisions. In addition, LaMEDS 
will automatically store information available to the system for use in 
eligibility decision making.

Recommendation 5: LDH should determine if it should allow Medicaid 
recipients to verbally cancel their coverage using the same methods as 
when an applicant verbally applies for Medicaid.

LDH Response: LDH agrees with this recommendation. LDH is currently 
evaluating options for allowing applicants to verbally cancel their 
coverage similar to how applicants verbally apply for Medicaid.

You may contact Michael Boutte, Medicaid Deputy Director, at (225) 342-
0327 or via e-mail at [email protected] with any questions about 
this matter.

Sincerely,
Cindy Rives
Undersecretary

                   Appendix B: Scope and Methodology

    We conducted this analysis under the provisions of Title 24 of the 
Louisiana Revised Statutes of 1950, as amended. This analysis focused 
on LDH's income eligibility processes, primarily concerning its use of 
LWC wage data. The purpose of this analysis was:

To evaluate the sufficiency of LDH's process of using wage data to 
determine the eligibility of the Medicaid expansion population.

    The scope of our audit was less than that required by Government 
Auditing Standards. We believe the evidence obtained provides a 
reasonable basis for our findings and conclusions. To conduct this 
analysis we performed the following steps:

          Researched relevant federal and state laws, regulations, 
        policies, and guidance regarding the Medicaid eligibility 
        determination process.

          Met with LDH employees to gain an understanding of the 
        eligibility determination processes relative to income and 
        Medicaid expansion.

          Researched and compared verification plans for each of the 
        50 states and the District of Columbia to current Louisiana 
        standards in regards to the frequency and use of wage data.

          For both our targeted selection and random sample, we 
        analyzed Medicaid data to identify PMPMs paid on behalf of and 
        services received by Medicaid recipients. We also analyzed wage 
        data from LWC to identify quarterly wages of Medicaid 
        recipients and the months in which the recipients were 
        employed. We analyzed driver's license data from the Office of 
        Motor Vehicles to ensure individuals captured in Medicaid and 
        LWC data were truly the same people.

          Conducted a targeted selection of single-person household 
        Medicaid expansion recipients to determine if issues existed in 
        the Medicaid eligibility determination process in regards to 
        the use of LWC wage data. We identified Medicaid recipients to 
        include in the targeted selection by doing the following:

              We initially identified 195,306 single-person 
        household Medicaid expansion recipients.

              We joined the population of 195,306 single-
        person household Medicaid expansion recipients, to LWC data on 
        Social Security number and found that 132,767 recipients had 
        wages.

              Using the population of 132,767 single-person 
        household Medicaid expansion recipients who had wages in the 
        LWC data, we extracted those who had average quarterly wages 
        over the nine quarters analyzed that exceeded 138% of the 
        federal poverty level in effect at Medicaid expansion. This 
        identified 19,789 single-person household Medicaid expansion 
        recipients whose average quarterly wages over the nine quarters 
        analyzed were higher than 138% of the federal poverty level in 
        effect at Medicaid expansion. We used quarters that included 
        January l, 2016, because this wage data would have been 
        available to caseworkers making eligibility determinations at 
        the beginning of Medicaid expansion. We used quarters that 
        included March 31, 2018, because this was the most recent 
        Medicaid and LWC data at the time of our analysis. The nine 
        quarters used to identify high wages included the following 
        period:

                         Quarter l, 2016-January 1, 2016 through 
                        March 31, 2016

                         Quarter 2, 2016-April 1, 2016 through 
                        June 30, 2016

                         Quarter 3, 2016-July 1, 2016 through 
                        September 30, 2016

                         Quarter 4, 2016-October 1, 2016 through 
                        December 31, 2016

                         Quarter 1, 2017-January 1, 2017 through 
                        March 31, 2017

                         Quarter 2, 2017-April 1, 2017 through 
                        June 30, 2017

                         Quarter 3, 2017-July 1, 2017 through 
                        September 30, 2017

                         Quarter 4, 2017-October 1, 2017 through 
                        December 31, 2017

                         Quarter 1, 2018-January 1, 2018 through 
                        March 31, 2018

              Using these 19,789 Medicaid recipients, we 
        sorted the results to include Medicaid recipients with the 
        average highest wages at the top. We then worked through them 
        case by case to determine if the Medicaid recipients were 
        eligible.

          Conducted a random sample to identify single-person 
        household Medicaid expansion recipients whose wages were higher 
        than the allowable amount of 138% of the federal poverty level. 
        We analyzed quarterly wages and the months during which the 
        Medicaid recipient was employed to determine if the PMPMs paid 
        on behalf of each Medicaid recipient were ineligible due to 
        their wages. We identified Medicaid recipients for the random 
        sample by doing the following:

              We initially identified 195,306 single-person 
        household Medicaid expansion recipients.

              We joined the population of 195,306 single-
        person household Medicaid expansion recipients, to LWC data on 
        Social Security number and found that 132,767 recipients had 
        wages.

              Using the population of 132,767 single-person 
        household Medicaid expansion recipients who had wages in the 
        LWC data, we extracted those who had average quarterly wages 
        over the nine quarters analyzed that exceeded 138% of the 
        federal poverty level in effect at Medicaid expansion. This 
        identified 19,789 single-person household Medicaid expansion 
        recipients whose average quarterly wages over the nine quarters 
        analyzed were higher than 138% of the federal poverty level in 
        effect at Medicaid expansion. We used quarters that included 
        January l, 2016, because this wage data would have been 
        available to caseworkers making eligibility determinations at 
        the beginning of Medicaid expansion. We used quarters that 
        included March 31, 2018, because this was the most recent 
        Medicaid and LWC data at the time of our analysis. The nine 
        quarters used to identify high wages included the following 
        period:

                         Quarter l, 2016-January 1, 2016 through 
                        March 31, 2016

                         Quarter 2, 2016-April 1, 2016 through 
                        June 30, 2016

                         Quarter 3, 2016-July 1, 2016 through 
                        September 30, 2016

                         Quarter 4, 2016-October 1, 2016 through 
                        December 31, 2016

                         Quarter 1, 2017-January 1, 2017 through 
                        March 31, 2017

                         Quarter 2, 2017-April 1, 2017 through 
                        June 30, 2017

                         Quarter 3, 2017-July 1, 2017 through 
                        September 30, 2017

                         Quarter 4, 2017-October 1, 2017 through 
                        December 31, 2017

                         Quarter 1, 2018-January 1, 2018 through 
                        March 31, 2018

              Using the population of 19,789 single-person 
        household Medicaid expansion recipients whose average quarterly 
        wages over the nine quarters analyzed were higher than 138% of 
        the federal poverty level in effect at Medicaid expansion, we 
        removed those individuals who had names that did not appear to 
        be the same in LWC and LDH data. This occurs because 
        information reported to LWC is reported by employers and not 
        validated, while LDH caseworkers sometimes enter wrong 
        identifying information for Medicaid recipients. After removing 
        those that appeared to not be true matches, we had a population 
        of 19,226 Medicaid expansion recipients.

              We then extracted a random sample of 100 
        Medicaid recipients from the 19,226 single-person household 
        Medicaid expansion recipients and reviewed their case files and 
        wage data to determine how much LDH paid for each recipient to 
        remain enrolled with a managed care organization during months 
        when that recipient's income exceeded 138% of the federal 
        poverty level. Of these 100 Medicaid recipients, 82 were 
        ineligible at some point during the period examined. The 
        average amount of ineligible PMPMs for these 100 Medicaid 
        recipients (including those with $0 in ineligible PMPMs) was 
        $3,824.20 per Medicaid recipient, and the standard deviation 
        was $3,172.22. On this basis, we projected that the dollar 
        amount of ineligible PMPMs for the population of 19,226 single-
        person household Medicaid expansion recipients was $73,524,063, 
        with a 95% confidence interval of $61,570,417 to $85,477,710. 
        Exhibit B.1 below shows the results of this analysis.


                 Exhibit B.1. Estimated Ineligible PMPMs
------------------------------------------------------------------------
                        Category                              Number
------------------------------------------------------------------------
Medicaid Recipients in Sample                                        100
Ineligible Medicaid Recipients in Sample                              82
Average Ineligible PMPM Payments Per Medicaid Recipient        $3,824.20
 in Sample
Standard Deviation of Ineligible PMPM Payments Per             $3,172.22
 Medicaid Recipient in Sample
Number of Medicaid Recipients in Sub-population of                19,226
 Single-Person Households Covered by Medicaid Expansion
Estimated Ineligible PMPM Payments in Subpopulation,         $73,524,063
 Projected from Sample
Lower Bound of Ineligible PMPM Payments in Sub-              $61,570,417
 population (95% Confidence Interval)
Upper Bound of Ineligible PMPM Payments in Sub-             $85,477,710
 population (95% Confidence Interval)
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using data from LDH and
  LWC.


         Discussed and provided the results of our analyses to LDH 
        management.


         Appendix C: Enrollment Types and Eligibility of the P100 Targeted Selection Medicaid Recipients
----------------------------------------------------------------------------------------------------------------
                                                                                Did not Qualify
                                                 Number of      Applicants Who   at Some Point     Eligible for
              Enrollment Method                  Applicants    Did Not Qualify  During Coverage  Entire Coverage
                                                  Reviewed       for Medicaid          *              Period
----------------------------------------------------------------------------------------------------------------
Online/Paper Application                                  52                4               43                5
FFM Determination                                         38                1               35                2
FFS                                                        8                2                6                0
SNAP                                                       2                0                2                0
    Total                                                100                7               86               7
----------------------------------------------------------------------------------------------------------------
* If LDH performed interim checks for wages on these individuals, LDH could have prevented PMPMs from being paid
  after the Medicaid recipient began receiving wages higher than the allowable amount to qualify for Medicaid.
Source: Prepared by legislative auditor's staff using information from state's Medicaid verification plans.



          Appendix D: Enrollment Types and Eligibility of the  100 Randomly-Sampled Medicaid Recipients
----------------------------------------------------------------------------------------------------------------
                                                           Applicants      Did not
                                              Number of    Who Did Not   Qualify at   Eligible for
             Enrollment Method               Applicants    Qualify for   Some Point      Entire     Multi-Person
                                              Reviewed     Entire Time     During       Coverage    Household **
                                                           on Medicaid   Coverage *      Period
----------------------------------------------------------------------------------------------------------------
Online/Paper Application                             54             2            36            14             2
FFM Determination                                    20             0            19             1             0
FFS                                                  25             1            24             0             0
Unknown                                               1             0             0             0             1
    Total                                           100             3            79            15             3
----------------------------------------------------------------------------------------------------------------
* If LDH performed interim checks for wages on these individuals, LDH could have prevented PMPMs from being paid
  after the Medicaid recipient began receiving wages higher than the allowable amount to qualify for Medicaid.
** While we requested only single-person households be included in the list sent by LDH, we did identify
  instances where the recipient was actually a multi-person household.
Source: Prepared by legislative auditor's staff using information from state's Medicaid verification plans.


                       Appendix E: Targeted Selection Individual  Medicaid Recipient Cases
----------------------------------------------------------------------------------------------------------------
                                                                                                        Wages
                                   Ineligible    Services    Ineligible     Months      Months Not      During
     Recipient        PMPM Paid    PMPMs Paid    Received     Services   Qualified on  Qualified on    Medicaid
                                                              Received     Medicaid      Medicaid      Coverage
----------------------------------------------------------------------------------------------------------------
1                        $19,903      $17,807      $14,641      $14,214            2            19      $111,785
2                         13,708       13,708            0            0            0            19       101,171
3                         12,602       12,602       15,845       15,845            0            13        61,685
4                         15,220       12,583       41,714       34,829            3            16        88,874
5                         19,855       11,410        5,653          821            9            12        99,140
6                         10,930       10,930            0            0            0            12       126,284
7                         14,702       10,762       12,847        1,720            5            14       104,921
8                         11,526       10,556        2,845        2,845            1            12        99,017
9                         15,729       10,553       12,364        5,884            6            12       104,925
10                         9,991        9,991           44           44            0            12        73,082
11                         9,446        8,606        6,034        6,034            1            11        62,400
12                        11,036        8,389           76           76            3            10        93,929
13                         8,356        8,356            0            0            0            19       112,247
14                         9,056        8,254            0            0            1            11        66,494
15                         9,056        8,254        4,054        4,054            1            11        82,715
16                        11,266        8,217            0            0            3             9       103,628
17                         8,127        8,127            0            0            0            12        69,340
18                         8,412        7,969        1,172        1,172            1            20       114,797
19                         8,597        7,796          417          417            1            11        63,231
20                        11,743        7,757          690          408            5            10        58,701
21                        10,530        7,733            0            0            3             9        80,300
22                         8,486        7,720       11,713       11,713            1            11        55,988
23                        10,761        7,245        3,517        2,073            4             9        65,389
24                        11,650        7,061          325          311            6            10        82,867
25                         7,737        7,039            0            0            1            11        77,214
26                        10,542        7,028          771          355            5            10        64,974
27                        10,689        6,963            0            0            4             8        63,323
28                         8,242        6,783        4,901            0            2            10        89,964
29                         7,338        6,663            0            0            1            11        70,200
30                        10,814        6,583        1,103        1,103            5             8        31,290
31                         8,819        6,528           22           11            3             9        59,841
32                         8,814        6,429        1,569          538            3             8        42,300
33                         7,838        6,410          332          212            2            10        77,563
34                        12,027        6,330            0            0            6             7        86,705
35                         9,459        6,309        8,541        2,037            4             9        58,086
36                         6,252        6,251          726          439            1            12        65,830
37                         8,532        6,159            0            0            4             8        75,159
38                         8,343        6,139            0            0            3             9        63,329
39                         7,466        6,138          646          626            2            10        85,172
40                         7,624        5,880          154          154            3            10        69,860
41                         8,261        5,880       49,036       34,578            4            10        97,945
42                         7,135        5,862       10,822        1,567            2            10        57,369
43                         8,890        5,740          152           46            4             8        79,326
44                         6,616        5,662        3,384          370            2            13       110,536
45                         8,711        5,611        1,246          764            4             8        58,929
46                         8,452        5,518           26           26            4             8        89,639
47                        11,122        5,426            0            0            6             6        46,893
48                         9,319        5,419        1,675          833            5             7        64,733
49                         9,312        5,418            0            0            5             7        52,982
50                         5,416        5,416            0            0            0            12        93,022
51                         8,127        5,377          438          162            4             8        66,424
52                         7,128        5,189        7,904        5,899            4            12       145,146
53                         9,041        4,803          338            0            6             7        45,330
54                         5,729        4,774          162            0            2            11        94,906
55                         7,022        4,746        5,265        1,308            4             7        59,557
56                         8,676        4,686          258          221            5             6        78,668
57                         8,527        4,677        2,379          118            5             6        16,682
58                         5,118        4,641            0            0            1            11        51,986
59                         6,382        4,633        6,835            0            3             8        69,208
60                         4,977        4,539            0            0            1            11        84,145
61                         7,668        4,402           76            0            5             7        58,222
62                         4,757        4,319            0            0            1            11        70,413
63                         5,089        4,201            0            0            2            10        67,378
64                         8,860        4,138        9,912        2,311            8             7       113,019
65                         8,419        4,117          447            0            6             6        39,387
66                         7,080        4,070            0            0            5             7        83,016
67                         4,933        4,047           21           18            2            10        45,027
68                         5,362        3,968          554            0            3             9        60,237
69                         5,278        3,968        2,297          407            3             9        56,175
70                         4,812        3,936          667          174            2            10        63,972
71                         4,664        3,898        1,001          782            2            11        80,687
72                         5,085        3,878          271          135            3            10        66,970
73                         4,713        3,793            0            0            2             9        53,180
74                        10,463        3,702        6,503        2,016            9             5        51,018
75                         4,245        3,479          259           79            2             9        61,099
76                         4,357        3,478           44           44            2             8        60,440
77                         4,967        3,428          241          178            4             9       114,272
78                         6,222        3,393           83            0            6             7        65,837
79                         5,442        3,293        5,669          381            5             8       123,900
80                         5,416        3,089            0            0            5             7        68,485
81                         9,494        2,764            0            0            9             4        89,582
82                         8,343        2,712           97            0            8             4        42,168
83                         6,480        2,533          321          205            6             4        50,616
84                         5,907        2,350        5,509        3,438            6             4        13,361
85                         4,064        2,012        1,129            0            5             5        72,484
86                         8,456        2,009        1,668            0           16             5       127,301
87                         6,012        1,927            0            0            8             4        19,995
88                        11,842        1,809        1,565          198           10             2        43,880
89                         3,835        1,672        2,973          618            5             4        53,688
90                         5,173          963        2,320           83            9             2        38,525
91                         2,365          591           59           18            3             1         7,071
92                           879          440            0            0            1             1        17,526
93                         4,637          383          258            0           11             1        50,606
94                         5,796            0          941            0           13             0        76,759
95                         4,357            0        3,889            0           10             0        15,213
96                         2,072            0            0            0            6             0        10,396
97                         6,687            0          611            0           10             0         7,079
98                        17,122            0            0            0           21             0         6,180
99                           686            0            0            0            1             0             0
100                        5,799            0        2,927            0           10             0         1,932
Total                   $813,023     $538,795     $294,946     $164,913          421           840   $6,774,242
----------------------------------------------------------------------------------------------------------------
Note: The totals may not equal the sum of the 100 recipients due to rounding.
Source: Prepared by legislative auditor's staff using information from LDH and LWC.


                        Appendix F: Randomly-Sampled Individual PMedicaid Recipient Cases
----------------------------------------------------------------------------------------------------------------
                                                                                                        Wages
                                   Ineligible    Services    Ineligible     Months      Months Not      During
     Recipient        PMPM Paid    PMPMs Paid    Received     Services   Qualified on  Qualified on    Medicaid
                                                              Received     Medicaid      Medicaid      Coverage
----------------------------------------------------------------------------------------------------------------
1                        $15,872      $14,939       $3,595       $3,595            1            18       $55,579
2                         15,209       13,642        5,119        4,770            2            19        46,303
3                         13,267       11,120       23,756       19,437            3            18        43,664
4                         14,614       10,753            0            0            4            12        24,668
5                          9,826        9,822       37,437       36,888            3            11        33,231
6                         13,041        9,478        1,807        1,632            6            15        32,776
7                          9,887        8,996            0            0            1            11        44,720
8                         12,818        8,860          645          142            6            15        52,400
9                          8,611        8,611        8,997        8,997            0            13        40,567
10                         8,456        8,018        3,346        3,206            1            20        59,855
11                         9,664        7,945        2,194        2,109            2            10        27,991
12                         9,130        7,676          488          186            3            18        35,104
13                        13,041        7,340        1,984        1,436            9            12        31,725
14                         9,152        7,259          759          583            4            17        32,579
15                         9,911        7,171        3,595        2,087            3             8        35,572
16                         7,194        6,655        3,582        3,582            1            14        25,587
17                         8,241        6,639        1,423        1,423            2             9        16,251
18                         6,515        6,515       33,165       33,165            0            14        31,975
19                         7,029        6,432        1,548          769            1            11        21,529
20                         6,916        6,279            0            0            2            16        37,833
21                         8,267        6,120        4,330        2,249            3             9        47,410
22                        18,951        5,836        7,497        3,299           14             6        29,813
23                         7,236        5,670           89           48            3            12        55,599
24                         7,438        5,553          448          216            3             8        21,016
25                         6,562        5,542        2,672        1,748            3            16        37,415
26                        11,122        5,505           25           25            6             6        32,695
27                        10,002        5,352        2,929        2,695            4             9        24,344
28                         9,309        5,313          675          535            9            11        29,298
29                         7,784        5,054          982          624            4             8        19,542
30                         6,046        5,024          976          964            2            11        19,934
31                        13,708        4,803          114            0           12             7        22,547
32                         7,037        4,775        2,682        1,284            6            15        37,567
33                         6,009        4,767          883          441            4            16        35,892
34                         7,191        4,628        8,827          626            6            11        30,509
35                        19,485        4,475        6,634          609            2            10        55,712
36                         5,191        4,295          139          139            2            10        24,111
37                         8,456        4,245          515          305           10            11        46,801
38                        18,459        4,238        9,680        4,049            8             9        27,884
39                         5,667        4,222        2,642        1,701            3             9        21,227
40                         4,588        4,208            0            0            1            11        23,007
41                        13,238        4,181        1,304        1,304           12             6        32,978
42                         4,986        4,140        1,176        1,176            2            10        31,660
43                         8,860        4,138        9,912        2,311            8             7       113,019
44                         6,032        4,032          996          996            7            14        42,900
45                         9,702        4,013        1,913          711           11             8        35,871
46                         4,393        3,987        1,221        1,221            1            11        32,951
47                         9,152        3,883            0            0           12             9        29,853
48                         6,653        3,772          793          443            7             9        21,066
49                         9,700        3,750        1,618          253           13             8        56,804
50                         5,643        3,679          833          593            6            12        43,968
51                         6,194        3,664          118            0            6             9        22,686
52                         5,371        3,578          539          531            4             8        36,531
53                         5,430        3,519          217            0            4             8        28,870
54                         4,357        3,478           44           44            2             8        60,440
55                         5,960        3,417        1,576        1,170            0            11        31,954
56                         4,729        3,212          383          349            5            11        48,222
57                         5,743        3,176            0            0            5             7        26,167
58                         7,526        3,036            0            0           11             8        26,394
59                         4,414        2,826        1,968          658            5             7        34,460
60                         6,715        2,618          294           16            9             6        38,778
61                         3,290        2,546          386            0            4             8        25,523
62                         6,621        2,453            0            0           11             6        23,291
63                         5,817        2,408          130           57            7             5        26,272
64                         7,251        2,190       36,855            0           14             5        39,318
65                         6,990        2,187        1,571          514            7             3        10,605
66                         7,926        1,993          230           72            9             3        29,157
67                         4,611        1,983            0            0            7             5        17,476
68                         5,286        1,952            0            0           11             7        34,444
69                         4,637        1,946          216           12            7             5        19,564
70                        17,048        1,939        8,415          156            1             4        20,948
71                         4,038        1,768        2,288        1,608            8             6        19,407
72                         4,086        1,745          476            0            4             3         7,185
73                        11,514        1,734        1,813           38           16             3        28,532
74                        16,763        1,598        8,511        2,761           19             2        42,328
75                         8,062        1,356        3,257          176           10             2        18,125
76                         4,558        1,214       16,088          469            8             3        14,705
77                         6,161        1,192       25,844        3,678           12             3        25,225
78                         2,668          996            7            0            5             3         9,852
79                         3,736          977          475            0           10             4        22,863
80                         7,733          838        1,190          129           14             2        11,574
81                        12,075          784       20,959        6,114           16             1         3,532
82                         5,214          750        7,758          416           10             2        21,325
83                         7,423            0        1,129            0           10             0        14,917
84                         8,559            0       12,844            0           12             0             0
85                         4,539            0        1,326            0            2             0        35,931
86                        10,497            0          334            0           12             0        17,082
87                         6,990            0        7,305            0           10             0         9,770
88                         8,530            0        1,170            0           11             0         3,423
89                         7,047            0          951            0           10             0         3,462
90                         8,918            0        1,601            0           10             0        16,421
91                         3,862            0           34            0           10             0             0
92                         9,458            0            0            0           12             0        17,700
93                         8,703            0        4,079            0            8             0             0
94                         5,388            0        1,305            0            0             0        38,005
95                         4,922            0            0            0            0             0        10,465
96                         4,177            0          895            0           11             0         3,610
97                         4,183            0          409            0            5             0           936
98                         5,735            0        4,583            0           13             0         1,615
99                         6,164            0           97            0            0             0        40,684
100                        5,465            0        1,304            0           12             0        35,496
    Total               $808,341     $382,420     $386,915     $173,540          647           748   $2,888,574
----------------------------------------------------------------------------------------------------------------
Note: The totals may not equal the sum of the 100 recipients due to rounding.
Source: Prepared by legislative auditor's staff using information from LDH and LWC.


                Appendix G: List of Previous MAU Reports
------------------------------------------------------------------------
         Issue Date                             Title
------------------------------------------------------------------------
October 31, 2018             Identification of Incarcerated Medicaid
                              Recipients
June 20, 2018                Reliability of Medicaid Provider Data
May 2, 2018                  Strengthening of the Medicaid Eligibility
                              Determination Process
November 29, 2017            Improper Payments for Deceased Medicaid
                              Recipients
October 4, 2017              Monitoring of Medicaid Claims Using All-
                              Inclusive Code (T1015)
September 6, 2017            Improper Payments in the Medicaid
                              Laboratory Program
July 12, 2017                Prevention, Detection, and Recovery of
                              Improper Medicaid Payments in Home and
                              Community-Based Services
March 29, 2017               Duplicate Payments for Medicaid Recipients
                              with Multiple Identification Numbers
March 22, 2017               Program Rule Violations in the Medicaid
                              Dental Program
October 26, 2016             Medicaid Recipient Eligibility--Managed
                              Care and Louisiana Residency
------------------------------------------------------------------------
Source: MAU reports can be found on the LLA's website under ``Reports
  and Data'' using the ``Audit Reports by Type'' button. By selecting
  the ``Medicaid'' button, all MAU reports issues by LLA will be
  displayed; https://www.lla.la.gov/reports-data/audit/audit-type/
  index.shtml?key=Medicaid.


                                 ______
                                 

              Update on Wage Verification Process of the 
                     Medicaid Expansion Population

                     Louisiana Department of Health

                          Medicaid Audit Unit

                            Follow-Up Report

                           Issued May 1, 2019

                     Louisiana Legislative Auditor

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                          Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

        Assistant Legislative Auditor for State Audit Services 

                   Nicole B. Edmonson, CIA, CGAP, MPA

                 Director of Performance Audit Services

                     Karen Leblanc, CIA, CGAP, MSW

For questions related to this medicaid audit unit report, Contact Chris 
            Magee, Data Analytics Manager, at 225-339-3800.

Under the provisions of state law, this report is a public document. A 
copy of this report has been submitted to the Governor, to the Attorney 
General, and to other public officials as required by state law. A copy 
of this report is available for public inspection at the Baton Rouge 
office of the Louisiana Legislative Auditor and online at 
www.lla.la.gov.

This document is produced by the Louisiana Legislative Auditor, State 
of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 
in accordance with Louisiana Revised Statute 24:513. Eleven copies of 
this public document were produced at an approximate cost of $2.75. 
This material was produced in accordance with the standards for state 
agencies established pursuant to R.S. 43:31. This report is available 
on the Legislative Auditor's website at www.lla.la.gov. When contacting 
the office, you may refer to Agency ID No. 9726 or Report ID No. 
82190002 for additional information.

In compliance with the Americans With Disabilities Act, if you need 
special assistance relative to this document, or any documents of the 
Legislative Auditor, please contact Elizabeth Coxe, Chief 
Administrative Officer, at 225-339-3800.

                                 ______
                                 

                     Louisiana Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                        https://www.lla.la.gov/

                          Phone: 225-339-3800

                           FAX: 225-339-3870

May 1, 2019

The Honorable John A. Alario, Jr.,
    President of the Senate

The Honorable Taylor F. Barras,
    Speaker of the House of Representatives

Dear Senator Alario and Representative Barras:

    This report details the progress made by the Louisiana Department 
of Health (LDH) in response to recommendations in a November 8, 2018, 
report issued by the Louisiana Legislative Auditor (LLA). That report, 
Medicaid Eligibility: Wage Verification Process of the Expansion 
Population, evaluated and identified areas in which LDH could 
strengthen its process of using wage data to determine the eligibility 
of the Medicaid expansion population.

    In its previous report, the LLA found that 93 (93.0 percent) of 100 
Medicaid recipients in a targeted selection analyzed did not qualify 
for $538,795 (66.3 percent) of the $813,023 in per-member per-month 
fees (PMPMs) LDH paid on their behalf.

    On November 13, 2018, LDH launched its new Medicaid eligibility 
system, LaMEDS, which allows the Department to perform automated 
quarterly wage checks. Such quarterly checks were one of the 
recommendations in the LLA report.

    After its new system was implemented, the Department analyzed the 
100 recipients from the LLA report and identified $692,663 in 
ineligible PMPMs paid on behalf of 98 of them. Fifteen of the cases 
were considered to involve potential fraud and were referred to the 
Attorney General's (AG) office. The AG's office determined one case was 
indicative of fraud and an arrest was made, while three cases did not 
indicate fraud. The remaining 11 cases were still under investigation 
as of April 11, 2019.

    The report contains our findings, conclusions, and recommendations. 
Appendix A contains LDH's response to this report.

    I hope this report will benefit you in your legislative decision-
making process.

    We would like to express our appreciation to the management and 
staff of the LDH for their assistance during this audit.

            Sincerely,

            Daryl G. Purpera, CPA, CFE
            Legislative Auditor

                                 ______
                                 

                     Louisiana Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

              Update on Wage Verification Process of the 
                     Medicaid Expansion Population

Louisiana Department of Health

May 2019
                                            Audit Control #82190002
_______________________________________________________________________

                              Introduction

    This report provides an update on specific actions taken by LDH in 
response to the report titled Medicaid Eligibility: Wage Verification 
Process of the Expansion Population\1\ released on November 8, 2018. 
The Louisiana Legislative Auditor (LLA) made five recommendations in 
that report, and LDH agreed with all of them. The report found that 93 
(93.0%) of the 100 Medicaid recipients in the targeted selection of 
Medicaid recipients analyzed did not qualify for $538,795 (66.3%) of 
the $813,023 in PMPMs LDH paid on their behalf.
---------------------------------------------------------------------------
    \1\ http://app.lla.state.la.us/PublicReports.nsf/0/
1CDD30D9C8286082862583400065E5F6/$FILE/0001ABC3.pdf.

    On November 13, 2018, LDH launched its new Medicaid Eligibility 
system, LaMEDS. According to LDH, the capabilities of this new 
eligibility system allow LDH to perform automated quarterly wage checks 
to verify income as recommended in our report. The objective of this 
report was to determine how LDH addressed the ineligible individuals 
identified in our targeted selection and to assess the results of LDH's 
first quarterly wage check using data from the Louisiana Workforce 
Commission (LWC).

                                Results

    LDH analyzed the 100 individuals in the targeted selection and 
identified $692,663 in ineligible per-member per-month fees (PMPMs) 
paid on behalf of 98 Medicaid recipients. Fifteen potentially-
fraudulent cases were referred to the Attorney General's Office (AG), 
of which the AG has determined that one case was indicative of fraud 
and resulted in an arrest, three cases did not indicate fraud, and the 
remaining 11 cases were still under investigation as of April 11, 2019. 
Prior to February 2019, LDH used LWC wage data only while reviewing a 
recipient's application--and at the earliest one year later during the 
recipient's renewal--to assist in determining a recipient's Medicaid 
eligibility. Instead of proactively checking for changes or increases 
in recipient wages on a quarterly basis, LDH relied on Medicaid 
recipients to voluntarily report changes in their income to LDH.

    We sent the results of our analysis of the targeted selection to 
LDH for verification, and LDH determined that these recipients were 
actually ineligible for longer periods of time than was determined by 
our analysis because our methodology was more conservative.\2\ LDH's 
initial review found that 98 (98.0%) of the 100 recipients did not 
qualify for $692,663 of the $813,023 in PMPMs paid on their behalf. See 
Exhibit 1 below for a comparison of the Medicaid recipients, PMPMs, 
services, and months identified as ineligible by LLA and LDH from the 
targeted selection.
---------------------------------------------------------------------------
    \2\ LLA's analysis required a Medicaid recipient to be employed 
consistently with the same employer over a three-month time period in 
order for one month, the second month, to be considered ineligible. 
This methodology was used by LLA since Medicaid allows an individual 
who is unemployed for one day in a month to qualify for Medicaid for 
the entire month. LDH's methodology identified all months within a 
quarter (three months) as ineligible if LWC data indicated that the 
recipient was employed with wages higher than the allowable amount for 
a specific quarter instead of analyzing the recipient's employment on a 
monthly basis.

 Exhibit 1. LLA and LDH Targeted Selection Initial Ineligibility Results
------------------------------------------------------------------------
            Recipients         PMPMs         Services         Months
 Entity    Ineligible **    Ineligible    Ineligible ***    Ineligible
------------------------------------------------------------------------
LLA                   93        $538,795        $164,913             840
LDH                   98       692,663 *         234,718           1,079
Differen               5        $153,868         $69,805             239
 ce
------------------------------------------------------------------------
* LDH also identified additional ineligible months for these recipients
  after the end of our scope (March 31, 2018). However, these additional
  ineligible months, PMPMs, and services are not included in this
  exhibit.
** Recipients were ineligible for at least one month during the period
  of their coverage.
*** These costs are incurred by MCOs.
Source: Prepared by legislative auditor's staff using information from
  LDH.


    Of the 100 Medicaid recipients identified in the targeted 
selection, 15 cases were referred to the AG, which determined that at 
least one case was indicative of fraud and resulted in an arrest, three 
cases did not indicate fraud, and the remaining 11 cases were still 
under investigation as of April 11, 2019. LDH initially sent demand 
letters to 93 of the 98 recipients identified through its review of our 
targeted selection, which indicated how much each recipient owed to 
Medicaid. However, LDH staff later stated that due to CMS requirements 
they would only seek recoupment from those Medicaid recipients who are 
convicted of committing fraud. LDH stated that any Medicaid recipients 
who have paid to LDH the amount in the demand letter and are not found 
to have committed fraud will be reimbursed.

    LDH has established a process to conduct more frequent wage data 
matches and identified 40,006 \3\ Medicaid recipients with wages that 
were higher than the allowable amount to be eligible for Medicaid. 
Through its review process, LDH terminated the coverage of 30,051 
(75.1%) \4\ Medicaid recipients. In response to LLA's recommendation 
that LDH conduct more frequent wage data matches, LDH entered into a 
data sharing agreement with LWC to receive wage data on a quarterly 
basis to proactively identify wage changes and increases for Medicaid 
recipients instead of relying on the recipients themselves to self-
report changes. LDH incorporated this new LWC wage data match into its 
new eligibility system. LDH ran this analysis on 1,549,703 Medicaid 
recipients and identified 79,851 with wages higher than the allowable 
amount. LDH then mailed letters to 40,006 recipients with wages higher 
than the allowable amount who were not in continuous enrollment.\5\ 
These letters stated that they would lose Medicaid coverage if they did 
not submit proof of their eligibility by April 1, 2019.
---------------------------------------------------------------------------
    \3\ There were 37,041 letters sent to the 40,006 Medicaid 
recipients. Households with multiple recipients were sent one letter.
    \4\ As of April 3, 2019, 30,051 of the 40,006 recipients identified 
by LDH's wage data match lost coverage; 6,493 were determined to be 
approved individuals; 2,417 were newly approved for coverage after 
previously losing coverage; and 1,045 recipient cases were awaiting LDH 
worker action. According to LDH, the majority of these cases were 
closed due to recipients' failure to respond to requests for 
information.
    \5\ Continuous enrollment is a decision of each state, and examples 
of these types of Medicaid recipients include children and other groups 
such as pregnant women. Income identified for those in continuous 
enrollment was used to assess the eligibility of other household 
members, but not those in continuous enrollment.

    Of the 40,006 Medicaid recipients identified through this analysis 
and sent letters, 30,051 \6\ (75.1%) lost Medicaid coverage. The PMPMs 
associated with the Medicaid recipients who lost coverage due to LDH's 
wage match totaled approximately $14.7 million \7\ for the month of 
January 2019, which indicates the potential monthly savings for LDH. 
LDH's new process has improved LDH's ability to more quickly identify 
changes in wages to ensure that only qualified individuals are on the 
Medicaid program and dollars are spent appropriately.
---------------------------------------------------------------------------
    \6\ As of April 4, 2019.
    \7\ This does not account for any effects of Medicaid recipients 
losing and re-acquiring Medicaid coverage.
---------------------------------------------------------------------------

                   Appendix A: Management's Response

John Bel Edwards                                Rebekah E. Gee MD, MPH
GOVERNOR                                                      SECRETARY

                           State of Louisiana

                     Louisiana Department of Health

                    Office of Management and Finance

                           Bienville Building

                           628 N. Fourth St.

                             P.O. Box 91030

                   Baton Rouge, Louisiana 70821-9030

                         Phone: (888) 342-6207

                          Fax: (225) 342-9508

                          https://ldh.la.gov/

April 29, 2019

Daryl G. Purpera, CPA, CFE
Legislative Auditor
P.O. Box 94397
Baton Rouge, Louisiana 70804-9397

Re: Wage Verification Process of the Expansion Population

Dear Mr. Purpera:

Thank you for the opportunity to respond to the findings of your 
Medicaid Audit Unit report on the Wage Verification Process of the 
Medicaid Expansion Population. The Bureau of Health Services Financing, 
which is responsible for the administration of the Medicaid program in 
Louisiana, is committed to ensuring the integrity of the Medicaid 
program.

We have reviewed the results and overall agree with the reported 
update. Our data sharing agreement with the Louisiana Workforce 
Commission (LWC) has allowed LDH to conduct more frequent wage 
verification instead of solely relying on recipients to self-report 
changes in income. With this change, LDH detected and referred to the 
Attorney General potentially fraudulent cases, which are currently 
under investigation. Per federal requirements, LDH will only seek 
recoupment from Medicaid recipients convicted of committing fraud.

Additionally, in its first quarterly wage check performed in February 
of 2019, LDH initially terminated the coverage of 30,051 Medicaid 
adults effective March 31, 2019. However, the vast majority of the 
closures were for enrollees' failure to respond to LDH's request for 
information, rather than evidence of ineligibility at present. Since 
initial closure, over 7 percent of the 40,006 enrollees who received a 
request for information have since provided proof of eligibility and 
been re-enrolled in coverage.

LDH is actively monitoring enrollment churn, defined as the cycling in 
and out of the Medicaid program as life circumstances change. Cognizant 
of related disruptions in care that put enrollees at risk for poor 
health outcomes, LDH is actively working on diverse strategies to 
improve member communications and member responsiveness as a means to 
reducing coverage termination for purely procedural reasons, such as 
failure to respond to a request for information.

You may contact Michael Boutte, Medicaid Deputy Director, at (225) 342-
0327 or via e-mail at [email protected] with any questions about 
this matter.

Sincerely,

Cindy Rives
Undersecretary

                                 ______
                                 

                   Appendix B: Scope and Methodology

    We conducted this analysis under the provisions of Title 24 of the 
Louisiana Revised Statutes of 1950, as amended. This analysis focused 
on the Louisiana Department of Health's (LDH) income eligibility 
processes, primarily concerning its use of Louisiana Workforce 
Commission (LWC) wage data. The purpose of this analysis was to 
determine how LDH addressed the ineligible individuals identified in 
the targeted selection analysis in our November 2018 report and assess 
the results of LDH's first quarterly wage check.

    The scope of our audit was significantly less than that required by 
Government Auditing Standards. We believe the evidence obtained 
provides a reasonable basis for our findings and conclusions. To 
conduct this analysis, we performed the following steps:

          Researched relevant federal and state laws, regulations, 
        policy, and guidance regarding the Medicaid eligibility 
        determination process.

          Obtained information from LDH on steps taken to address 
        recommendations made in our previous report.

          Analyzed LDH electronic case record information to determine 
        steps taken by LDH on the 100 Medicaid recipients identified in 
        the targeted selection from our previous report.

          Analyzed the results of LDH's first quarterly LWC wage match 
        with Medicaid recipients.

                Appendix C: List of Previous MAU Reports
------------------------------------------------------------------------
           Issue Date                             Title
------------------------------------------------------------------------
December 12, 2018                Medicaid Eligibility: Modified Adjusted
                                  Gross Income Determination Process
November 8, 2018                 Medicaid Eligibility: Wage Verification
                                  Process of the Expansion Population
October 31, 2018                 Identification of Incarcerated Medicaid
                                  Recipients
June 20, 2018                    Reliability of Medicaid Provider Data
May 2, 2018                      Strengthening of the Medicaid
                                  Eligibility Determination Process
November 29, 2017                Improper Payments for Deceased Medicaid
                                  Recipients
October 4, 2017                  Monitoring of Medicaid Claims Using All-
                                  Inclusive Code (T1015)
September 6, 2017                Improper Payments in the Medicaid
                                  Laboratory Program
July 12, 2017                    Prevention, Detection, and Recovery of
                                  Improper Medicaid Payments in Home and
                                  Community-Based Services
March 29, 2017                   Duplicate Payments for Medicaid
                                  Recipients with Multiple
                                  Identification Numbers
March 22, 2017                   Program Rule Violations in the Medicaid
                                  Dental Program
October 26, 2016                 Medicaid Recipient Eligibility--Managed
                                  Care and Louisiana Residency
------------------------------------------------------------------------
Source: MAU reports can be found on the LLA's website under ``Reports
  and Data'' using the ``Audit Reports by Type'' button. By selecting
  the ``Medicaid'' button, all MAU reports issues by LLA will be
  displayed; https://www.lla.la.gov/reports-data/audit/audit-type/
  index.shtml?key=Medicaid.

             Medicaid Eligibility: Modified Adjusted Gross 
                      Income Determination Process

                     Louisiana Department of Health

                      Medicaid Audit Unit Report 
                        Issued December 12, 2018

                     Louisiana Legislative Auditor

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                          Legislative Auditor 
                       Daryl G. Purpera, CPA, CFE

        Assistant Legislative Auditor for State Audit Services 

                   Nicole B. Edmonson, CIA, CGAP, MPA

                      Director of Financial Audit

                    Ernest F. Summerville, Jr., CPA

    For questions related to this audit, Contact Wes Gooch, Special 
            Assistant For Healthcare Audit, at 225-339-3800.

Under the provisions of state law, this report is a public document. A 
copy of this report has been submitted to the Governor, to the Attorney 
General, and to other public officials as required by state law. A copy 
of this report is available for public inspection at the Baton Rouge 
office of the Louisiana Legislative Auditor and online at 
www.lla.la.gov.

This document is produced by the Louisiana Legislative Auditor, State 
of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 
in accordance with Louisiana Revised Statute 24:513. Six copies of this 
public document were produced at an approximate cost of $4.68. This 
material was produced in accordance with the standards for state 
agencies established pursuant to R.S. 43:31. This report is available 
on the Legislative Auditor's website at www.lla.la.gov. When contacting 
the office, you may refer to Agency ID No. 3347 or Report ID No. 
80180079 for additional information.

In compliance with the Americans With Disabilities Act, if you need 
special assistance relative to this document, or any documents of the 
Legislative Auditor, please contact Elizabeth Coxe, Chief 
Administrative Officer, at 225-339-3800.

                                 ______
                                 

                     LOUISIANA LEGISLATIVE AUDITOR

                       Daryl G. Purpera, CPA, CFE

                        1600 North Third Street

                         Post Office Box 94397

                   Baton Rouge, Louisiana 70804-9397

                        https://www.lla.la.gov/

                          Phone: 225-339-3800

                           Fax: 225-339-3870

                           December 12, 2018

The Honorable John A. Alario, Jr.,
    President of the Senate
The Honorable Taylor F. Barras,
    Speaker of the House of Representatives

Dear Senator Alario and Representative Barras:

    This report provides the results of our testing of the Louisiana 
Department of Health's (LDH) Medicaid MAGI eligibility determination 
process. Proper and timely eligibility decisions are critical to ensure 
LDH does not expend state and federal funds for ineligible individuals.

    The report contains our findings, conclusions, and recommendations. 
Appendix A contains LDH's response to this report. I hope this report 
will benefit you in your legislative decision-making process.

    We would like to express our appreciation to the management and 
staff of LDH for their assistance during this audit.

            Sincerely,

            Daryl G. Purpera, CPA, CFE
            Legislative Auditor

                                 ______
                                 

                     Louisiana Legislative Auditor

                       Daryl G. Purpera, CPA, CFE

      Medicaid Eligibility: Modified Adjusted Gross Income (MAGI) 
                         Determination Process

Louisiana Department of Health

December 2018
                                            Audit Control #80180079
_______________________________________________________________________

    The Louisiana Department of Health (LDH) administers the Medicaid 
program to provide health and medical services to eligible Louisiana 
Medicaid recipients. As the single state Medicaid agency, LDH is 
responsible for all Medicaid eligibility determinations.

    With the implementation of managed care in 2012, eligibility became 
the cost driver for Medicaid. LDH pays a per member per month (PMPM) 
rate, essentially a premium, for each Medicaid recipient according to 
the current eligibility records. Proper and timely eligibility 
decisions are critical to ensure LDH is not expending state and federal 
funds on PMPMs for ineligible individuals. Considering rising state 
health care costs and limited budgets, it is important that LDH ensure 
that Medicaid dollars are spent appropriately.

    In 2014, through the Affordable Care Act, federal regulations 
changed the requirements for Medicaid eligibility determinations to a 
new methodology using federal income tax data known as Modified 
Adjusted Gross Income (MAGI). This new methodology better aligned 
Medicaid eligibility requirements with the requirements used in the 
Federally Facilitated Marketplace (FFM) so that consistent information 
could place an applicant in an appropriate, available health insurance 
program, whether Medicaid or a federally-subsidized private insurance 
policy through the FFM. The new MAGI determination process 
significantly changed the way Medicaid eligibility was determined for a 
large percentage of the Louisiana Medicaid program.

    As of June 30, 2018, there were 1.6 million recipients in Louisiana 
Medicaid. Of these recipients, 1.2 million (75%) were determined 
eligible in a MAGI eligibility group by LDH and enrolled in one of the 
managed care organizations (MCO). The MCOs are responsible for payment 
of provider claims for Medicaid services. LDH paid $5.4 billion in 
PMPMs for MAGI-determined recipients in state fiscal year 2018.

    In July 2016, Louisiana expanded Medicaid to a population of adults 
who previously had not been eligible for full Medicaid services. Now, 
adults earning up to 138% of the federal poverty level are eligible for 
full benefits in Louisiana Medicaid. The Centers for Medicare and 
Medicaid Service (CMS) regulations require the use of the MAGI-
determination methodology for the Medicaid expansion adult group. Since 
the implementation of Medicaid expansion, approximately 490,000 adults 
have enrolled in Medicaid. Considering the large number of newly-
enrolled recipients, new federal methodology, and quick implementation 
of Medicaid expansion, we determined this new Medicaid expansion adult 
population to be a higher-risk eligibility group. Based on this risk, 
we focused the testing for this report on the Medicaid expansion adult 
group.

    This report is the second in a series of two reports where we 
tested the eligibility of a sample of Medicaid recipients. Whereas this 
report evaluated the department's overall process for making 
eligibility determinations for the MAGI population, the first report 
titled Medicaid Eligibility: Wage Verification of the Expansion 
Population (issued November 8, 2018) focused on the wage verification 
process.

    The purpose of this report is:

To evaluate LDH's policies and processes for making and documenting 
MAGI-based eligibility determinations.

    Appendix A contains LDH's response to this report, Appendix B 
details our scope and methodology, Appendix C contains detailed results 
of our testing, and Appendix D contains a list of previously-issued 
Medicaid Audit Unit audit reports.

                                 ______
                                 
Objective: To evaluate LDH's policies and processes for making and 
documenting MAGI-based eligibility determinations.

    Although MAGI-based eligibility determinations were required by 
federal regulations beginning in 2014, auditors of state Medicaid 
programs were instructed to not test the new MAGI determinations \1\ 
because CMS would conduct pilot projects on this process for the first 
four years of the new eligibility methodology. Due to an oversight by 
CMS,\2\ the instruction to auditors to not test MAGI determinations was 
inadvertently continued for a fifth year (2018). However, due to risks 
noted through our continuous Medicaid audit work, we determined that 
testing MAGI determinations was critical to our audit of Medicaid for 
2018. As a result, this report is our first testing of LDH's MAGI 
determination process.
---------------------------------------------------------------------------
    \1\ Per guidance published in the Office of Management and Budget's 
(OMB) Compliance Supplement, which instructs auditors on the audits of 
federal programs under the Single Audit Act.
    \2\ CMS did not notify OMB to make the required change to the 
Compliance Supplement to instruct auditors to test all (MAGI and non-
MAGI) Medicaid populations for eligibility.

    For this report, we tested eligibility determinations for a random 
sample \3\ of 60 recipients from the Medicaid expansion adult group 
using MAGI-determinations and renewals for the period of July 2017 
through February 2018. Our test included examining initial 
determination policies and practices as well as renewal policies and 
practices. Overall, we found that LDH needs to strengthen its policies 
and processes to ensure eligibility decisions are accurate per federal 
regulations and supported by adequate documentation. Our testing found 
that for all 60 recipients (100%), LDH did not utilize federal and/or 
state tax data to verify self-attested tax filer status and household 
size or to verify certain types of income, including self-employment 
income, out-of-state income, and various unearned income. We consider 
the department's decision to not use tax data a weakness in internal 
control because tax data is the only trusted source for these critical 
Medicaid eligibility factors. Based on the federal definition of 
improper payments, CMS could consider all related payments improper. 
Since LDH did not use tax data and auditors are not granted access to 
tax data for the purpose of auditing Medicaid, we consider this to be a 
scope limitation for our audit because we were unable to adequately 
test Medicaid MAGI-based eligibility determinations without tax data.
---------------------------------------------------------------------------
    \3\ For the 60 sample recipient cases, we examined fiscal year 
2018, fiscal year 2017, and fiscal year 2016 (start of expansion) in 
order to include both renewals and initial determinations in our 
review.

    Despite the scope limitation, we were able to perform certain audit 
procedures for LDH's eligibility determination processes by reviewing 
the information included in the LDH recipient case records 
documentation. This testing found that five (8%) of the 60 recipients 
in our sample were ineligible for Medicaid, based on the issues we 
identified with LDH's MAGI determination process. Some recipient cases 
had multiple errors noted. As a result, LDH made payments totaling 
---------------------------------------------------------------------------
$60,586 in PMPMs to MCOs on behalf of these ineligible recipients.

    Because this sample was randomly selected, we were able to project 
these results to the population of 220,292 Medicaid expansion 
recipients considered for this report. Based on this projection, it 
appears that LDH paid PMPMs for 17,623 Medicaid recipients who did not 
qualify for Medicaid coverage. Using the LDH eligibility case files and 
other documentation, we were unable to determine the exact time during 
our audit period when the recipient became ineligible or whether the 
recipient was ever eligible. We were only able to determine that the 
recipient was not eligible based on the case file at the time of our 
review. Because of this limitation, we cannot reasonably project the 
amount of improper payments associated with the projected ineligible 
population. However, our testing results suggest that if policies and 
processes are strengthened, the department could experience annual cost 
avoidance of approximately $111 million.\4\ Without good internal 
controls, accurate Medicaid eligibility determinations, and adequate 
documentation to support the eligibility decisions, the department may 
make PMPM payments to MCOs on behalf of ineligible recipients until the 
errors are identified and corrected by LDH. Based on the federal 
definition of improper payments, CMS could consider these payments 
improper.\5\
---------------------------------------------------------------------------
    \4\ See Appendix B for our Scope and Methodology.
    \5\ Public Law No. 107-300, the Improper Payments Information Act 
of 2002, as amended by Public Law 111-204, the Improper Payments 
Elimination and Recovery Act, Executive Order 13520 on reducing 
improper payments, and the June 18, 2010, Presidential memorandum to 
enhance payment accuracy.

    The specific issues we found regarding LDH's policies and processes 
for the MAGI-based eligibility determinations identified in our test 
---------------------------------------------------------------------------
are as follows:

          LDH did not adequately verify critical MAGI-based 
        eligibility determination factors for any of the 60 recipients 
        in our sample. LDH's policy did not require it to utilize 
        federal and/or state tax data to verify self-attested tax filer 
        status and household size or to verify certain types of income, 
        including self-employment income, out-of-state income, and 
        various unearned income. Instead, LDH made a policy decision to 
        accept self-attested information for these critical eligibility 
        factors when federal tax data could be used to verify the 
        applicant's responses. If LDH does not verify critical 
        eligibility factors, recipients may be deemed eligible when 
        they are not, resulting in the department making PMPM payments 
        to MCOs on behalf of ineligible recipients until the errors are 
        identified and corrected. Based on the federal definition of 
        improper payments, CMS could consider these payments improper.

          LDH policy allowed caseworkers to renew the eligibility of 
        50 (83%) of the 60 recipients in our sample without contacting 
        the recipients. For these recipients, LDH conducted electronic 
        verification for some but not all critical eligibility factors. 
        While this practice may be allowable for certain populations of 
        Medicaid recipients, this practice does not appear to be 
        consistent with federal regulations and/or CMS guidance for all 
        of the populations that received automatic renewals by LDH.

          LDH caseworkers made incorrect eligibility decisions for 
        five (8%) of the recipients in our sample. Also, LDH 
        caseworkers did not consistently follow up on requests for 
        information sent to recipients as part of the eligibility 
        determination, resulting in eight (13%) documentation errors 
        for the recipients in our sample. In addition, LDH caseworkers 
        and supervisors did not consistently retain adequate 
        documentation in the case file to support the eligibility 
        decision for 41 (68%) of the recipients in our sample.

    In addition to the weaknesses we found with LDH's policies and 
processes for making MAGI-based eligibility determinations, we 
identified the following practices that further weaken the process and 
could impede the department's ability to recoup payments made on behalf 
of ineligible recipients:

          LDH did not retain signed Medicaid applications in the case 
        record for 50 (83%) of the 60 recipients in our sample. LDH's 
        case record copies of the state's online Medicaid application 
        do not capture a signature. Electronic, including 
        telephonically recorded, signatures or handwritten signatures 
        transmitted via any electronic transmission are required for 
        all initial applications by federal regulations. By not 
        retaining evidence of a signed application, LDH may not legally 
        be able to hold the applicant responsible for certain 
        attestations made in the application. Also, LDH did not retain 
        evidence of the delivery of certain required stipulations and 
        notifications to the applicant, in violation of federal 
        regulations.

          LDH allowed people to apply on behalf of an adult applicant 
        for whom he or she had no legal authority for three (5%) of the 
        60 recipients in our sample. LDH accepted applications, 
        including attestations, by anyone acting on behalf of the 
        applicant and allowed recipients to age out of child categories 
        into adult categories without obtaining information and 
        signatures from the now legal adult. Not requiring each legal 
        adult to complete his or her own application could hinder the 
        department's ability to hold the legal adult responsible for 
        self-attested information. Without a separate application, the 
        department is not able to provide evidence that the adult 
        applicant accepted the federally-required stipulations and 
        notifications included in the application.

    These findings, along with recommendations to help LDH strengthen 
its Medicaid MAGI-based eligibility determination process are discussed 
in more detail on the following pages.

LDH did not adequately verify critical MAGI-based eligibility 
determination factors for any of the 60 recipients in our sample. LDH 
policy did not require it to use federal and/or state tax data to 
verify self-attested tax filer status and household size or to verify 
certain types of income, including self-employment income, out-of-state 
income, and various unearned income.

    We tested a sample of 60 expansion MAGI-based eligibility 
determinations and confirmed that for all 60 recipients tested, LDH did 
not verify tax filer status and household size during initial expansion 
enrollment or renewal. The tax filer status and household size are both 
critical eligibility factors that could be electronically verified by 
using federal tax return data. However, as previously reported in our 
Medicaid Audit Unit report, Strengthening of the Medicaid Eligibility 
Determination Process issued May 2, 2018, LDH made a policy decision to 
accept self-attested information for these critical eligibility factors 
when federal tax data could be used to verify the applicant's 
responses. Also noted in the report, LDH did not use federal tax data 
to verify self-employment and certain unearned income. The electronic 
sources LDH currently chooses to use for verification of income cannot 
verify self-employment income, income from other states, or unearned 
income. The policies and practices used by LDH increase the risk that 
applicants will be determined eligible for Medicaid when they are not, 
resulting in the department making PMPM payments to MCOs on behalf of 
ineligible recipients until the errors are identified and corrected by 
LDH.

    LDH did not utilize federal and/or state tax data to verify self-
attested tax filer status and household size. For both of these 
critical factors, LDH accepted self-attested answers from the Medicaid 
applicant as stated in its MAGI-based Eligibility Verification Plan. 
Per CMS guidance, the tax filer status is the first step in the MAGI-
based eligibility determination. If the recipient is a tax filer, the 
CMS tax filer rules apply. If the recipient is not a tax filer, a 
different set of non-tax filer rules apply. The tax filer rules and 
non-tax filer rules vary in how to determine the household size, so the 
verification of this first step is critical. The household size is also 
a critical eligibility factor since the number of people in the 
household determines what income level is allowable for Medicaid 
eligibility as shown in Exhibit 1. Without a correct household size, 
the eligibility income level cannot be accurately determined.


                                Exhibit 1. Federal Poverty Income Guidelines 138%
----------------------------------------------------------------------------------------------------------------
                                         Monthly Income            Monthly Income            Monthly Income
            Family Size              Effective March 1, 2016   Effective March 1, 2017   Effective March 1, 2018
----------------------------------------------------------------------------------------------------------------
1                                                    $1,367                    $1,387                    $1,397
2                                                    $1,843                    $1,868                    $1,893
3                                                    $2,319                    $2,349                    $2,390
4                                                    $2,795                    $2,829                    $2,887
5                                                    $3,271                    $3,310                    $3,384
6                                                    $3,747                    $3,791                    $3,881
7                                                    $4,224                    $4,272                    $4,377
8                                                    $4,703                    $4,752                   $4,874
----------------------------------------------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from the LDH Medicaid Eligibility Manual.


    Currently, LDH relies on self-attestation from the applicant. The 
Medicaid application contains a statement indicating that LDH will 
check several databases including the Internal Revenue Service for 
verification. The application also asks the recipient about tax filer 
status and tax dependents. The only electronic sources to verify this 
information are federal or state income tax data, which LDH currently 
chooses to not use.

    Exhibit 2 illustrates a specific example from our audit outlining 
how tax filer status can change the proper household size, which 
changes the Medicaid income limit, and ultimately changes the 
applicant's Medicaid eligibility. In this example, an adult applied for 
Medicaid indicating they would be a tax dependent of their parent. At 
the time of application, the household consisted of a parent, an adult 
dependent (child), and a minor child. The parent earned a monthly 
income of $2,913 and expected to file a return and claim both children 
as dependents. The adult dependent earned a monthly income of $911. LDH 
incorrectly determined this recipient as eligible by not using the tax 
dependent status. For this case, each of the three tax filer scenarios 
is shown in Exhibit 2. Only Scenario 2 correctly reflects the facts as 
presented in the case file. This case is scheduled for closure by LDH, 
more than two years after initial enrollment. Based on the case files 
and facts of the case, it appears the recipient was never eligible. 
This example shows why both the tax filer status and household size are 
critical factors in the MAGI-based determination process.


     Exhibit 2. Example of the Effect of MAGI Tax Filer Status and  Household Size on Medicaid Eligibility
----------------------------------------------------------------------------------------------------------------
                                           Scenario 1                Scenario 2                Scenario 3
----------------------------------------------------------------------------------------------------------------
                                                                                        Non-Filer/Non-Dependent--
                                                               Tax Dependent--Expects    Does not Expect to File
         Tax Filer Status             Tax Filer--Expects to      to be Claimed as a      a Return or be Claimed
                                          File a Return               Dependent              as a Dependent
 
----------------------------------------------------------------------------------------------------------------
MAGI-based Household                                      1                         3                         1
Monthly Income                                         $911                    $2,913                      $911
Medicaid Income Limit for Adult                      $1,367                    $2,319                    $1,367
 Group in 2016
Eligible/Ineligible                                Eligible                Ineligible                  Eligible
Eligibility determination correct                 Incorrect                          Correct         Incorrect
 based on actual facts per case
 file?
----------------------------------------------------------------------------------------------------------------
Scenario 1: Adult child (age 19) lives with a parent and younger sibling. The adult child claims he/she will
  file his/her own tax return.
Scenario 2: Adult child (age 19) lives with a parent and younger sibling. The adult child claims he/she will be
  a dependent on his/her parent's tax return.
Scenario 3: Adult child (age 19) lives with a parent and younger sibling. The adult child claims he/she will not
  file a tax return and will not be claimed as a dependent on the parent's return.
Source: Prepared by legislative auditor's staff using information from CMS guidance and LDH recipient case
  records.


    LDH did not use federal tax data to verify certain types of income, 
including self-employment income, out-of-state income, and various 
unearned income. Per federal regulations, LDH can use information from 
other agencies in the state, and other state and federal programs in 
order to assist with verification of financial information. CMS 
requires state Medicaid programs to develop and submit a MAGI-based 
Eligibility Verification Plan that notes significant eligibility 
factors and defines how the state will address verification for each 
factor. While CMS requires this form to be completed and submitted, CMS 
does not either approve or disapprove the state's verification plan, 
allowing the state great flexibility on how eligibility is verified.

    The Medicaid application asks the recipient about employment, other 
income, deductions, and yearly income. LDH made policy decisions for 
which of these answers are allowed to be accepted with just the self-
attestation from the applicant, which answers need to be verified, and 
how that verification is to be performed.

    LDH utilizes several state and private data systems to verify some 
income. However, the systems used are not comprehensive. For example, 
LDH uses quarterly wage and unemployment benefits (UI) information from 
the Louisiana Workforce Commission (LWC). In addition, LDH also uses a 
private data system, TALX, which provides information on employment 
status and income from some employers nationwide. However, this system 
is limited to only those employers that choose to participate. Exhibit 
3 notes the types of income that must be considered in the MAGI-based 
eligibility determination, whether or not LDH verifies this type of 
income, and if so, the systems that are used. The exhibit also notes 
any limitations of the systems used for verification.


     Exhibit 3. MAGI-based Income Types and Data System Verification
------------------------------------------------------------------------
                 Verified with                          Explanation and
  Income Type     Data Source    Verification Source      Limitations
------------------------------------------------------------------------
Taxable wages/  Yes              LWC wage data        State wages
 Psalary                                               reported to LWC
 (gross)                                               by employers.
                                                       Would not include
                                                       wages earned in
                                                       another state.
                Yes              Private databases    Wages from some
                                                       nationwide
                                                       employers, but
                                                       only those that
                                                       choose to
                                                       participate in
                                                       the private
                                                       system.
Taxable         No               Tax data             LDH does not use
 interest                                              tax data for any
                                                       verification.
Self-           No               Tax data             LDH does not use
 employment                                            tax data for any
 net income                                            verification.
 (profit after
 subtracting
 business
 expenses)
Taxable Social  Yes              SSA                  LDH uses a real-
 Security                                              time connection
                                                       to Social
                                                       Security
                                                       Administration
                                                       data.
Alimony         No               Tax data             LDH does not use
 received                                              tax data for any
                                                       verification.
Most            Partial          PARIS                Provides some
 retirement                                            income for
 benefits                                              Veterans
                                                       Administration
                                                       benefits, but
                                                       most other
                                                       retirement
                                                       benefits are not
                                                       verified.
Net capital     No               Tax data             LDH does not use
 gains (profit                                         tax data for any
 after                                                 verification.
 subtracting
 capital
 losses)
Most            No               Tax data             LDH does not use
 investment                                            tax data for any
 income                                                verification.
Unemployment    Yes              LWC UI data          LWC Unemployment
 benefits                                              Compensation data
                                                       system.
Rental or       No               Tax data             LDH does not use
 royalty                                               tax data for any
 income                                                verification.
Other taxable   No               Tax data             LDH does not use
 income such                                           tax data for any
 as canceled                                           verification.
 debts, court
 awards, jury
 duty pay not
 given to
 employer, and
 gambling
 prizes or
 awards
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using CMS regulations
  and LDH MAGI-based Eligibility Verification Plan.


    As noted previously, LWC data does not capture self-employment 
income, income earned in other states, and royalty/rental income. 
Additionally, if a self-employed recipient does not report self-
employment income as part of their application, LDH has no way of 
identifying that income as an omission. LDH relies solely on the 
recipient to report self-employment income and unearned income and does 
not use tax data as proof of self-employment income. Our testing noted 
three recipients with self-employment income or unearned income 
identified. For these cases, we noted the following:

          For one case, LDH accepted a handwritten statement 
        representing one month of income from an employer with the same 
        last name as the recipient with no additional inquiry.

          For one case, LDH accepted the recipient's attestation 
        without requiring additional documentation to support the 
        attestation.

          For one case, LDH accepted an application with self-
        employment income omitted while another state system, 
        Supplemental Nutrition Assistance Program (SNAP), noted the 
        income.

    For all three of the cases, currently used systems did not provide 
verification of the self-employment or unearned income. Since the case 
file did not include adequate evidence to support the eligibility 
decision, we considered each of the three cases as documentation errors 
in our testing results in Appendix C, Exhibit C-3. However, any of 
these three errors could be eligibility determination errors if the 
self-employment and unearned income were verified and found to be at an 
amount to make the recipient ineligible. Because the LDH caseworker did 
not obtain and retain adequate documentation and auditors do not have 
access to tax data, we cannot determine if these three recipient cases 
were eligible or not.

    We consider the department's policy decision to not use tax data to 
be a weakness in internal control since tax data is the only trusted 
source for verifying the Medicaid applicant's self-attested information 
for tax filer status, household size, self-employment income and 
deductions, and certain unearned income. As noted in Exhibit 3, LDH 
made policy decisions to not use federal or state tax return data for 
any verification. Without using tax data, LDH does not have an 
electronic source to verify any of the information or omissions from 
the amounts self-attested for the ``other income'' and ``deductions'' 
section of the application. We found this lack of internal control to 
be present in all 60 cases tested and also applicable to all 1.2 
million MAGI-based determinations. See Appendix C, Exhibit C-2.

    Income tax data, while for the previous year, could offer 
verification and valuable information on past tax reporting of tax 
filer status, household size (tax dependents), self-employment income, 
and other adjusted income and deductions. LDH management stated it 
intends to obtain federal income tax data to assist in eligibility 
determinations beginning in May 2019. Until that time, applicant 
information for several possible income sources is accepted as self-
attested with no verification. This practice leaves the state 
vulnerable to errors or omissions that increase the risk that 
applicants could be determined eligible for Medicaid when they are not.

        Recommendation 1: LDH should strengthen its processes for 
        eligibility determinations. LDH should also ensure that all 
        critical eligibility factors are verified rather than relying 
        on self-attestation from the recipient.

        Summary of Management's Response: Management concurred, noting 
        that the new eligibility system will automate the verification 
        of critical eligibility factors. LDH also noted that in May 
        2019 LDH will begin using federal tax data in the verification 
        process.

        Auditor's Additional Comments: Per LDH, federal tax data will 
        not be used in the new eligibility system until May 2019, which 
        will be 11 of the 12 months of fiscal year 2019. As a result, 
        our audit scope limitation will continue to be present for 
        fiscal year 2019.

LDH policy allowed caseworkers to renew the eligibility of 50 (83%) of 
the 60 recipients in our sample without contacting the recipients. For 
these recipients, LDH conducted electronic verification for some but 
not all critical eligibility factors.

    Federal regulations require an annual renewal of eligibility for 
Medicaid recipients whose financial eligibility is determined using 
MAGI-based income. Renewal should be based on reliable information 
contained in the individual's account or other current information 
available to the agency. If possible, available information should be 
used before requiring information from the individual. LDH used both 
automatic and manual renewals.

[GRAPHIC] [TIFF OMITTED] T0309.010


    LDH used three types of renewals where caseworkers made the renewal 
determination without contacting the Medicaid recipient. These renewals 
are as follows:

          Express Lane Eligibility (ELE)--determines the recipient 
        under 19 years of age to be automatically recertified for 
        another year of Medicaid eligibility if the recipient has an 
        active SNAP case and is receiving SNAP benefits.

          Administrative Renewal (AR)--determines the recipient 
        automatically recertified for another year of Medicaid 
        eligibility, with no contact or verification, for cases 
        unlikely to have changes in income and/or personal status that 
        would cause ineligibility. Per LDH policy, these renewals would 
        only be applied to certain eligibility populations where little 
        or no change in eligibility circumstances would be expected.

          Exparte--determines the recipient recertified for another 
        year of Medicaid eligibility based on a review made by the 
        department without the active involvement of the enrollee. 
        However, Exparte includes electronic verification of some, but 
        not all, eligibility factors to ensure the recipient's critical 
        eligibility factors have not significantly changed to make them 
        now ineligible.

    We noted 50 of the 60 recipients tested were renewed for one or 
more years using ELE, Administrative Renewal, or Exparte, with no 
contact with the recipient.

    While ELE and Exparte are established renewal methodologies, 
administrative renewals do not exist in federal guidance. 
Administrative renewals appear to be a practice developed by Louisiana 
Medicaid to cut down on the required workload for LDH eligibility 
caseworkers when processing annual renewal determinations.

    LDH's administrative renewal practice does not appear to meet the 
department's own criteria for an administrative renewal which should 
only be applied to certain eligibility populations where little or no 
change in eligibility circumstances would be expected. Per our testing, 
administrative renewals did occur for the Medicaid expansion adult 
population. Per LDH, when an administrative renewal is applied to an 
expansion adult recipient, LDH matches the recipient to SNAP records to 
ensure the recipient has an active case. Any recipient with an active 
SNAP case is automatically renewed for another year without any further 
electronic verification or contact with the recipient. The SNAP case 
may provide some assurance about the recipient's income, but SNAP alone 
may not be enough to determine the Medicaid recipient eligible.

    Even though automatic renewals may be allowable for certain 
populations of Medicaid recipients, this practice does not appear to be 
consistent with federal regulations and/or CMS guidance for all of the 
populations that received automatic renewals by LDH. The expansion 
adult group, which is made up primarily of working adults, is the 
eligibility group most likely to have changes from year to year that 
could significantly change eligibility factors, especially household 
size and income. Renewals that do not confirm critical MAGI-based 
eligibility factors put the state at risk for improper eligibility 
decisions particularly for the expansion group. If LDH uses an 
automatic renewal and does not verify critical eligibility factors, the 
recipient's eligibility may be renewed in error, resulting in the 
department making PMPM payments to MCOs on their behalf until the 
errors are identified and corrected.

    Due to the use of ELE, AR, and Exparte renewals, LDH often relied 
on tax filer status and tax dependent information from previous, older 
applications. In one instance, we did not find evidence of tax filer 
status in the case record for an expansion adult group recipient. The 
agency provided an application dated January 2014, where the recipient 
declared she would not file taxes and was not a tax dependent. The non-
disabled recipient, born in 1986, is likely to have changes in 
circumstances over the past four years. The recipient's case was closed 
in December 2017 after the recipient failed to respond to a request for 
information. The recipient had not received any services since 2012.

    Our Medicaid Audit Unit report Managed Care and Louisiana 
Residency, issued October 26, 2016, reported that automatic renewals 
processed without direct contact with the recipient contributed to 
approximately $1 million in improper payments from February 2012 
through May 2016 due to out-of-state residency for Louisiana Medicaid 
recipients. If LDH does not verify critical eligibility factors, the 
recipient's eligibility may be renewed in error, resulting in the 
department making PMPM payments to MCOs on the behalf of ineligible 
recipients until the errors are identified and corrected.

        Recommendation 2: LDH should verify MAGI-based eligibility 
        criteria annually using reliable data sources. LDH should also 
        reconsider using automatic renewals for MAGI-based cases until 
        all critical eligibility factors can be verified using reliable 
        data systems.

        Summary of Management's Response: Management concurred, noting 
        that no automatic renewals will be processed in the new 
        eligibility system.

LDH caseworkers made incorrect eligibility decisions for five (8%) of 
the recipients in our sample. Also, LDH caseworkers did not 
consistently follow up on requests for information sent to recipients 
as part of the eligibility determination, resulting in eight (13%) 
documentation errors for the recipients in our sample. In addition, LDH 
caseworkers and supervisors did not consistently retain adequate 
documentation in the case file to support the eligibility decision for 
41 (68%) of the recipients in our sample.

    LDH is required by federal regulations \6\ to include in each 
applicant's case record adequate evidence and facts to support the 
department's decision on the application. Our testing included a 
detailed review of recipient case records. We noted inconsistency of 
documentation in the case records regarding income verification, 
resulting in errors in the eligibility decisions. We also noted 
inconsistency in caseworkers' actions regarding private insurance, 
returned mail, and requests for additional information from the 
applicant. In addition, we noted limited review and supervision of 
caseworker activity.
---------------------------------------------------------------------------
    \6\ 42 CFR 435.914.

    Based on federal review standards, CMS could consider the lack of 
documentation to support the eligibility decision as errors and 
---------------------------------------------------------------------------
improper payments.

    LDH caseworkers made incorrect eligibility decisions for five (8%) 
of the recipients in our sample. LDH case record guidelines only 
require the caseworker to document the systems the caseworker utilized 
to verify the applicant's income. However, when discrepancies in income 
are noted, the caseworker should document the amounts used to resolve 
the differences. There is no requirement to include a database 
screenshot or other evidence to support the caseworker's efforts. As a 
result of this permissive policy, we found that documentation practices 
varied greatly by caseworker. Case records included full screenshots, 
limited screenshots, case notes with amounts, and case notes without 
amounts. This inconsistency in practices from caseworkers can result in 
inadequate documentation to support the eligibility determinations. For 
17 recipients, we noted instances of documentation issues related to 
income that included notes with no income, income counted incorrectly, 
notes that do not indicate system clearances were done, and notes that 
indicate system clearances were done when they were not. For five of 
the 17 recipients, the caseworkers made incorrect eligibility decisions 
or lacked adequate information to make the decision. We noted the 
following:

          For one recipient, in 2016, the case record noted that self-
        attested income exceeded the allowable amount and reasonable 
        compatibility was not met. The caseworker sent a request for 
        information to verify the income but determined the recipient 
        as eligible even though the response to the request for 
        information was never received. LDH closed the case in December 
        2017 when the recipient again failed to respond to the request 
        for information. An LDH post eligibility review related to our 
        work confirmed this result.

          For one recipient, in 2017, the caseworker accepted self-
        attested income with no verification. The caseworker noted that 
        systems were checked when they were not. An LDH post 
        eligibility review related to our work confirmed this result. 
        LDH closed the case in September 2018.

          For one recipient, in 2017, the caseworker noted that income 
        checks were performed, but no system checks were actually 
        completed, resulting in the recipient's eligibility for two 
        renewal periods when income actually exceeded the allowable 
        amount. An LDH post eligibility review related to our work 
        confirmed this result. Additionally, the recipient household 
        size was not properly considered. LDH closed the case in 
        October 2018.

          For one recipient, in 2018, the caseworker did not account 
        for increased earnings, resulting in eligibility when the 
        recipient actually exceeded the allowable income. An LDH post 
        eligibility review related to our work confirmed this result. 
        LDH closed the case in September 2018 after the recipient 
        failed to respond to a request for information related to proof 
        of earnings.

          For one recipient, self-attested rental income was included 
        on a 2016 application. The case was subsequently Exparte 
        renewed in 2017 and 2018 with system checks only without any 
        verification of the rental income. The recipient had new income 
        in 2018 that would make the recipient ineligible if the rental 
        income still existed at amounts previously reported.

    We consider these five cases to be eligibility determination errors 
in our testing results in Appendix C, Exhibit C-1. We consider all 17 
cases to be documentation errors in Appendix C, Exhibit C-3.

    Caseworkers do not always use available private insurance 
information in their eligibility consideration. For certain LDH 
programs--Louisiana Children's Health Insurance Program (LaCHIP) and 
the Breast and Cervical Cancer (BCC) program--having other health 
insurance makes the recipient ineligible for Medicaid. For all other 
programs, the recipient can be covered by private insurance and be 
eligible for Medicaid as long as Medicaid is the payer of last resort 
as required by federal regulations, meaning the private insurance must 
pay first. According to LDH, monthly premiums are adjusted by LDH's 
actuary in consideration of private insurance coverage. Insurance 
coverage is a question on the Medicaid application. LDH has a 
contractor responsible for identifying recipient linkage to private 
insurance and recovery of any amounts owed to LDH if Medicaid was not 
the payer of last resort as required under federal regulations.

    Our testing noted one instance where the caseworker did not 
adequately consider private insurance when evidence was present in the 
case file. For this recipient, TALX income verification information 
noted that the recipient and the family participated in employer 
sponsored insurance at the recipient's place of work. There was no 
evidence that the caseworker considered this information. We also noted 
the recipient's children were on LaCHIP, which stipulates that covered 
children must not have other insurance. We consider this eligibility 
determination to be a documentation error in our testing results in 
Appendix C, Exhibit C-3.

    Caseworkers did not always adequately consider mail returned to the 
department as undeliverable and the potential impact on eligibility. 
For one recipient, the case file contained returned mail dated November 
15, 2016. Returned mail could indicate that the recipient moved out of 
state, was incarcerated, or was deceased. The caseworker did not 
reconsider the recipient's eligibility until July 2017 and did not 
close the case until September 2017 after the recipient did not respond 
to a request for information letter. The last evidence of utilization 
of services by this recipient occurred in October 2016. As a result, 
LDH paid PMPMs for this recipient for almost a year when faster action 
on the returned mail might have avoided making payments to the MCOs on 
behalf of the ineligible recipient. We consider this eligibility 
determination to be a documentation error in our testing results in 
Appendix C, Exhibit C-3.

    Caseworkers renewed eligibility without recipients responding to 
their requests for required information such as proof of income. LDH 
caseworkers sent out requests for information to recipients for various 
reasons. Two types of requests that we noted were (1) letters notifying 
the recipient that it was time to renew their Medicaid eligibility 
determination including steps the recipient must take and (2) letters 
requesting proof of earnings. In both request types, specific 
instructions are provided with dates for the recipient's required 
response. To meet the requirement of due process, Medicaid allows 
enrollees an adequate timeframe to provide needed information. For 
renewals, LDH policy provides 30 days for the recipient to respond to 
request for information on MAGI cases, and 10 days are allowed for all 
others. If no response is received within the days allowed, the 
caseworker should determine the recipient ineligible and close the 
case. For applications, LDH policy provides for 10 days on responses to 
request for information. Our testing noted nine instances for eight 
recipients where the recipient did not respond to the request for 
required information, but LDH renewed their eligibility anyway without 
the appropriate response.

          For four recipients, the caseworkers requested proof of 
        earnings but renewed the cases without a response from the 
        recipient.

          For one recipient, the caseworker did not receive the proof 
        of income documentation requested but instead accepted the 
        recipient's statement for renewal.

          For one recipient, the caseworkers sent a case review letter 
        noting appropriate ways for the recipient to renew. The letter 
        clearly states the recipient must make contact by one of the 
        listed methods by the noted date or coverage will end. The 
        caseworker renewed coverage without the required response.

          For one recipient, the caseworker did not receive two 
        separate requests for information, one for a case review letter 
        and the other for proof of earnings. The eligibility was 
        renewed despite no response to either inquiry.

          For one recipient, an application was accepted approximately 
        22 days after a request for information was due. The case 
        record does not contain information as to why the case was not 
        closed after the initial request for information was not 
        answered. After receiving the application, a second request for 
        information was sent with a due date in the next month. The 
        recipient did respond to the request and eligibility was ended 
        the next month, two months after the due date of the first 
        request for information.

    For these eight recipient cases, we consider the determinations to 
be documentation errors in our testing results in Appendix C, Exhibit 
C-3.

    In our testing of case files, we found limited evidence of 
supervision and review of caseworker activity, documentation, and 
eligibility decisions. It appears that caseworkers are given latitude 
in applying LDH Medicaid policies and practices. Per LDH, each 
supervisor is required to conduct a formal case review on 30 cases per 
quarter. LDH employs approximately 117 supervisors and 540 caseworkers, 
with a supervisor for every four or five caseworkers. With 1.6 million 
recipients, each caseworker is responsible for an average caseload of 
approximately 2,900 cases per year, or 725 cases per quarter. As a 
result, each supervisor is providing oversight for about 3,400 cases 
per quarter but formally reviewing 30 (< 1%). Per LDH, supervision and 
review other than the formal review occurs routinely but is not 
specifically documented. Also, per LDH, supervisors' reviews were 
reduced for the second quarter of 2018 and then suspended in September 
2018 due to supervisors participating in the implementation of the new 
eligibility system. Without adequate supervision and review, the risk 
of eligibility decision errors by caseworkers increases. This increases 
the risk of the department making PMPM payments to MCOs on the behalf 
of ineligible recipients until the errors are identified and corrected.

    In addition to our testing for this report, we also noted issues 
with inconsistent activity by caseworkers in our Medicaid Audit Unit 
report Medicaid Eligibility: Wage Verification of the Expansion 
Population, issued November 8, 2018.

        Recommendation 3: LDH should strengthen its processes to ensure 
        that eligibility case determinations are supported by 
        definitive, auditable documentation and promote consistency 
        among caseworkers. Also, supervision and review of caseworker 
        activity should be strengthened to ensure consistency of 
        documentation and accurate eligibility determinations.

        Summary of Management's Response: Management concurred, noting 
        that the new eligibility system will store the information 
        available for use in the eligibility decision and create an 
        audit trail for caseworker decisions. LDH also noted the 
        ongoing efforts to train, supervise, and review caseworker 
        actions.

LDH did not retain signed Medicaid applications in the case record for 
50 (83%) of the 60 recipients in our sample. LDH's case record copies 
of the state's online Medicaid application do not capture a signature, 
which is required. By not retaining evidence of a signed application, 
LDH may not legally be able to hold the applicant responsible for 
certain attestations made in the application.

    Federal regulations require initial applications and renewal forms 
signed by the applicant. If the agency cannot renew solely based on 
available information, a renewal form is required and must be signed in 
accordance with 42 CFR 435.907(f).\7\ Per federal regulations, 
electronic, including telephonically recorded, signatures or 
handwritten signatures transmitted via any electronic transmission are 
required for all initial applications.\8\
---------------------------------------------------------------------------
    \7\ 42 CFR 435.916(a)(3).
    \8\ 42 CFR 435.907(f).

---------------------------------------------------------------------------
    According to LDH policy, the Medicaid application form:

          Is the official agency document used to collect information 
        necessary to determine eligibility;

          Is the applicant's formal declaration of financial and other 
        circumstances at the time of application;

          Is the applicant's certification that all information 
        provided is true and correct;

          Shall not be altered after the applicant has signed the 
        form; and

          May be used in a court of law.

    In our review of 60 adult expansion group MAGI-based renewals and 
initial determinations for the period of 2016 through the date of our 
review in 2018, we found 50 recipients \9\ (83%) with either no 
application on file or with an online application in the case file with 
the signature line blank. We noted the following:
---------------------------------------------------------------------------
    \9\ Auditor counted by recipient instead of by instances and years. 
Some recipients submit multiple applications during the year.

          For 37 of the 50 recipients, an electronic application was 
        included in the case file, but none of the applications 
---------------------------------------------------------------------------
        contained the federally-required evidence of a signature.

          For 13 of the 50 recipients, no application was included in 
        the case file for the period of our review.

    For the 13 recipients with no application on file in the case 
record, we further noted the following:

          Nine were enrolled into the adult eligibility group from an 
        existing LDH program in July 2016.

          Three were enrolled in the adult eligibility group using 
        applications completed by others, with no application signed by 
        the recipient.

          One was enrolled into the adult eligibility group using a 
        pending disability application from 2015.

    We considered these 50 recipients with unsigned applications or no 
applications to be documentation errors in Appendix C, Exhibit C-3.

    According to LDH, applications/renewals generated through the 
online application system (electronic applications) contain a ``sign 
and submit'' feature. However, the system does not record the 
electronic signatures of the applicant in a manner that the department 
can provide evidence of the signature after submission, which appears 
to violate federal regulations. Without evidence of a signed 
application, LDH may not legally be able to hold the applicant 
responsible for certain attestations made in the application. Also, 
without a signature, LDH did not retain evidence of the delivery of 
certain required stipulations and notifications to the applicant, in 
violation of federal regulations.

        Recommendation 4: LDH should maintain as part of the 
        recipient's case record the Medicaid application with evidence 
        of the signature as required by federal regulations.

        Summary of Management's Response: Management concurred, noting 
        that the new system will capture and store the electronic 
        signature with the application.

LDH allowed people to apply on behalf of an adult applicant for whom he 
or she had no legal authority for three (5%) of the 60 recipients in 
our sample. LDH accepted applications, including attestations, by 
anyone acting on behalf of the applicant and allowed recipients to age 
out of child categories into adult categories without obtaining 
information and signatures from the now legal adult. Not requiring each 
legal adult to complete his or her own application could hinder the 
department's ability to hold the legal adult responsible for self-
attested information.

    According to LDH policy, anyone may apply for medical assistance. 
The following individuals may apply for assistance on behalf of someone 
else:

          The applicant/tax filer.

          A tax filer for a dependent claimed on their federal income 
        tax return.

          A parent or legal guardian of a child. Note: A minor may 
        apply for assistance without the consent of the parent or legal 
        guardian with whom they reside.

          A curator or other legal representative of an adult.

          A spouse or other responsible person acting on behalf of the 
        applicant.

          The appropriate Office of Juvenile Justice worker for a 
        child in the custody of the state.

          An authorized representative.

          Any other person who is acting for the applicant.

          Other authorized agencies.

    The policy also notes that if there is another non-related adult 
included on the application, only the signature of the applicant is 
required. While the policy and practice is understandable in cases 
involving minors, legal guardianships, state custody situations, and 
incapacitated individuals, allowing others to complete applications for 
adults with legal majority \10\ could hinder the department's ability 
to hold the legal adult responsible for self-attested information. This 
policy allows a person to apply on behalf of an applicant for whom he 
or she has no legal authority. The policy may place the department at 
risk of violating personal identifying information requirements by 
allowing queries of income information for the non-related adults 
included on the application without the consent of the legal adult.
---------------------------------------------------------------------------
    \10\ Majority is defined as the age at which a person, formerly a 
minor, is recognized by law to be an adult, capable of managing his or 
her own affairs and responsible for any legal obligations created by 
his or her actions.

    Also per current LDH policy and practice, when a recipient ages out 
of a child case at age 19, LDH closes the child type case and opens a 
case as an adult with a single-member household without getting an 
application and without communicating with the recipient regarding tax 
---------------------------------------------------------------------------
filer status, household size, and taxable income.

    In a review of 60 expansion renewals and initial determinations, we 
found three instances where the recipients were not contacted and the 
case file included no information that would indicate the recipient 
knew of the application being made on their behalf. As a result, the 
department may be hindered in its ability to hold the legal adult 
responsible for self-attested information. Without a separate, signed 
application, the department may not be able to provide evidence that 
the adult accepted the federally-required stipulations and 
notifications included in the application. The specific instances we 
found are as follows:

          One instance where a parent submitted and provided 
        attestation for their child who is a legal adult.

          Two instances where recipients were transitioned into an 
        adult eligibility group case from child cases without an 
        application.

    For the case with applications completed by a parent, the recipient 
did utilize services, indicating they are aware of their Medicaid 
status. For the two cases of eligibility transition, the recipients did 
not use services since 2014 and 2016, respectively. This could be an 
indication that the recipient was unaware of their continued 
eligibility. We noted these three cases as documentation errors in 
Appendix C, Exhibit C-3.

    To ensure that each legal adult has knowingly provided self-
attested information for which they can be held liable, each legal 
adult should file their own application, provide their own 
attestations, and accept the required stipulations and notifications. 
Current LDH policies and practices may violate federal regulations 
since no evidence is retained to prove that required stipulations and 
notifications were delivered and accepted by the legal adult recipient.

        Recommendation 5: LDH should reassess the current application 
        policies that allow one adult to complete the application for 
        another legal adult and allow a recipient to age out of a child 
        category to an adult category without an application and 
        contact with the now legal adult.

        Summary of Management's Response: Management concurred, noting 
        that they will reassess current policies regarding 
        applications. Management also noted that, in some situations, 
        current policies are required by federal regulations.

                   Appendix A: Management's Response

John Bel Edwards                                Rebekah E. Gee MD, MPH
GOVERNOR                                                      SECRETARY

                           State of Louisiana

                     Louisiana Department of Health

                    Office of Management and Finance

                           Bienville Building

                           628 N. Fourth St.

                              P.O. Box 629

                   Baton Rouge, Louisiana 70821-0629

                         Phone: (225) 342-6726

                          Fax: (225) 342-5568

                             www.ldh.la.gov

December 7, 2018

Daryl G. Purpera, CPA, CFE
Legislative Auditor
P.O. Box 94397
Baton Rouge, Louisiana 70804-9397

Re: Medicaid Eligibility--Modified Adjusted Gross Income Determination 
Process

Dear Mr. Purpera:

Thank you for the opportunity to respond to the findings of your 
Medicaid Audit Unit report on the Medicaid eligibility modified 
adjusted gross income (MAGI) determination process. The Bureau of 
Health Services Financing, which is responsible for administration of 
the Medicaid program in Louisiana, is committed to ensuring the 
integrity of the Medicaid eligibility determination process through 
appropriate management controls.

We have reviewed the findings and provide the following response to the 
recommendations documented in the report.

Recommendation 1: LDH should strengthen its processes for eligibility 
determinations. LDH should also ensure that all critical eligibility 
factors are verified rather than relying on self-attestation from the 
recipient.

LDH Response: LDH agrees with this recommendation and continuously 
works to strengthen its eligibility determination processes. With the 
new eligibility system, LaMEDS, LDH will automate the verification of 
critical eligibility factors in accordance with 42 CFR 
Sec. Sec. 435.940-435.965. Additionally, in May 2019, LDH will 
incorporate federal tax information into LaMEDS for use in the 
verification process.

Recommendation 2: LDH should verify MAGI-based eligibility criteria 
annually using reliable data sources. LDH should also reconsider using 
automatic renewals for MAGI-based cases until all critical eligibility 
factors can be verified using reliable data systems.

LDH Response: LDH agrees with this recommendation. With the 
implementation of LaMEDS, there are no automatic renewals. MAGI based 
cases are renewed by the use of current case information and interface 
with all data sources available to determine eligibility or via direct 
contact with the applicant for any MAGI cases that are not extended on 
an ex parte basis.

Recommendation 3: LDH should strengthen its processes to ensure that 
eligibility case determinations are suppo1ted by definitive, auditable 
documentation and promote consistency among caseworkers. Also, 
supervision and review of caseworker activity should be strengthened to 
ensure consistency of documentation and accurate eligibility 
determinations.

LDH Response: LDH agrees with this recommendation. LDH continuously 
reinforces caseworker training on agency policy requiring documentation 
of information used to make eligibility decisions. LDH supervisors 
review caseworker actions daily, including random sampling of cases for 
comprehensive review and targeted reviews of cases for specific issues. 
In addition, LaMEDS routes all cases assigned to the new employee to 
the supervisor for review and approval before finalizing the 
eligibility decision. In all cases, LaMEDS automatically stores 
information available to the system for use in eligibility decision 
making, creating an audit trail for case worker decisions.

Recommendation 4: LDH should maintain, as pa1t of the recipient's case 
record, the Medicaid application with evidence of the signature as 
required by federal regulations.

LDH Response: LDH agrees with this recommendation. While the previous 
online application required an electronic signature from the applicant, 
it did not create or store a printed name as evidence in the electronic 
case record. However, the new system, LaMEDS, automatically stores the 
electronic signature in the Enterprise Document Management System.

Recommendation 5: LDH should reassess the current application policies 
that allow one adult to complete the application for another legal 
adult and allow a recipient to age out of a child category to an adult 
category without an application and contact with the now legal adult.

LDH Response: LDH agrees with this recommendation. LDH will reassess 
current policies regarding applications. However, for enrollees who age 
out of a child category and who remain in the same tax filer household, 
federal regulations (42 CFR Sec. 435.907) require that LDH accept an 
application from an adult who is in the applicant's MAGI household.

You may contact Michael Boutte, Medicaid Deputy Director, at (225) 342-
0327 or via e-mail at [email protected] with any questions about 
this matter.

Sincerely,

Cindy Rives
Undersecretary

                                 ______
                                 

                   Appendix B: Scope and Methodology

The purpose of our analysis was:

To evaluate LDH's policies and processes for making and documenting 
MAGI-based eligibility determinations.

    The scope of our project was significantly less than that required 
by Government Auditing Standards. However, we believe the evidence 
obtained provides a reasonable basis for our findings and conclusions. 
To conduct this analysis, we performed the following steps:

          Obtained a copy of the Medicaid eligibility files. Obtained 
        LDH documentation cross-walking MAGI eligibility cases and non-
        MAGI cases to the aid categories and the type cases noted in 
        the data files.

          Randomly sampled 60 cases from a population of 220,352 cases 
        from the expansion adult group up for renewal in fiscal year 
        2018, but also determined eligible for the entirety of fiscal 
        year 2017. While the sample cases were from fiscal year 2018 
        activity through February 2018, review of the cases considered 
        activity from January 2016 through February 2018 in order to 
        get a more comprehensive view of the case records.

          Obtained and reviewed the Medicaid eligibility policy and 
        procedure documents from the LDH intranet and the LDH website.

          Worked with LDH personnel to ensure a proper understanding 
        of policies and procedures.

          Reviewed electronic case records from fiscal year 2016 
        through February of fiscal year 2018.

          Provided results to LDH officials to validate our findings 
        and conclusions and for further investigation.

          Based on the results and errors noted in our random sample, 
        we projected the unduplicated eligibility cases error rate of 
        8% to the untested population of 220,292 cases, resulting in 
        17,623 likely ineligible recipients. We calculated the average 
        annual PMPM paid for the tested and untested population. We 
        used the projected ineligible recipients and the annual average 
        of PMPMs paid per recipient to estimate $111 million in annual 
        cost avoidance if noted deficiencies in processes are 
        corrected.

                        Appendix C: Test Results

Eligibility Errors

    Our testing noted 5 (8%) unduplicated eligibility case errors. See 
Exhibit C-1.


   Exhibit C-1. Errors Resulting in an Incorrect Eligibility Decision
------------------------------------------------------------------------
     Errors         Percent Error                Error Noted
------------------------------------------------------------------------
5 of 60           8%                 Errors in income calculation
                                      resulted in incorrect eligibility
                                      decision
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from
  audit test results and LDH recipient case records.

Internal Control Deficiencies

    LDH does not use federal tax return data to verify the self-
attested information provided by Medicaid applicants regarding various 
critical eligibility factors, even though tax data was designed as the 
primary component to use in the MAGI-based eligibility determinations. 
We consider the department's decision to not use tax data a weakness in 
internal control, since tax data is the only trusted source for 
verifying the Medicaid applicant's self-attested information for tax 
filer status, household size, self-employment income and deductions, 
and certain unearned income. See Exhibit C-2.


               Exhibit C-2. Weaknesses in Internal Control
------------------------------------------------------------------------
     Errors         Percent Error        Internal Control Deficiency
------------------------------------------------------------------------
60 of 60          100%               No verification of tax filer status
                                      included in the case file
60 of 60          100%               No verification of household size
                                      included in the case record
60 of 60          100%               Tax data was not used to verify
                                      modified adjusted gross income
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from
  audit test results and LDH recipient case records.

Errors Due to Lack of Documentation

    For 82% of the cases tested, we noted insufficient documentation to 
fully support the eligibility determination as correct. This percentage 
is for 49 unduplicated cases. Some cases had multiple errors. Per 
federal regulations, reviewers can determine a payment to be improper 
if they note insufficient documentation or a lack of documentation to 
support the payment. Our testing noted inconsistency in the case files 
and multiple instances of insufficient documentation. See Exhibit C-3.


            Exhibit C-3 Errors Due to Lack of Documentation
------------------------------------------------------------------------
     Errors         Percent Error                Error noted
------------------------------------------------------------------------
8 of 60           13%                LDH caseworker did not consistently
                                      follow up on requests for
                                      information sent to recipients as
                                      part of the eligibility
                                      determination.
3 of 60           5%                 LDH caseworker did not obtain
                                      adequate documentation to verify
                                      self- employment income to support
                                      the eligibility determination.
17 of 60          28%                LDH caseworker did not maintain
                                      sufficient evidence in the case
                                      file to document the verification
                                      of income and appropriate
                                      consideration of the income noted.
1 of 60           2%                 LDH did not request any
                                      documentation to verify rental/
                                      royalty income noted on
                                      application.
1 of 60           2%                 LDH caseworker did not properly
                                      consider private insurance.
1 of 60           2%                 LDH did not document its action
                                      taken or the consideration of the
                                      impact of returned mail noted in
                                      the eligibility file.
2 of 60           3%                 The caseworker rolled an adult
                                      child into the adult eligibility
                                      group upon the recipient turning
                                      19 years old without obtaining a
                                      signed application, including
                                      attestations from the adult
                                      recipient.
1 of 60           2%                 The caseworker enrolled an adult
                                      recipient using an application
                                      completed and submitted by his/her
                                      mother, without obtaining a signed
                                      application, including
                                      attestations from the adult
                                      recipient.
37 of 60          62%                LDH did not maintain evidence of a
                                      signature on electronic
                                      applications during our reporting
                                      period (2016-2018).
13 of 60          22%                LDH did not maintain a copy of the
                                      accepted application in the case
                                      file and considered during our
                                      reporting period (2016-2018).
------------------------------------------------------------------------
Source: Prepared by legislative auditor's staff using information from
  audit test results and LDH recipient case records.



                  Appendix D: MAU Issued Reports Detail
------------------------------------------------------------------------
         Issue Date                             Title
------------------------------------------------------------------------
November 8, 2018             Medicaid Eligibility: Wage Verification of
                              the Expansion Population
October 31, 2018             Identification of Incarcerated Medicaid
                              Recipients
June 20, 2018                Reliability of Medicaid Provider Data
May 2, 2018                  Strengthening of the Medicaid Eligibility
                              Determination Process
November 29, 2017            Improper Payments for Deceased Medicaid
                              Recipients
October 4, 2017              Monitoring of Medicaid Claims Using All-
                              Inclusive Code (T1015)
September 6, 2017            Improper Payments in the Medicaid
                              Laboratory Program
July 12, 2017                Prevention, Detection, and Recovery of
                              Improper Medicaid Payments in Home and
                              Community-Based Services
March 29, 2017               Duplicate Payments for Medicaid Recipients
                              with Multiple Identification PNumbers
March 22, 2017               Program Rule Violations in the Medicaid
                              Dental Program
October 26, 2016             Medicaid Recipient Eligibility--Managed
                              Care and Louisiana Residency
------------------------------------------------------------------------
Source: MAU reports can be found on the LLA's website under ``Reports
  and Data'' using the ``Audit Reports by Type'' button. By selecting
  the ``Medicaid'' button, all MAU reports issued by LLA will be
  displayed; https://www.lla.la.gov/reports-data/audit/audit-type/
  index.shtml?key=Medicaid.


                                 ______
                                 
         Question Submitted for the Record to Daryl G. Purpera
              Question Submitted by Hon. Patrick J. Toomey
    Question. Based on your experience, do you believe that use of 
current wage data will improve the overall accuracy of Medicaid 
eligibility determinations and reduce improper payments?

    Answer. Yes. In Louisiana, we have shown that more frequent wage 
data checks can improve the overall accuracy of Medicaid eligibility 
determination and reduce improper payments.

    At this time, Federal regulations require consideration of income 
for Medicaid recipients at the time of application and at annual 
renewal. Based on the audit work I presented to the committee, we have 
shown that checking income only once a year leaves unmitigated risk 
that recipients will continue in Medicaid when their status has changed 
during the year and are now ineligible, especially with the Expansion 
population of working adults.

    In Louisiana, we have seen that more frequent checks of income 
absolutely works to reduce improper payments. In the Medicaid Audit 
Unit report that I presented, Medicaid Eligibility: Wage Verification 
of the Expansion Population, issued November 8, 2018, we recommended 
that the Louisiana Department of Health (LDH) conduct more frequent 
wage checks to mitigate the identified risk. LDH agreed with our 
recommendation.

    In response to our recommendation, LDH began performing quarterly 
matches of eligibility data to state labor department wage data, with 
the first match using data from the quarter ending December 2018.

    To date, LDH has performed three quarterly matches, as shown below.

           Statistics From Quarterly Matches to LWC Wage Data
------------------------------------------------------------------------
                              Number of
                            Requests for
    Month      Quarter for   Information        Results        Month of
  Performed    Labor Data    Sent Due to                        Closure
                                Match
------------------------------------------------------------------------
February      December           39,162   LDH removed 34,789  April 2019
 2019          2018                        recipients and
                                           continues to work
                                           on 236 cases--89%
May 2019      March 2019         14,930   LDH removed 12,403  July 2019
                                           recipients and
                                           continues to work
                                           on 867 cases--83%
August 2019   June 2019          27,898   LDH removed 17,036  October
                                           recipients--61%     2019
------------------------------------------------------------------------
Source: Compiled by the legislative auditor's staff using data provided
  by LDH.


    As shown above, 64,228 Medicaid recipients have been removed due to 
excess income for the first three quarterly data matches. With the 
Louisiana managed care premium rates averaging about $600 per member 
per month, if each of these recipients were ineligible for just one 
month prior to removal, improper payments would total over $38 million.

    The latest wage check was performed in November 2019 for September 
2019 wage data. While the department has not completed the process yet, 
preliminary information obtained from LDH show an additional 27,578 
cases where the wage data shown was in excess of eligibility levels. 
Requests for information are pending for these recipients and answers 
will be evaluated. If the final results are similar to the first 3 
quarters, another 17,000 to 24,000 could be removed.

                                 ______
                                 
Prepared Statement of Brian P. Ritchie, Assistant Inspector General for 
 Audit Services, Office of Inspector General, Department of Health and 
                             Human Services
    Good morning, Chairman Toomey, Ranking Member Stabenow, and 
distinguished members of the committee. I am Brian P. Ritchie, 
Assistant Inspector General for Audit Services, U.S. Department of 
Health and Human Services. Thank you for your longstanding commitment 
to ensuring that the Medicaid program's 67 million beneficiaries are 
well-served and the taxpayers' approximately $600-billion investment is 
well-spent. I appreciate the opportunity to discuss the Office of 
Inspector General's (OIG's) work on Medicaid beneficiary eligibility 
determinations and what more can be done to secure the future of this 
important program.
                              introduction
    Medicaid spending represents one-sixth of the national health care 
economy, and Medicaid serves more people, including some of the 
Nation's most vulnerable individuals, than any other Federal health-
care program. In 2010, Congress enacted the Patient Protection and 
Affordable Care Act (Pub. L. No 111-148) and the Health Care and 
Education Reconciliation Act (Pub. L. No. 111-152), collectively known 
as the Affordable Care Act (ACA). The ACA mandated changes to Medicaid 
eligibility rules, such as calculating income based on modified 
adjusted gross income, a measure of income that is based on Internal 
Revenue Service rules. The ACA also provided States with the option to 
expand Medicaid coverage to low-income adults without dependent 
children and established a higher Federal reimbursement rate for 
services provided to these ``newly eligible beneficiaries.''

    Historically, only certain groups of individuals who had incomes 
and assets below certain thresholds were eligible for Medicaid. These 
traditional coverage groups include low-income parents and other 
caretaker relatives with dependent children, pregnant women, people 
with disabilities, children, and the elderly. Although many ``newly 
eligible beneficiaries'' applied for Medicaid coverage for the first 
time after the passage of the ACA, many people who applied for coverage 
qualified for these traditional coverage groups. We refer to these 
individuals as ``non-newly eligible beneficiaries.''

    OIG shares the committee's commitment to protecting Medicaid from 
fraud, waste, and abuse and has an extensive body of oversight work in 
this area. A strong program integrity strategy starts with prevention. 
Correctly determining beneficiary eligibility prevents Medicaid from 
making improper payments for people who are not eligible for the 
program.

    For the past several years, OIG has conducted several audits of 
States' Medicaid eligibility determinations under the Medicaid 
eligibility rules changed by the ACA. To date, OIG has issued seven 
audit reports of four States: four on newly eligible beneficiaries and 
three on non-newly eligible beneficiaries.

    We found that these States made payments on behalf of beneficiaries 
who were not eligible, or who may not have been eligible, for Medicaid. 
We also identified instances where States received higher Federal 
reimbursement rates than appropriate on behalf of beneficiaries who 
were eligible for a traditional eligibility group; but were incorrectly 
enrolled as newly eligible. These four States did not comply with 
requirements to verify applicants' income, citizenship, identity, and 
other eligibility criteria. We estimated that almost $6.3 billion in 
Federal payments were associated with these incorrect, or potentially 
incorrect, eligibility determinations.

    My testimony today details this work, which was done in California, 
Colorado, Kentucky, and New York. I will discuss the types of errors, 
the estimated number of beneficiaries affected, and the associated 
amount of dollars impacted for both newly eligible and non-newly 
eligible groups; as well as how both human and system errors 
contributed to these payments. Our audit period for California, 
Kentucky, and New York was October 1, 2014, to March 31, 2015; and our 
audit period for Colorado was January 1, 2014, to September 30, 2015. 
We have additional ongoing audits in Louisiana and Ohio assessing 
Medicaid eligibility determinations for newly eligible beneficiaries, 
as well as an audit in Colorado for non-newly eligible beneficiaries. 
These reports will be issued as they are completed.
states do not always correctly determine medicaid eligibility for both 
          newly eligible and non-newly eligible beneficiaries

    Correctly determining beneficiary eligibility is vital to the 
accuracy of Medicaid payments. To ensure that Medicaid makes payments 
on behalf of the right beneficiary, it is critical to determine whether 
the beneficiary receiving services is actually eligible for Medicaid, 
as well as for the specific eligibility category the beneficiary has 
been placed in. The seven recent OIG audits of four States estimated 
that almost $6.3 billion in Federal Medicaid payments has been made on 
behalf of beneficiaries who are ineligible or who may have been 
ineligible for Medicaid or their assigned eligibility category. 
Beneficiaries that States determined to be newly eligible accounted for 
almost $1.3 billion of these payments, and the remaining $5 billion was 
for beneficiaries that States determined to meet one of the non-newly 
eligible Medicaid categories.
                              methodology
    For each of our seven audits, we reviewed the Medicaid eligibility 
determinations made by the State Medicaid agency for a random sample of 
beneficiaries, classified as newly eligible or non-newly eligible 
depending on the audit, to determine whether the State agency made 
payments on behalf of beneficiaries who did not meet Federal and State 
eligibility requirements.

    For each sampled beneficiary, we obtained, where possible, 
application data and documentation used to support the State agency's 
eligibility determination. Reviewing that data and documentation, we 
determined whether the State agency followed Federal and State 
requirements and its own procedures to verify eligibility information 
when making the eligibility determinations. In instances where the 
eligibility documentation, data, or the State's determination was 
unclear, we followed up with State agency officials.

    If we were able to determine that a beneficiary was not eligible 
for Medicaid based on the application data and documentation, we refer 
to the beneficiary as ineligible. As an example, a sampled beneficiary 
attested to having income, supported by documentation, which was above 
the Medicaid income limit. In this example, the State agency 
incorrectly determined the beneficiary to be eligible and incorrectly 
claimed Federal reimbursement for payments made on behalf the 
ineligible beneficiary. We also refer to a beneficiary as ineligible if 
the beneficiary was eligible for a traditional coverage group but the 
State incorrectly determined that the beneficiary was newly eligible. 
As an example, a sampled beneficiary attested to having income that was 
below 100 percent of the Federal poverty level. The beneficiary 
qualified for Medicaid under a traditional coverage group but was not 
newly eligible. As result, the State agency incorrectly received a 
higher Federal reimbursement rate for this beneficiary. In this type of 
case, we used the difference between the higher Federal reimbursement 
rate for the newly eligible population and the lesser reimbursement 
rate for the traditional population when determining the amount of 
Federal reimbursement that was incorrectly claimed.

    If we were unable to conclusively determine eligibility because the 
State agency did not have sufficient supporting documentation or did 
not verify eligibility in accordance with Federal and State 
requirements, we refer to the beneficiary as potentially ineligible. As 
an example, a sampled beneficiary had not had a Medicaid eligibility 
redetermination since 2011. There were no case notes or other 
documentation between November 2011 and April 2017, and the State 
agency could not explain why no annual redetermination had been 
performed, as required, since 2011. For this type of situation, the 
State agency may have claimed Federal reimbursement for an ineligible 
beneficiary.

    Based on our sample results in each audit, we estimated the total 
number of ineligible beneficiaries and beneficiaries who were 
potentially ineligible during our audit period; we also estimated the 
total amount of Federal Medicaid reimbursement made on behalf of 
ineligible beneficiaries and potentially ineligible beneficiaries 
during our audit period.
           results from four audits on medicaid eligibility 
                    for newly eligible beneficiaries
    OIG reviewed whether certain States correctly determined 
eligibility, following changes made by the ACA to Medicaid eligibility 
rules.

    OIG reviews of Medicaid eligibility determinations by California, 
New York, Colorado, and Kentucky revealed that these States did not 
always comply with Federal and State requirements to verify applicants' 
income, citizenship, identity, and other eligibility criteria. 
Generally, errors associated with newly eligible beneficiary 
determinations were due to the State agencies not properly verifying 
income or citizenship requirements; or the beneficiary being eligible 
under a different Medicaid eligibility group. In total, across these 
four States, OIG estimated that more than $721 million in Federal 
Medicaid payments were made on behalf of 498,434 ineligible 
beneficiaries. More than $534 million in Federal Medicaid payments were 
made on behalf of 127,020 beneficiaries who may have been ineligible. 
In total, that is almost $1.3 billion in Federal Medicaid payments made 
for more than 625,000 beneficiaries that were ineligible or potentially 
ineligible.

    Both human and system errors contributed to these payments. As an 
example, human error occurs when State agency officials making 
eligibility determinations do not correctly act on known information. 
We identified instances where State agency officials incorrectly 
determined beneficiaries to be newly eligible even though the 
beneficiaries' application data or supporting documentation clearly 
demonstrated that their household income amounts were above the allowed 
maximum threshold of 138 percent of the Federal poverty level.

    We found that some enrollment data systems were lacking the ability 
to (1) deny or terminate ineligible beneficiaries; (2) properly 
redetermine eligibility when a beneficiary aged out of an eligibility 
group; (3) maintain records, in accordance with Federal requirements, 
relating to eligibility determinations and verifications; and (4) 
retrieve and use information from other Government databases, such as 
those managed by the Social Security Administration and Department of 
Homeland Security. For example, we identified instances where a State 
agency electronically verified that a change in beneficiary income was 
above the allowable threshold but the system continued to make payments 
on behalf of the beneficiary. This occurred because the State systems 
did not have the functionality to discontinue Medicaid for a 
beneficiary who became ineligible due to a change in income after a 
previous determination had already been made.
           results from three audits on medicaid eligibility 
                  for non-newly eligible beneficiaries
    OIG also reviewed whether certain States were correctly determining 
eligibility for non-newly eligible beneficiaries in accordance with 
Federal and State requirements. Errors associated with non-newly 
eligible beneficiaries were generally due to beneficiaries not meeting 
income requirements (including not submitting required tax information 
forms) or specific coverage group requirements. Additionally, there 
were a few errors due to beneficiaries not meeting citizenship and 
residency requirements. As a result of States incorrectly determining 
beneficiaries' eligibility, payments were made on behalf of those 
beneficiaries that were ineligible or potentially ineligible, resulting 
in improper and potentially improper costs to the Federal Government.

    OIG reviews of Medicaid eligibility determinations by California, 
New York, and Kentucky revealed that these States did not always comply 
with Federal and State requirements to verify applicants' eligibility. 
In total, across these three States, OIG estimated that more than $1.05 
billion in Federal Medicaid payments were made on behalf of 1,186,635 
ineligible beneficiaries. More than $3.98 billion in Federal Medicaid 
payments were made on behalf of 3,788,248 beneficiaries who may have 
been ineligible. In total, more than $5 billion in Federal Medicaid 
payments were made for more than 4.9 million beneficiaries who were 
ineligible or potentially ineligible.

    As with OIG's newly eligible audits, the non-newly eligible audits 
showed that both human and system errors contributed to these payments; 
specifically, (1) State agency staff did not consider all relevant 
information when making determinations, (2) caseworkers made errors, 
(3) system delays occurred during a system conversion, and (4) State 
agencies did not always maintain documentation to support their 
eligibility determinations.
       comparison of newly eligible and non-newly eligible errors
    In the three States where we have completed audits of both newly 
eligible and non-newly eligible beneficiary eligibility determinations, 
we have found eligibility determination errors in both groups. Kentucky 
and New York had relatively comparable error rates between both the two 
beneficiary groups, whereas California had a higher error rate for the 
non-newly eligible group (see chart below).

[GRAPHIC] [TIFF OMITTED] T0309.011

                               conclusion
    Correct determination of beneficiary eligibility is vital to the 
accuracy of Medicaid payments. Seven recent OIG audits of four States 
estimated that almost $6.3 billion in Federal Medicaid payments has 
been made on behalf of beneficiaries who were ineligible or who may 
have been ineligible. These include inaccurate eligibility 
determinations for both the newly eligible and the non-newly eligible 
beneficiary groups (see Attachment A listing information on our seven 
reports).

    To address the concerns that we identified, we recommended that 
these States ensure that enrollment data systems be able to verify 
eligibility criteria, develop and implement written policies and 
procedures to address vulnerabilities, and undertake redeterminations 
as appropriate.

    OIG will continue to prioritize Medicaid oversight to prevent 
fraud, waste, and abuse and take appropriate action when they occur. We 
are committed to ensuring that Medicaid pays the right amount, to the 
right provider, for the right service, on behalf of the right 
beneficiary.

    Thank you for your ongoing leadership and for affording me the 
opportunity to testify on this important topic.


                                                  Attachment A
----------------------------------------------------------------------------------------------------------------
                                                      Ineligible                    Potentially Ineligible
Report    Report Number     Date Issued  -----------------------------------------------------------------------
 Title                                      Beneficiaries        Dollars        Beneficiaries        Dollars
----------------------------------------------------------------------------------------------------------------
Colora     A-07-16-04228     August 2019            85,085       $66,525,688            13,372       $26,797,483
 do
 Did
 Not
 Corre
 ctly
 Deter
 mine
 Medic
 aid
 Eligi
 bilit
 y for
 Some
 Newly
 Enrol
 led
 Benef
 iciar
 ies
New        A-02-16-01005       July 2019           383,893      $520,295,792           618,057    $1,297,308,200
 York
 Did
 Not
 Corre
 ctly
 Deter
 mine
 Medic
 aid
 Eligi
 bilit
 y for
 Some
 Non-
 Newly
 Eligi
 ble
 Benef
 iciar
 ies
Califo     A-09-17-02002   December 2018           802,742      $536,039,109         3,100,260    $2,616,843,793
 rnia
 Made
 Medic
 aid
 Payme
 nts
 on
 Behal
 f of
 Non-
 Newly
 Eligi
 ble
 Benef
 iciar
 ies
 Who
 Did
 Not
 Meet
 Feder
 al
 and
 State
 Requi
 remen
 ts
Califo     A-09-16-02023   February 2018           366,078      $628,838,417            79,055      $402,358,529
 rnia
 Made
 Medic
 aid
 Payme
 nts
 on
 Behal
 f of
 Newly
 Eligi
 ble
 Benef
 iciar
 ies
 Who
 Did
 Not
 Meet
 Feder
 al
 and
 State
 Requi
 remen
 ts
New        A-02-15-01015    January 2018            47,271       $26,221,803                 0                 -
 York
 Did
 Not
 Corre
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Kentuc     A-04-16-08047     August 2017                 0                 -            69,931       $72,800,000
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----------------------------------------------------------------------------------------------------------------

         Questions Submitted for the Record to Brian P. Ritchie
                 Question Submitted by Hon. John Thune
    Question. In your testimony you discussed that the OIG has 
identified issues in State systems used to determine Medicaid 
eligibility. When visiting the State of South Dakota's Medicaid 
website, the public can view the number of individuals eligible for 
Medicaid by county, by month. Are all States able to pull this level of 
detail? If not, what steps do policymakers and CMS need to take to 
ensure that all State systems are functioning correctly to prevent 
improper payments?

    Answer. We do not have information regarding the level of 
eligibility detail available to all States. To ensure that all State 
systems are functioning correctly and correctly identify eligibility 
errors, we encourage policymakers and CMS to work with States to 
address previous recommendations that we have made. OIG has made 
specific recommendations to States we have audited regarding system 
functionality. For example, we recommended that the California State 
Medicaid agency ensure it has the system functionality to use Social 
Security Administration data to verify whether a beneficiary is 
entitled to or enrolled in Medicare.

                                 ______
                                 
             Questions Submitted by Hon. Patrick J. Toomey
    Question. Do you recommend States consistently use current and 
verified wage data as part of their Medicaid eligibility determination 
processes to improve payment accuracy and administrative efficiency?

    Answer. Yes, States should consistently and correctly use current 
and verified wage data. However, many of the incorrect eligibility 
determinations we identified during our audits resulted from States 
making human or system errors. Information about an applicant's 
earnings was available. At times, the information showed that the 
applicant was not eligible for Medicaid. Yet, because of human or 
system errors, the applicant was incorrectly enrolled in the program. 
We recommend States follow existing rules that include using financial 
information related to wages, net earnings from self-employment, 
unearned income, and resources from IRS, SSA, State wage system and 
State unemployment insurance.

    Question. Would you recommend that CMS issue guidance directing 
States to consistently use data sources available at the Federal level, 
such as current employment and income data accessible through the CMS 
Federal Data Services Hub, to accurately verify eligibility for 
Medicaid?

    Answer. We recommend that CMS ensure that States are following 
existing eligibility requirements. Issuing guidance may help ensure 
that States understand current rules. We note that both California's 
and New York's eligibility verification processes use the Federal Data 
Services Hub. However, both States had errors related to income 
verification even though the Federal Data Services Hub was a data 
source. Using the Federal Data Service Hub is an important component of 
verifying eligibility, but CMS and States must ensure there are strong 
internal controls, policies, and procedures that make use of the data 
consistent with existing eligibility requirements. Similar to our 
response to Senator Toomey's first question, that means addressing 
human and system errors as well.

                                 ______
                                 
                 Questions Submitted by Hon. Tim Scott
    Question. Medicaid enrollment has grown substantially in recent 
years, even for non-expansion States. In South Carolina, for instance, 
Medicaid and CHIP enrollment totaled 1,036,851 in August of this year, 
marking a 17.9-percent increase over August 2014 levels. Over the same 
5-year period, the State's population grew by closer to 5 or 6 percent, 
so population growth alone cannot explain the rise in enrollment. 
Furthermore, whereas South Carolina's unemployment rate was at 6.6 
percent in August 2014, it had fallen to 3.2 percent by August 2019, 
representing a drop of more than 50 percent. Our economy is strong, 
with more South Carolinians entering the workforce to pursue 
sustainable opportunities, and yet our State's Medicaid enrollment 
figures remain high.

    While South Carolina's State government takes important steps to 
ensure program integrity and robust eligibility determination 
processes, programmatic growth across the country will increasingly 
spur the need for additional tools, supports, and resources from 
Federal agencies and other key stakeholders as States seek to bolster 
their internal processes.

    I understand that a number of Federal agencies and States 
incorporate current wage data into their eligibility determination 
processes for Medicaid and other government benefit programs. This type 
of data, for instance, is available at no cost to State Medicaid 
agencies through the CMS Federal Data Hub. However, use of this data is 
not a consistent practice.

    Do you recommend that States consistently use current and verified 
wage data as part of their Medicaid eligibility determination processes 
to improve payment accuracy and administrative efficiency?

    Answer. Yes, States should consistently and correctly use current 
and verified wage data. However, many of the incorrect eligibility 
determinations we identified during our audits resulted from States 
making human or system errors. For example, audits of California and 
New York found income errors even though those States use the Federal 
Data Services Hub. In other words, information about an applicant's 
earnings was available. At times, the information showed that the 
applicant was not eligible for Medicaid. Yet, because of human or 
system errors, the applicant was incorrectly enrolled in the program. 
We recommend States follow existing rules that include using financial 
information related to wages, net earnings from self-employment, 
unearned income, and resources from IRS, SSA, State wage system and 
State unemployment insurance.

    Question. Are there concrete steps that we can take, when working 
with States, to raise awareness of this type of data and to encourage 
effective utilization thereof?

    Answer. States need to be aware of existing rules and the 
importance of making correct eligibility determinations based on 
current information that is available. States also should be encouraged 
to take all steps necessary to reduce human and system errors to the 
greatest extent possible. The reduction of these types of errors would 
help to eliminate many of the errors we identified during our audits.

                                 ______
                                 
                 Question Submitted By Hon. Todd Young
                    national directory of new hires
    Question. The Federal Government currently has systems available to 
verify income, like the National Directory of New Hires (NDNH)--which 
has been used for many years in programs such as the Temporary 
Assistance for Needy Families, SNAP, and housing. The President's 
budget proposed using NDNH in Medicaid for program integrity.

    If you had access to this data, do you think it would help with 
preventing, identifying, and recovering improper payments--and how?

    Answer. OIG does not have a basis to determine whether access to 
NDNH data could help prevent, identify, and recover improper payments 
related to Medicaid eligibility. OIG does not currently have access to 
the NDNH and cannot judge how useful it might be.

                                 ______
                                 
         Prepared Statement of Judith Solomon, Senior Fellow, 
                 Center on Budget and Policy Priorities
    Chairman Toomey, Ranking Member Stabenow, and members of the Health 
Subcommittee of the Finance Committee, thank you for today's 
opportunity to testify. My name is Judith Solomon. I am a senior fellow 
on the health team at the Center on Budget and Policy Priorities, a 
nonprofit, nonpartisan policy institute located here in Washington. The 
Center conducts research and analysis on a range of Federal and State 
policy issues affecting low- and moderate-income families. The Center's 
health work focuses on Medicaid, the Children's Health Insurance 
Program (CHIP), the Affordable Care Act (ACA), and Medicare. I have 
spent over 40 years working on Medicaid, beginning as a legal services 
attorney and in several positions focusing on Medicaid policy issues 
affecting children, seniors, and people with disabilities.

    The ACA provides a continuum of coverage for low-income adults, 
including an expansion of Medicaid for adults with incomes below 138 
percent of the poverty line and subsidized individual market coverage 
for those with incomes above that level. The ACA also includes 
provisions intended to create a seamless, no-wrong-door, coordinated 
eligibility system that allows people to enroll in and move between 
Medicaid, CHIP, and marketplace coverage depending on their 
circumstances. Streamlined enrollment is particularly important for 
low-wage workers, who had high rates of uninsurance before enactment of 
the ACA.

    The audits that are the focus of today's hearing illustrate the 
challenge of implementing a streamlined enrollment system that gets 
people enrolled in the right program at initial application and when 
their circumstances change. But we shouldn't let that challenge detract 
from how the coverage expansions under the ACA have achieved their 
goals of reducing uninsured rates and improving access to care, 
financial security, and health, especially in the States that have 
implemented Medicaid expansion.

    Medicaid expansion has led to significant coverage gains and 
reductions in uninsurance among low-income people. Most studies show 
Medicaid expansion has improved access to care, utilization of 
services, the affordability of care, and financial security for low-
income people. And an increasing number of studies show improved self-
reported health following expansion and an association between 
expansion and certain positive health outcomes.\1\ But the ACA's vision 
hasn't been entirely realized in the 14 States yet to expand, and as 
this hearing shows there is still work to do to streamline enrollment 
and avoid gaps in coverage.
---------------------------------------------------------------------------
    \1\ Larissa Antonisse et al., ``The Effects of Medicaid Expansion 
Under the ACA: Updated Findings from a Literature Review,'' Kaiser 
Family Foundation, August 15, 2019, https://www.
kff.org/medicaid/issue-brief/the-effects-of-medicaid-expansion-under-
the-aca-updated-findings-from-a-literature-review-august-2019/.

    Today's hearing concerns eligibility errors in Medicaid, primarily 
whether people are being properly enrolled and whether they are 
remaining enrolled after they are no longer eligible. But we shouldn't 
limit our definition of program integrity to the occurrence and 
likelihood of these types of errors. We should also be concerned that 
there are many eligible people who aren't enrolled in coverage and 
others whose coverage is incorrectly being taken away because of 
barriers in the eligibility and enrollment process, including excessive 
paperwork, inadequate communication, and other factors. In 2017, 25 
percent of uninsured people, 7.5 million in total, were eligible for 
Medicaid, according to the Urban Institute.\2\
---------------------------------------------------------------------------
    \2\ Linda J. Blumberg et al., ``Characteristics of the Remaining 
Uninsured: An Update,'' Urban Institute, July 2018, https://
www.urban.org/sites/default/files/publication/98764/2001914-
characteristics-of-the-remaining-uninsured-an-update_2.pdf.

    In large part, both the eligibility errors that are the focus of 
today's hearing and the processes that leave many eligible people 
uninsured stem from the challenges of operationalizing precise 
eligibility limits based on income and household circumstances for 
people whose situations frequently change. Focusing only on the 
potential for errors in one direction rather than also addressing 
what's needed to ensure people can easily enroll, stay enrolled, and 
transition to other forms of coverage when their situations change will 
likely exacerbate the recent rise in uninsurance among both children 
and adults.
  states face multiple challenges in determining medicaid eligibility
    As noted, the ACA created a continuum of coverage for low-income 
people based on their income as a percentage of the poverty line, which 
takes into account both household income and household size. But income 
and household size aren't static. Children grow up and leave the home. 
People get married and divorced. And income changes over the course of 
a year are especially prevalent among low-income people. Low-wage jobs 
are often unstable, with frequent job losses and work hours that can 
fluctuate from month to month. Many Medicaid enrollees also work 
seasonal jobs in industries such as retail or tourism. A study looking 
at participation of working-age adults in the Supplemental Nutrition 
Assistance Program (SNAP), which has Federal income limits close to 
those of the Medicaid expansion, found that workers earning low wages 
are frequently in and out of work and on and off SNAP as their earnings 
fall and rise.\3\ A similar study looking at Medicaid showed similar 
income volatility.\4\
---------------------------------------------------------------------------
    \3\ Brynne Keith-Jennings and Raheem Chaudry, ``Most Working-Age 
SNAP Participants Work, But Often in Unstable Jobs,'' Center on Budget 
and Policy Priorities, March 15, 2018, https://www.cbpp.org/research/
food-assistance/most-working-age-snap-participants-work-but-often-in-
unstable-jobs.
    \4\ Aviva Aron-Dine, Raheem Chaudry, and Matt Broaddus, ``Many 
Working People Could Lose Health Coverage Due to Medicaid Work 
Requirements,'' Center on Budget and Policy Priorities, April 11, 2018, 
https://www.cbpp.org/research/health/many-working-people-could-lose-
health-coverage-due-to-medicaid-work-requirements.

    Another study completed soon after enactment of the ACA showed the 
majority of people with income below 138 percent of the poverty line at 
the beginning of a 12-month period had income above 138 percent of the 
poverty line at some point during those 12 months. Conversely, about 40 
percent of people with income between 138 and 200 percent of the 
poverty line saw their income fall below 138 percent of the poverty 
line at some point over the course of a year.\5\ Thus, it was clear 
from the outset that the low-income adults gaining coverage under the 
ACA would experience frequent changes in eligibility for Medicaid and 
subsidized coverage.
---------------------------------------------------------------------------
    \5\ Benjamin D. Sommers and Sara Rosenbaum, ``Issues in Health 
Reform: How Changes in Eligibility May Move Millions Back and Forth 
Between Medicaid and Insurance Exchanges,'' Health Affairs, February 
2011, https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2010.
1000.

    There are other factors that continue to make it challenging for 
states to ensure that eligible people get enrolled, stay enrolled when 
they are eligible, and move to other coverage when their incomes or 
---------------------------------------------------------------------------
other circumstances change:

          Replacing and modernizing State eligibility and enrollment 
        systems to accommodate the ACA's vision of streamlined 
        enrollment. Upgrading enrollment systems and adopting new 
        business processes was a huge undertaking for States, and the 
        audits that are the subject of this hearing reflect system and 
        caseworker errors, particularly in the first years of 
        implementation, that continue to be addressed.

          Requiring that States use income levels for claiming 
        enhanced match different from those used to determine 
        eligibility. Most expansion States must not only determine 
        whether peoples' income is below 138 percent of the poverty 
        line, but also must determine whether they can claim enhanced 
        Federal matching funds for the costs of their care. Determining 
        the right match rate requires a separate assessment of whether 
        an individual would be eligible under the State's pre-ACA rules 
        or whether they are newly eligible under the expansion. This 
        determination requires a precision that is often difficult to 
        attain and is reflected in some of the audit findings where 
        States claimed the higher match for people who were eligible 
        under pre-ACA rules. For example, a State may correctly 
        determine that a parent's income is below 138 percent of the 
        poverty line but incorrectly claim enhanced match if it makes a 
        mistake in finding that her income is above the pre-ACA 
        eligibility level for parents. The error is in the match the 
        State claims, not in eligibility of the person being covered.

          Training eligibility workers on brand new tax-based rules 
        for determining Medicaid eligibility. The use of ``Modified 
        Adjusted Gross Income'' to determine eligibility was a sea 
        change for States, significantly changing prior rules on what 
        income counts and who is considered in a household. Caseworkers 
        had to learn the rules on tax treatment of income, including 
        complex rules on how dependents' income is treated and who is 
        considered a dependent under tax rules.

          Limitations on the utility of tax data and other electronic 
        data to verify income of low-wage workers who are self-
        employed, often change jobs, work on a seasonal basis, and have 
        variable hours. Verifying income largely through electronic 
        data as the ACA suggests has been difficult to do for some low-
        wage workers although helpful for many others who no longer 
        must submit pay stubs or other documentation. Medicaid 
        eligibility depends on monthly income, which can change 
        frequently. Electronic data sources and State wage databases 
        often don't reflect people's current circumstances, because the 
        data aren't up to date, or people's circumstances have changed 
        since the data match, leading to requests for documentation 
        that are difficult to fulfill. And electronic data aren't 
        available for people who are self-employed.

          Difficulties in effectively communicating complex 
        eligibility rules. Medicaid rules require that people notify 
        the State Medicaid agency when their situations change to the 
        extent that they are no longer eligible for coverage. This 
        assumes people know that small changes in income or changes in 
        their household composition may make them ineligible and that 
        they should report these changes. Proper reporting is 
        especially difficult for people with frequent income changes 
        based on seasonal employment or variable hours.
            challenges lead eligible people to lose coverage
    The audits by the Government Accountability Office, Health and 
Human Services Office of Inspector General (OIG), and the State of 
Louisiana find errors in eligibility determination due to caseworker 
error, inadequate system capacity, and lack of documentation in case 
files. Most of these errors reflect the challenges inherent in 
determining eligibility. In some of the cases, enrollees may have 
failed to make timely reports of income changes, but variable income 
and difficulty knowing when to report make timely reporting difficult. 
For example, a parent who works extra hours in a month or two may not 
report knowing her hours will soon return to a lower level.

    Meanwhile, the audits don't measure whether eligible people are 
unable to enroll or are losing their coverage when they remain 
eligible. Recent declines in Medicaid coverage for children and adults 
are due in part to a greater emphasis on frequent wage checks, more 
stringent documentation requirements, and terminations based on 
returned mail.\6\ When State wage checks show income above the 
eligibility level, states require people to respond and prove they are 
still eligible within 10 days of the date of the notice, which 
sometimes reaches them just a few days before the deadline. In addition 
to short deadlines, the notices are difficult to understand, and people 
often don't know how to show they remain eligible if, for example, the 
increase in wages was just temporary.
---------------------------------------------------------------------------
    \6\ Robin Rudowitz et al., ``Medicaid Enrollment and Spending 
Growth: FY 2019 and 2020,'' Kaiser Family Foundation, October 2019, 
http://files.kff.org/attachment/Issue-Brief-Medicaid-Enrollment-and-
Spending-Growth-FY-2019-2020.

    Research and decades of experience in enrolling low-income children 
and adults in coverage show that increasing paperwork can lead to loss 
of coverage among eligible people due to difficulties completing 
processes and providing documentation.\7\ Behavioral science helps 
explain why this is the case, teaching that everyone has limited 
attention and cognitive bandwidth, but people living in poverty face 
chronic scarcity, which forces them simultaneously to manage multiple 
challenging problems and requires enormous mental effort.\8\
---------------------------------------------------------------------------
    \7\ Samantha Artiga and Olivia Pham, ``Recent Medicaid/CHIP 
Enrollment Declines and Barriers to Maintaining Coverage,'' Kaiser 
Family Foundation, September 24, 2019, https://www.kff.org/medicaid/
issue-brief/recent-medicaid-chip-enrollment-declines-and-barriers-to-
maintaining-coverage/.
    \8\ Harrison Neuert et al., ``Work Requirements Don't Work: A 
behavioral science perspective,'' Ideas 42, March 2019, http://
www.ideas42.org/wp-content/uploads/2019/04/ideas42-Work-Requirements-
Paper.pdf.

    The story of a Texas family in a recent New York Times story is a 
stark illustration of the consequences of increased paperwork for 
families facing multiple challenges. A baby's mother didn't respond 
quickly enough to a notice from the State to show her baby was still 
eligible and didn't even know her son lost coverage until she took him 
to the hospital. Her other two children had previously lost coverage 
for reasons she didn't understand, and she had given up trying to re-
enroll them because it was so hard.\9\
---------------------------------------------------------------------------
    \9\ Abby Goodnough and Margot Sanger-Katz, ``Medicaid Covers a 
Million Fewer Children. Baby Elijah Was One of Them,'' New York Times, 
October 22, 2019, https://www.nytimes.com/2019/10/22/upshot/medicaid-
uninsured-children.html?action=click&module=Top%20Stories&pgtype=
Homepage.

    Frequent changes in income and household composition, the 
complexity of rules governing whose income counts, and the need to make 
separate determinations of who is eligible for enhanced match make 
errors inevitable. The types of errors identified in the audits can be 
reduced but not eliminated. But a sole focus on improving accuracy by 
more frequent wage checks, increased documentation requirements, and 
terminating coverage when mail is returned will result in further 
declines in enrollment and will significantly increase errors in the 
---------------------------------------------------------------------------
other direction--taking coverage away from people who are eligible.

    We've seen the impact of paperwork and the difficulty of reaching 
people to effectively explain complex rules in the implementation of 
work requirements in Arkansas and New Hampshire, where large numbers of 
eligible people lost coverage or were at risk of losing it. About 3 or 
4 percent of those subject to the Arkansas work requirement were not 
working and did not qualify for exemptions, studies estimated.\10\ Yet 
each month, 8 to 29 percent of those subject to the requirement failed 
to report sufficient work hours; many didn't report any hours. And over 
75 percent of those required to report hours (that is, those not 
automatically exempted by the State) failed to do so each month.\11\ 
Likewise, a study estimates that all but a small minority of Medicaid 
expansion beneficiaries in New Hampshire are either working or ill or 
disabled (and therefore should qualify for exemptions), yet 40 percent 
of those subject to the work requirement were set to lose coverage had 
the State not put the policy on hold.\12\
---------------------------------------------------------------------------
    \10\ Anuj Gangopadhyaya et al., ``Medicaid Work Requirements in 
Arkansas,'' Urban Institute, May 24, 2018, https://www.urban.org/
research/publication/medicaid-work-requirements-arkansas.
    \11\ Arkansas Department of Human Services, ``ARWorks Reports,'' 
https://humanservices.
arkansas.gov/newsroom/toolkits.
    \12\ Rachel Garfield et al., ``Understanding the Intersection of 
Medicaid and Work: What Does the Data Say?'', Kaiser Family Foundation, 
August 8, 2019, https://www.kff.org/medicaid/issue-brief/understanding-
the-intersection-of-medicaid-and-work-what-does-the-data-say/.
---------------------------------------------------------------------------
               frequent changes in eligibility are costly
    Frequent changes in eligibility, often referred to as ``churn,'' 
disrupt the continuity of care and coverage. Coverage changes are 
associated with changes in physicians, increased use of the emergency 
room, and decreased medication adherence even for many who don't 
experience gaps in coverage.\13\ Churn also creates problems for 
health-care providers and Medicaid managed care organizations, limiting 
their ability to provide effective care and increasing their 
administrative costs as people cycle in and out of coverage. People who 
churn in and out of coverage have higher health-care costs, some 
studies suggest.\14\ Churn is also costly for States, creating extra 
work to process new applications for people who remain eligible after 
losing coverage.
---------------------------------------------------------------------------
    \13\ Benjamin D. Sommers et al., ``Insurance Churning Rates for 
Low-Income Adults Under Health Reform: Lower Than Expected but Still 
Harmful for Many,'' Health Affairs, October 2016, https://
www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2016.0455.
    \14\ Anthem Public Policy Institute, ``Continuity of Medicaid 
Coverage Improves Outcomes for Beneficiaries and States,'' June 2018, 
https://www.communityplans.net/wp-content/uploads/2019/04/
13_Report_Continuity-of-Medicaid-Coverage-Improves-Outcomes-for-
Beneficiaries-and-States.pdf.

    Frequent changes in eligibility work at cross-purposes with efforts 
to better manage care in order to lower costs and improve health 
outcomes. Federal and State programs, including Medicaid, are 
increasingly shifting to value-based care models that reward providers 
for managing patients' care and providing low-cost, high-value 
services. Value-based payment models are intended to give providers 
greater incentive to reduce costs and improve care by strengthening 
care coordination, avoiding duplicative or low-value care, and helping 
patients obtain high-value, low-cost services, such as preventive and 
primary care and medications to manage chronic conditions. But it's 
difficult for providers to coordinate and manage their patients' care 
if they are not continuously enrolled in health coverage.\15\
---------------------------------------------------------------------------
    \15\ Hannah Katch, ``Restrictive Medicaid Policies Will Impede 
Innovation to Improve Care and Reduce Costs,'' Center on Budget and 
Policy Priorities, March 14, 2019, https://www.cbpp.org/research/
health/restrictive-medicaid-policies-will-impede-innovation-to-improve-
care-and-reduce.
---------------------------------------------------------------------------
                       states can decrease churn
    Some States have decided churn is so counterproductive that they 
have changed their eligibility rules to limit the frequency with which 
households need to change coverage due to changes in income. States 
have the option to provide children enrolled in Medicaid and the 
Children's Health Insurance Program (CHIP) with ``continuous 
eligibility''--a full year of coverage regardless of changes in their 
family's income. States can also elect to provide continuous 
eligibility to adults through a Medicaid waiver. To date, 24 States 
have adopted continuous eligibility for children in Medicaid, and 26 
have adopted it for CHIP. So far, Montana and New York are the only 
States with continuous eligibility for adults. Utah has a proposal 
pending.

    In States that have not adopted continuous eligibility, it's likely 
that some people still remain enrolled in Medicaid for a period after 
their income rises; similarly, it's likely that some people remain 
enrolled in the marketplaces for a period after their income falls. But 
while the audits being considered today have led some to claim that the 
Federal Government is spending large sums on people who are 
inappropriately enrolled in Medicaid, the reality is that the fiscal 
impact of these mistakes is often limited. Medicaid expansion enrollees 
whose incomes rise modestly above 138 percent of the poverty line are 
generally eligible for subsidized marketplace coverage. And for people 
with low incomes, the Federal cost for subsidized marketplace coverage 
is similar to (or sometimes greater than) the Federal cost for 
Medicaid.\16\
---------------------------------------------------------------------------
    \16\ The Congressional Budget Office (CBO) estimates the 2019 
annual average Federal cost of covering an individual in Medicaid or 
CHIP at $4,620, compared to $6,490 for covering an individual in the 
ACA marketplace. While these cost estimates are not directly comparable 
due to differences in the people who are eligible for coverage in these 
programs, they are suggestive evidence that coverage through Medicaid 
is not more costly to the Federal Government than coverage through the 
marketplace. Additional Treasury Department data show that ACA 
marketplace subsidies for those between 150 percent and 200 percent of 
poverty--those just above the Medicaid expansion level--are greater 
than the average subsidy, further suggesting that the Federal 
Government pays a similar amount, or perhaps less, for people with 
incomes modestly above 138 percent of the poverty line who remain 
enrolled in Medicaid. See, ``Federal Subsidies for Health Insurance 
Coverage for People Under Age 65: 2019 to 2029,'' Congressional Budget 
Office, May 2019, https://www.cbo.gov/system/files/2019-05/55085-
HealthCoverageSubsidies_
0.pdf; and ``Health Tax Provisions and Analysis, Table 3, Premium Tax 
Credit, 2018,'' U.S. Department of the Treasury, accessed September 
2019, https://home.treasury.gov/policy-issues/tax-policy/office-of-tax-
analysis.

    While continuous eligibility is the best approach, States can take 
other steps to decrease churn without increasing the number of 
---------------------------------------------------------------------------
ineligible people receiving coverage:

          Improve communication with enrollees. Written notices are 
        often lengthy and complex without clear directions on what 
        people must do to stay covered. In addition to improving 
        enrollee notices, states can use phone calls, text messaging, 
        and email to reach enrollees. Text messages are commonly used 
        by low-income people, can reach them more quickly than 
        traditional mail, can remind enrollees about needed 
        verification documents, and can even collect information.\17\ 
        States should also use online and case management portals, 
        through which enrollees can report changes in income and 
        household size, view notices, and see when their renewal 
        paperwork is due.\18\
---------------------------------------------------------------------------
    \17\ Jennifer Wagner, ``Leveraging Text Messaging to Improve 
Communications in Safety Net Programs,'' Center on Budget and Policy 
Priorities,'' May 8, 2019, https://www.cbpp.org/research/poverty-and-
inequality/leveraging-text-messaging-to-improve-communications-in-
safety-net.
    \18\ Sonal Ambegaokar, Rachael Podesfinski, and Jennifer Wagner, 
``Improving Customer Service in Health and Human Services Through 
Technology,'' Social Interest Solutions and Center on Budget and Policy 
Priorities, August 23, 2018, https://www.cbpp.org/research/health/
improving-customer-service-in-health-and-human-services-through-
technology.

          Streamline verification of eligibility through self-
        attestation and use of electronic data to verify eligibility 
        factors. Part of the ACA's approach to streamline eligibility 
        relies on electronic data sources to verify eligibility at 
        application and renewal. When verifying income, State Medicaid 
        agencies compare the sworn attestations that clients make on 
        their application and renewal forms to available electronic 
        data. The attestation and data source are considered 
        ``reasonably compatible'' if they are both below the 
        eligibility threshold, even if the amount of income in the 
        attestation is different from the amount in the electronic data 
        source. Under reasonable compatibility, states require 
        documentation only when the difference between the attestation 
        and data source affects eligibility. There are best practices 
        States can take to fully implement reasonable compatibility 
        policy and minimize the need for paper documentation.\19\ 
        States can, and most do, allow sworn self-attestation of 
        eligibility factors such as age, household size, and tax filing 
        status to reduce paperwork.
---------------------------------------------------------------------------
    \19\ Jennifer Wagner, ``Reasonable Compatibility Policy Presents an 
Opportunity to Streamline Medicaid Determinations,'' Center on Budget 
and Policy Priorities, August 16, 2016, https://www.cbpp.org/research/
reasonable-compatibility-policy-presents-an-opportunity-to-streamline-
medicaid.

          Use information collected and verified from other programs 
        such as SNAP to determine eligibility. About three-quarters of 
        households receiving SNAP benefits in 2014 had at least one 
        member receiving health coverage through Medicaid or CHIP. 
        States can use data that SNAP programs collect and verify at 
        application and renewal to renew Medicaid eligibility, among 
        other strategies.\20\
---------------------------------------------------------------------------
    \20\ Jennifer Wagner and Alicia Huguelet, ``Opportunities for 
States to Coordinate Medicaid and SNAP Renewals,'' Center on Budget and 
Policy Priorities, February 5, 2016, https://www.cbpp.org/research/
health/opportunities-for-states-to-coordinate-medicaid-and-snap-
renewals.

          Follow up on returned mail. Arkansas is an example of a 
        State that terminates people's coverage based on just one piece 
        of returned mail. That's a big reason the State saw enrollment 
        decline by 60,000 people over an 18-month period even before it 
        started taking coverage away from people who didn't comply with 
        a work requirement.\21\ Many low-income people move frequently 
        within a State, so rather than assume they moved out of State 
        when mail is returned, which Arkansas appears to do, States can 
        use the postal service's National Change of Address system and 
        use text, mail, or phone to reach people before taking their 
        coverage away.
---------------------------------------------------------------------------
    \21\ Benjamin Hardy, ``Scrubbed from the system,'' Arkansas Times, 
August 9, 2018, https://arktimes.com/news/cover-stories/2018/08/09/
scrubbed-from-the-system.

    Adopting continuous eligibility and these other measures would 
decrease errors in both directions, increasing the accuracy of 
eligibility determination while also making it easier for people to 
enroll, stay enrolled, and transition to other coverage when their 
eligibility changes. Focusing just on increased wage checks and 
documentation may reduce the number of ineligible people who receive 
Medicaid, but it will likely end up taking coverage away from a greater 
number of eligible people.
 recent claims of widespread eligibility error based on faulty analysis
    Some opponents of Medicaid expansion have relied on a recent study 
finding that significant numbers of people who reported in census 
surveys that they have annual income above the Medicaid cutoff appeared 
to have gained coverage through the expansion.\22\ But those reporting 
survey income above 138 percent of poverty could be eligible for the 
Medicaid expansion for many legitimate reasons. They could, for 
example, be eligible for part of the year because they had low income 
in some months due to temporary unemployment or unstable hours; 
Medicaid eligibility is generally based on monthly, not annual, income. 
Or, they could have income from child support or other sources that 
don't count toward Medicaid eligibility. Or, in their responses to the 
census questions, they could have provided rough estimates of their 
incomes rather than precise answers. The census surveys don't verify 
income, while Medicaid does.
---------------------------------------------------------------------------
    \22\ Brian Blase, ``Health Reform Progress: Beyond Repeal and 
Replace,'' Galen Institute, September 2019, https://galen.org/assets/
Health-Reform-Progress-Brian_Blase.pdf; and Brian Blase and Aaron 
Yelowitz, ``Medicaid Deception,'' Wall Street Journal, August 14, 2019, 
https://www.wsj.com/articles/obamacares-medicaid-deception-11565822360.

    In addition, some higher-income people whom surveys record as 
enrolled in Medicaid may be enrolled in other coverage (such as 
marketplace coverage), either because they responded incorrectly to the 
survey questions or because of the way that census studies infer 
Medicaid enrollment for those who don't answer the relevant survey 
---------------------------------------------------------------------------
question.

    Moreover, the OIG audits--particularly those from Kentucky, which 
was the subject of an earlier study based on survey data with similar 
findings--don't show widespread enrollment of people with incomes over 
the poverty line, further debunking the attempt to use survey data as a 
proxy for improper enrollment.
                               conclusion
    Thank you for the opportunity to testify. I look forward to 
responding to your questions.

                                 ______
                                 
          Questions Submitted for the Record to Judith Solomon
             Questions Submitted by Hon. Patrick J. Toomey
    Question. Do you recommend States consistently use current and 
verified wage data as part of their Medicaid eligibility determination 
processes to improve payment accuracy and administrative efficiency?

    Answer. As my written testimony explains, using electronic data to 
verify eligibility is a key component in State efforts to streamline 
their eligibility systems and decrease paperwork. However, when States 
use these data to update information on eligible enrollees, they should 
take steps to avoid ending coverage for people who remain eligible. 
These steps include using multiple methods of communication including 
email and text messages, improving notices which are often confusing 
and unclear about what enrollees need to do to stay covered, 
identifying situations where a change in income may be temporary or may 
not actually affect eligibility, and making it simple for enrollees to 
report changes and respond to notices through on-line portals and 
readily accessible call centers.

    Question. Would you recommend that CMS issue guidance directing 
States to consistently use data sources available at the Federal level, 
such as current employment and income data accessible through the CMS 
Federal Data Services Hub, to accurately verify eligibility for 
Medicaid?

    Answer. Medicaid regulations already require that States use 
information from electronic data sources to the extent the information 
is useful. This includes information from the data hub along with 
information from State wage and unemployment records, SNAP, and other 
public assistance programs (42 CFR Sec. Sec. 435.948 and 435.949).

                                 ______
                                 
                  Question Submitted by Hon. Tim Scott
    Question. Medicaid enrollment has grown substantially in recent 
years, even for non-expansion States. In South Carolina, for instance, 
Medicaid and CHIP enrollment totaled 1,036,851 in August of this year, 
marking a 17.9-percent increase over August 2014 levels. Over the same 
5-year period, the State's population grew by closer to 5 or 6 percent, 
so population growth alone cannot explain the rise in enrollment. 
Furthermore, whereas South Carolina's unemployment rate was at 6.6 
percent in August 2014, it had fallen to 3.2 percent by August 2019, 
representing a drop of more than 50 percent. Our economy is strong, 
with more South Carolinians entering the workforce to pursue 
sustainable opportunities, and yet our State's Medicaid enrollment 
figures remain high.

    While South Carolina's State government takes important steps to 
ensure program integrity and robust eligibility determination 
processes, programmatic growth across the country will increasingly 
spur the need for additional tools, supports, and resources from 
Federal agencies and other key stakeholders as States seek to bolster 
their internal processes.

    I understand that a number of Federal agencies and States 
incorporate current wage data into their eligibility determination 
processes for Medicaid and other government benefit programs. This type 
of data, for instance, is available at no cost to State Medicaid 
agencies through the CMS Federal Data Hub. However, use of this data is 
not a consistent practice. Do you recommend that States consistently 
use current and verified wage data as part of their Medicaid 
eligibility determination processes to improve payment accuracy and 
administrative efficiency? Are there concrete steps that we can take, 
when working with States, to raise awareness of this type of data and 
to encourage effective utilization thereof?

    Answer. Medicaid regulations already require that States use 
information from electronic data sources to the extent the information 
is useful. This includes information from the data hub along with 
information from State wage and unemployment records, SNAP, and other 
public assistance programs (42 CFR Sec. Sec. 435.948 and 435.949).

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
              increase in the number of uninsured children
    Question. There have been an alarming number of reports about 
States taking action to decrease the number of people in their Medicaid 
programs. I think we can all agree about the need to ensure appropriate 
oversight and integrity of the Medicaid program. This is why I am 
concerned about eligible individuals, particularly children, getting 
kicked off of health-care coverage.

    According to the U.S. Census Bureau, about 4.3 million children did 
not have any health coverage in 2018, an increase of 425,000 from 2017. 
That is almost half a million children more uninsured children in just 
one year.

    It is incredible that there was an increase of half a million 
uninsured children, because last year this committee made a bipartisan 
commitment to continue funding for the Children's Health Insurance 
Program (CHIP) for 10 years.

    How unprecedented is this increase of uninsured children--now for 
the second year in a row?

    Answer. Coverage for children began to improve with the enactment 
of the Children's Health Insurance Program in 1997 and the trend 
continued with the enactment of the Affordable Care Act in 2014. The 
past 2 years have unfortunately shown a reversal of this longstanding 
trend.

    Question. Do you know why the United States is seeing this increase 
in uninsured children? Or what policies could be causing this?

    Answer. I agree with most experts that cite three primarily 
reasons: the Trump administration's public charge rule and other 
actions affecting immigrants that have created a chilling effect on 
enrollment for immigrant families even though their children remain 
eligible; the administration's emphasis on increased verification of 
income and other eligibility factors that have increased paperwork and 
made it harder to enroll; and a decrease in resources available for 
outreach and enrollment assistance.

    Question. What should Congress do to address the increase of 
uninsured children?

    Answer. Oversight of the administration's executive actions that 
appear to be increasing the number of uninsured children could lay a 
basis for reversing those actions either legislatively or by a future 
administration. And Congress could provide additional resources for 
outreach and enrollment assistance.
             improving medicaid eligibility determinations
    Question. Earlier this year, Maryland passed a first-in-the-nation 
measure to make it easier for people without health insurance to find 
out if they qualify for low-cost insurance after they file their taxes. 
The new law will create a box for people to check on State income tax 
returns.

    If a taxpayer checks the box, the State's health-care exchange will 
see if the person qualifies for Medicaid or premium tax credits based 
on information in the tax return. Those who qualify for Medicaid will 
be enrolled automatically. The exchange will reach out to people who 
qualify for private coverage.

    Maryland's new program makes it easier, not more difficult, for 
eligible low-
income people to receive coverage through Medicaid. Many individuals do 
not even know they qualify for Medicaid or premium tax credits.

    The audits we are discussing today found that errors in eligibility 
or enrollment were often due to caseworker error, inadequate system 
capacity, and lack of documentation in case files.

    Can you discuss best practices that States can take to both improve 
the accuracy of their eligibility determinations and make sure that 
eligible people are able to stay enrolled?

    Answer. As my written testimony explains, the best way to ensure 
that eligible people can enroll and stay enrolled is by implementing 
continuous eligibility, which allows people to remain covered for a 
year once they're determined eligible unless they move out of State or 
become ineligible based on age. Continuous eligibility is an option for 
children in Medicaid and CHIP and New York and Montana have implemented 
continuous eligibility for adults through a Medicaid waiver. Continuous 
eligibility avoids the churn that results from frequent changes in 
eligibility that occur due to wage volatility and changes in household 
circumstances. Other steps States can take are detailed at pages 7 and 
8 of my written testimony, including improving their written notices, 
using multiple means of communication including email and text 
messages, using on-line portals and readily accessible call centers, 
streamlining verification through the use of electronic databases, and 
using information collected and verified from other programs especially 
SNAP.
     medicaid expansion expanding substance use disorder treatment
    Question. Maryland was one of the initial 26 States that decided to 
expand its Medicaid program to cover individuals making up to 138 
percent Federal Poverty Level. In 2017, almost 300,000 Marylanders 
obtained health-care coverage because of Medicaid expansion.

    Medicaid expansion covers groups who were traditionally left out of 
public health coverage such as low-income adults without children and 
many low-income individuals with substance use disorders, chronic 
mental illness or disabilities, who struggle to maintain well-paid 
jobs, but don't currently meet disability standards for Medicaid.

    For example, Medicaid expansion enabled 1.29 million low-income 
people with substance use disorders in States like mine to gain access 
to coverage that is unavailable to their peers in non-expansion States.

    As many of my colleagues know first-hand, our country and our 
constituents are in the midst of an opioid crisis--something the full 
committee discussed during a hearing on October 24th. However, with 
States taking aggressive administrative actions in the name of 
addressing potential fraud and waste in the Medicaid program, I fear 
eligible adults in need of behavioral health treatment may be impacted 
and left without health coverage.

    Could you speak to the importance that Medicaid Expansion has 
played in getting needed treatment to those with substance use 
disorders and mental health needs?

    Answer. Providing coverage and access to care for these individuals 
has been one of the most significant impacts of Medicaid expansion. For 
example, since Medicaid expansion took effect, the share of opioid-
related hospitalizations in which the patient was uninsured has 
plummeted 79 percent in expansion States, compared to just 5 percent in 
non-expansion States. Before expansion, there was no pathway to 
coverage for most adults needing behavioral health treatment, because 
they were under 65, not caring for a dependent child and didn't meet 
strict disability standards. State resources for treatment were 
limited, and many adults now eligible for Medicaid had unmet needs not 
only for behavioral health care but also co-occurring physical health 
conditions. In contrast, many States now are taking steps through 
Medicaid waivers and other Medicaid options to improve the delivery of 
care to people needing behavioral health treatment. Unfortunately in 
States that haven't expanded large numbers of adults still lack access 
to comprehensive care.

    Question. What would be the impact on this population of people if 
President Trump's policy to eliminate Medicaid expansion went into 
effect?

    Answer. It would be a complete reversal of the gains that have been 
made in addressing unmet treatment needs for a significant number of 
adults with behavioral health conditions making it impossible for 
States to continue the progress they have made and are continuing to 
make to improve their behavioral health systems and increase provider 
capacity.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
                         continuous enrollment
    Question. Constant churning in and out of the health coverage has a 
direct, negative effect on beneficiaries. And it's expensive. That's 
why I introduced the Stabilize Medicaid and CHIP Coverage Act. This 
legislation would provide stability in coverage for all Medicaid and 
CHIP beneficiaries by ensuring 12 months of continuous coverage.

    In your written testimony you state that continuous eligibility is 
the best approach to keeping eligible people enrolled and increasing 
the accuracy of the eligibility process. Can you share more about how 
continuous eligibility works and why it would be the best approach?

    Answer. Continuous eligibility allows people to stay enrolled for a 
year once they are determined eligible unless they leave the State or 
age out of coverage. Continuous eligibility is a State option for 
children in Medicaid and CHIP, and two States--New York and Montana--
have Medicaid waivers allowing them to implement continuous eligibility 
for adults.

    Continuous eligibility avoids the churn that often occurs for low-
income households who experience frequent changes in income and 
household circumstances. Churn disrupts care and is costly for States 
and managed care organizations and other providers. Churn makes it 
harder for health plans to better manage care in order to lower costs 
and improve health care outcomes, working at cross-purposes with value-
based care models that reward providers for care management and 
providing low-cost, high-value services.

    While the Affordable Care Act includes provisions to ensure smooth 
transitions between Medicaid and marketplace coverage, we have found in 
practice these transitions are generally impossible without a gap in 
coverage. For people who do lose eligibility for Medicaid based on 
increased income, aligning Medicaid with calendar year marketplace 
enrollment would make it easier to achieve seamless transitions.

    Question. In your written testimony, you mention the challenges 
that cause edible Medicaid beneficiaries to lose coverage. Can you 
share more about the issues with these predatory tactics that force 
eligible beneficiaries off Medicaid?

    Answer. Many of the problems beneficiaries have in staying enrolled 
are due to inadequate communication, especially confusing written 
notices that don't clearly set out what beneficiaries should do to stay 
enrolled. Often people don't even get the notices because of mail 
delivery issues or out-of-date addresses. And States are only giving 
people 10 days from the date of the written notice to take action, 
which often leaves them just a few days to gather information to show 
they are still eligible. Other issues include difficulty in responding 
to notices because call centers aren't accessible due to call volume or 
inadequate hours for people who work and State failure to follow up on 
mail that is returned to them.
                       bureaucratic requirements
    Question. The new Georgetown Center for Children and Families 
report released on October 30th, highlights some incredibly concerning 
trends as it relates to the uninsured rate for children. According to 
the new Georgetown Center for Children and Families report, over the 
past 2 years, the number of uninsured children nationwide increased by 
more than 400,000. That number includes 29,000 more uninsured children 
from my home State of Ohio. That's a 27.9 percent increase in the 
number of uninsured Ohio children between 2016 and 2018.

    Can you please elaborate on how these bureaucratic requirements and 
complex eligibility checks prevent eligible families from receiving the 
health services and benefits?

    Answer. My answer to question #2 above details the issues that are 
often leading to loss of coverage and illustrate the importance of 
continuous eligibility to combat churn and loss of coverage. Other 
factors that are leading to the increase in uninsured children are fear 
in the immigrant community due to the Trump administration's public 
charge rule and other anti-immigrant actions and decreased resources 
for outreach and enrollment assistance.

                                 ______
                                 
              Prepared Statement of Hon. Debbie Stabenow, 
                      a U.S. Senator From Michigan
    Thank you, Mr. Chairman, for holding this hearing today.

    Welcome to our witnesses, and thank you for being here.

    Today's hearing will focus on Medicaid eligibility and enrollment. 
Where we have issues with eligibility and enrollment, we need to fix 
them. We should all be able to agree on that. But right now, the number 
one threat to Americans who qualify for--and would like to enroll in--
Medicaid is the Trump administration.

    Any day now, the Fifth Circuit Court of Appeals will rule on the 
Texas v. United States case. Everything is at stake here, including 
protections for people with pre-existing conditions, coverage for 
preventive services like cancer screenings, the ability for children to 
remain on their parents' health plans until age 26--and the entire 
Medicaid expansion that covers 17 million Americans.

    Thanks to a detailed evaluation by the University of Michigan, we 
know the facts about what Medicaid expansion, which we call the Healthy 
Michigan Plan, has meant for the 654,000 people covered in my State. 
Those with Healthy Michigan coverage not only have better health care 
outcomes, they are better able to work and to seek employment. The 
expansion created more than 30,000 new jobs, and increased economic 
activity is creating $150 million in new tax revenue.

    Uncompensated care at Michigan hospitals has been cut in half. That 
keeps private insurance rates down, and helps our hospitals in rural 
areas stay open.

    So I repeat--if the Trump administration succeeds in the Fifth 
Circuit Court case and strikes down the ACA, the expansion is gone, and 
millions of Americans lose their health care entirely. Instead of 
attacking the Medicaid expansion in court, this administration should 
be focusing on the real Medicaid crisis: 17 States still have not 
expanded their Medicaid program.

    Millions of Americans living in those States are caught in what is 
called the ``coverage gap,'' unable to enroll in Medicaid expansion or 
afford comprehensive health insurance.

    Senator Warner has a bill, which I am proud to cosponsor, that 
would allow States that expand Medicaid now the same full Federal 
matching funds as States that expanded earlier. The Senate should pass 
that bill so millions more Americans have coverage. Unfortunately, the 
court case and the ``coverage gap'' are not the only threats to 
Medicaid eligibility and enrollment right now.

    I ask unanimous consent to submit an article from last week's New 
York Times titled: ``Medicaid Covers a Million Fewer Children. Baby 
Elijah Was One of Them.'' The first paragraph reads: ``The baby's lips 
were turning blue from lack of oxygen in the blood when his mother, 
Kristin Johnson, rushed him to an emergency room here last month. Only 
after he was admitted to intensive care with a respiratory virus did 
Ms. Johnson learn that he had been dropped from Medicaid coverage.''

    So why was Elijah dropped from coverage? Was he found ineligible? 
Was this a case of fraud?

    No. According to The New York Times, Ms. Johnson missed a 10-day 
window for providing proof of income to the State. That might be why 
Elijah lost Medicaid coverage even though he qualified for it.

    The story continued: ``All of her children are now re-enrolled. But 
she has started receiving thousands of dollars in bills from the baby's 
hospital stay--bills she is counting on Medicaid to cover 
retroactively. And she is haunted by what might have happened if the 
hospital where she took Elijah had considered the case non-urgent and 
turned them away.''

    ``I went to the ER thinking he had insurance,'' she said. ``If the 
receptionist had not seen him turning blue, she might have just said, 
`He's not covered, so we can't see him today.' I do think about that.''

    After decades of progress toward universal coverage for children, 
the United States reached an all-time low uninsured rate of under 5 
percent in 2016. However, since then, we have been moving in the wrong 
direction. Thanks to complex enrollment policies pushed by the Trump 
administration and implemented by States, children, adults, and entire 
families are losing lifesaving health coverage they qualify for. Ms. 
Johnson only had 10 days to reconcile with the State before her child 
was kicked off Medicaid.

    In some States, if you move, and a piece of mail from the State 
Medicaid office gets returned from your old address, you lose your 
coverage. In other words, the Trump administration is building a wall 
of paperwork to keep people from seeing their doctors.

    So today, as we discuss ways to make sure that ineligible people 
aren't being enrolled in Medicaid, I hope we will also take a hard look 
at policies that are actually kicking eligible children and families 
off of their health insurance.

    I look forward to having this discussion.

    Thank you.

                                 ______
                                 

               From The New York Times, October 22, 2019

 Medicaid Covers a Million Fewer Children. Baby Elijah Was One of Them

                By Abby Goodnough and Margot Sanger-Katz

Officials point to rising employment, but the uninsured rate is 
climbing as families run afoul of new paperwork and as fear rises among 
immigrants.

HOUSTON--The baby's lips were turning blue from lack of oxygen in the 
blood when his mother, Kristin Johnson, rushed him to an emergency room 
here last month. Only after he was admitted to intensive care with a 
respiratory virus did Ms. Johnson learn that he had been dropped from 
Medicaid coverage.

The 9-month-old, Elijah, had joined a growing number of children around 
the country with no health insurance, a trend that new Census Bureau 
data suggests is most pronounced in Texas and a handful of other 
states. Two of Elijah's older siblings lost Medicaid coverage two years 
ago for reasons Ms. Johnson never understood, and she got so stymied 
trying to prove their eligibility that she gave up.

``I've been on this emotional roller coaster,'' Ms. Johnson, 34, said 
of Elijah's loss of coverage, an error that happened apparently because 
she didn't respond quickly enough to a letter asking for new proof of 
income. ``It's been a very scary month.''

Nationwide, more than a million children disappeared from the rolls of 
the two main state-federal health programs for lower-income children, 
Medicaid and the Children's Health Insurance Program, between December 
2017 and June, the most recent month with complete data.

Some state and federal officials have portrayed the drop--3 percent of 
enrolled children--as a success story, arguing that more Americans are 
getting coverage from employers in an improving economy. But there is 
growing evidence that administrative changes aimed at fighting fraud 
and waste--and rising fears of deportation in immigrant communities--
are pushing large numbers of children out of the programs, and that 
many of them are now going without coverage. The declines are 
concentrated in a minority of states; in other places, public coverage 
has actually increased.

An analysis of new census data by The New York Times shows the number 
of children in the United States without any kind of insurance rose by 
more than 400,000 in a two-year period, between 2016 and 2018, after 
decades of progress toward universal coverage for children.

Some of the states that saw the largest increases in uninsured 
children--like Tennessee and Texas--were those that created rules to 
check the eligibility of families more frequently or that reset their 
lists with new computer systems. In some states with large immigrant 
populations like Florida, doctors and patient advocates report growing 
concern among parents that signing up their children (who are citizens) 
may hurt their own chances of getting a green card or increase their 
risk of deportation.

When asked about the drop in Medicaid enrollment, government officials 
tend to point first to the improved economy, which has undoubtedly 
enabled some families to gain jobs with private insurance.

``Unemployment remains low, wage growth is up, and we now see fewer 
people relying on public assistance,'' Seema Verma, the administrator 
of the Centers for Medicare and Medicaid Services, wrote on Twitter in 
April. ``That's something to celebrate.''

In many states with large declines, like Tennessee and Missouri, 
officials cited the stronger job market.

Kelli Weldon, a spokeswoman for the Texas Health and Human Services 
Commission, cited ``record-low unemployment levels'' for its 
contraction in Medicaid enrollment.

But the census analysis also shows increases in the rate of uninsured 
children in states with enrollment declines, including Tennessee, 
Texas, Idaho and Utah.

In Texas, the number of uninsured children rose by around 120,000 
between 2016 and 2018. State officials increased paperwork requirements 
in 2014 for families covered under both Medicaid and CHIP, which serves 
children whose income is slightly higher than Medicaid's.

Instead of checking eligibility once a year, as many states do, Texas 
enrolls children for six months and then checks databases for four 
consecutive months to ensure family income is still low enough to 
qualify. If the databases show the income has gone over the limit, 
families are notified by mail and have 10 days to prove otherwise or 
lose Medicaid.

A bipartisan bill in the state legislature this spring sought to make 
income checks annual again after data suggested several thousand 
eligible children were being dropped from Medicaid each month, but it 
never got a vote.

Other states have also begun checking family incomes more often, or 
removing families who may have moved if mail is returned to the state.

``The way they are doing this seems clearly designed to throw people 
off this program,'' said Eliot Fishman, a senior director at the 
consumer group Families USA, who was a top Medicaid official in the 
Obama administration.

When Tennessee updated its enrollment computer system in 2016, it 
generated thousands of errors. Medicaid and CHIP enrollment in the 
state has declined by more than 55,000 children since January 2018, 
according to the Georgetown Center for Children and Families.

Tennessee's Medicaid director, Gabe Roberts, said that besides the 
improved economy, the decline in enrollment was a result of updating 
the computer system and clearing up a backlog of old cases.

Gordon Bonnyman, co-founder of the Tennessee Justice Center, which has 
been helping families struggling with lost coverage, was skeptical, 
saying the state response has revealed ``a remarkable lack of curiosity 
about what happened to these kids.''

The census shows that about 25,000 more children there have become 
uninsured since 2016.

A large body of evidence shows that Medicaid coverage for children has 
lasting effects on their lives, improving their health, educational 
attainment and even adult earnings. In 2010, the Affordable Care Act 
made it easier for states to check whether families qualified for 
Medicaid without requiring them to fill out paperwork, a strategy 
proven to increase coverage rates. The A.C.A. also made it harder for 
states to expel poor families for paperwork errors.

The changes helped the uninsured rate among children reach its lowest 
level ever in 2016, with fewer than 5 percent without coverage.

Trump administration officials have not explicitly tried to limit 
children's Medicaid coverage. But Ms. Verma has repeatedly encouraged 
state officials to safeguard ``program integrity,'' by doing more 
vigorous checks of enrollees' eligibility. More recently, her office 
reviewed the reductions and concluded that problems with state computer 
systems may be a factor in some places.

``While the economy is the most consistent driver of enrollment that we 
observed, we have found evidence that other more state-specific factors 
may be driving individual state experiences,'' an agency spokesman, 
Johnathan Monroe, said in an email.

Medicaid and CHIP eligibility does depend on household income, meaning 
that, as wages rise, some families may be earning too much to qualify. 
Yet the patterns in coverage suggest reasons beyond improved finances. 
In Tennessee, for example, the biggest declines in Medicaid enrollment 
have come in counties with the highest unemployment rates, a Justice 
Center analysis found.

History has shown that when states require more paperwork from Medicaid 
beneficiaries, more eligible people fall through the cracks. Medicaid 
beneficiaries tend to move often; to have unstable hours and incomes; 
and to have literacy challenges that can make it hard to submit 
detailed renewal packages or verify their incomes frequently.

The specter of a pending ``public charge'' rule--which could penalize 
green card applicants who use public benefits like Medicaid--is causing 
many immigrant patients to decline enrollment, according to a Kaiser 
Family Foundation survey of community health centers. This month a 
federal judge temporarily blocked that rule from taking effect.

Texas leads the nation in the number of uninsured children and adults. 
In Houston, Maricela, a single mother, had carefully filled out the 
paperwork to re-enroll her younger two children, both citizens, in 
Medicaid every year since they were born--until now. A permanent 
resident from El Salvador who earns minimum wage as a hotel maintenance 
worker, she was so worried about jeopardizing her status that she 
decided to let their coverage lapse in August. Because of the 
deportation risk, she agreed to share only her first name.

``My worst fear is that I could end up without my legal status and be 
separated from my children,'' Maricela said this month at Epiphany 
Community Health Services, a nonprofit group that helps people find 
health coverage. ``That would be fatal for me.''

Her older son, 11, has asthma; at his last doctor's visit before his 
coverage ended, she pleaded for extra medicine. His main treatment, a 
generic version of Singulair, could cost $150 a month without 
insurance. Listening to him cough at night, she finally decided to take 
the risk and re-enroll both boys in Medicaid.

``I had to do it,'' she said, ``But I'm afraid.''

Dr. Sogol Pahlavan, a Houston pediatrician, said the rate of her 
patients on Medicaid dropped to 70 percent in 2018, from 75 percent a 
year earlier. She is part of a practice that has 10,000 patients, and 
the number of uninsured has grown commensurately, with families citing 
both the impending public charge rule and administrative hurdles.

``It's definitely going to affect the community, because somebody 
ultimately has to bear that cost,'' she said. ``These kids are still 
here; their chronic disease isn't going away just because they're 
losing health coverage.''

For Ms, Johnson, Elijah's stay at Texas Children's Hospital led to an 
appointment with an enrollment counselor who helped her try to figure 
out what had happened. Trying to re-enroll her older children earlier 
this year, she was asked for proof of income and missed the 10-day 
window to provide it; that may be why Texas dropped Elijah from 
Medicaid even though he qualified because he was a baby.

All of her children are now re-enrolled. But she has started receiving 
thousands of dollars in bills from the baby's hospital stay--bills she 
is counting on Medicaid to cover retroactively. And she is haunted by 
what might have happened if the hospital where she took Elijah had 
considered the case non-urgent and turned them away.

``I went to the E.R. thinking he had insurance,'' she said. ``If the 
receptionist had not seen him turning blue, she might have just said, 
`He's not covered, so we can't see him today.' I do think about that.''

                                 ______
                                 
John Bel Edwards                                Rebekah E. Gee, MD, MPH
GOVERNOR                                                      SECRETARY

                           State of Louisiana

                     Louisiana Department of Health

                        Office of the Secretary

                           Bienville Building

                           628 N. Fourth St.

                              P.O. Box 629

                   Baton Rouge, Louisiana 70821-0629

                         Phone: (225) 342-9500

                          Fax: (225) 342-5568

                          https://ldh.la.gov/

October 28, 2019

The Honorable Patrick J. Toomey
Chairman
U.S. Senate
Committee on Finance,
Subcommittee on Health Care
219 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Debbie Stabenow
Ranking Member
U.S. Senate
Committee on Finance,
Subcommittee on Health Care
219 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Toomey and Ranking Member Stabenow:

As Louisiana's Secretary of Health and a practicing physician, I take 
seriously my constitutional charge to promote the health and welfare of 
Louisiana's people, while also responsibly managing the taxpayer 
dollars used to fund our programs, especially the state's Medicaid 
program, which serves 1.6 million Louisianans. Every day, we work to 
promote better health for our people and I am exceptionally proud of 
the work we have done to increase access to health care through our 
Medicaid expansion.

Governor John Bel Edwards' decision to expand Medicaid in 2016 resulted 
in more than 450,000 Louisiana residents gaining coverage and access to 
lifesaving health care. Louisiana's low income working residents can 
now see a primary care doctor when needed and receive preventive 
screenings. The results are life changing for our residents--76,000 
women have received mammograms, 43,000 individuals have received colon 
cancer screening and more than 100,000 people have received mental 
health or substance use disorder treatment.

The Medicaid expansion in Louisiana is saving lives.

In addition to significant physical and mental health benefits for our 
residents, the Medicaid expansion has had significant fiscal benefits 
for our state. By expanding Medicaid, Governor Edwards brought our 
federal tax dollars home, contributing to our state's economic growth. 
An analysis by Louisiana State University estimates that Medicaid 
expansion created more than 14,000 jobs in our state. And while our 
neighboring states have seen waves of rural hospital closures, not a 
single rural hospital has shuttered its doors during Governor Edwards' 
administration, which benefits everyone living in our rural 
communities. It comes as no surprise that, in a statewide survey, 76 
percent of Louisiana residents said they approve of Medicaid expansion.

Thanks to Medicaid expansion, Louisiana has its lowest uninsured rate 
ever, which at 8 percent is below the national average. In order to 
promote the health and welfare of Louisianans, we need to build upon 
the success of the Medicaid expansion and continue to foster a culture 
of health coverage.

While we've expanded Medicaid to working adults, our department also 
maintains a culture of continuous quality improvement and is diligently 
working to ensure proper use of Medicaid dollars. Through the federal 
Centers for Medicare and Medicaid Services, the Trump Administration 
has acknowledged our success in this arena.

We appreciate the ongoing partnership we have with CMS, especially as 
we have undertaken the modernization of Louisiana's legacy eligibility 
system, which was the single largest technology implementation in our 
state government's history. Our new system is a powerful tool for 
managing program eligibility and, as a result of this implementation, 
Louisiana is doing more than it ever has to root out fraud, waste and 
abuse and to ensure that those who are eligible are the ones getting 
Medicaid.

The Louisiana Legislative Auditor, despite knowing the Louisiana 
Department of Health was implementing more robust technology, released 
a report last fall pertaining to wage verification, just weeks before 
our new automated eligibility system went into place. That report on 
our outdated prior system has been widely misrepresented. Several 
reputable nonpartisan health policy organizations--such as the 
Georgetown Center for Children and Families and the Center on Budget 
and Policy Priorities--agree.

We have been careful to look at how our new system can improve on the 
Department's ability to make timely and accurate eligibility systems, 
while also reducing churn and ensuring procedural reasons are not the 
reason for loss of coverage. Like the dozens of other states who have 
implemented new technologies for Medicaid enrollment, Louisiana is 
continuously learning and improving as we adapt to our new system.

The fact is that never in the history of Louisiana have we had more 
tools to ensure proper eligibility for Medicaid participants. And never 
in the history of our state have we done more to ensure that hard 
working Louisianans have access to the health care they need to thrive.

Please do not hesitate to reach out if the Committee has questions or 
if the Department and I can be of assistance to you in any way.

Sincerely,

Rebekah E. Gee, MD, MPH
Secretary
Louisiana Department of Health

                                 ______
                                 
             Prepared Statement of Hon. Patrick J. Toomey, 
                    a U.S. Senator From Pennsylvania
    Welcome to the Senate Finance Subcommittee on Health Care hearing 
``Medicaid: Compliance With Eligibility Requirements.''

    It is my pleasure to welcome our four witnesses today as we discuss 
recent evidence of eligibility errors in the Medicaid expansion 
population and other issues surrounding State compliance with Federal 
eligibility requirements. Our panel contains several nonpartisan, 
government officials that have performed research relevant to today's 
topic.

    I look forward to hearing from them.

    But first, I want to set the stage with a few staggering 
statistics:

        The Federal Government improperly spent over $36 billion in 
the Medicaid program, giving the program an improper payment rate of 10 
percent;

        It accounted for about 26 percent of government-wide improper 
payments in that fiscal year, that was last year;

        Federal taxpayers spent almost $12 billion on ineligible 
Medicaid recipients; and

        Over the next 10 years, the expansion population alone will 
cost taxpayers a total of $925 billion.

    Here's why this matters: Medicaid spending is already on an 
unsustainable path. Every decade since it was created, Medicaid has 
grown faster than our economy, a trend the Congressional Budget Office 
(CBO) projects to continue under current law. It is now a major driver 
of our Federal deficits and debt. And this trajectory cannot continue 
in perpetuity without eventually causing a crisis.

    Unfortunately, Medicaid's financial condition has worsened in the 
last decade because Obamacare created a new category of eligibility--
working age, able-bodied, childless adults--and gave States a huge 
financial incentive to cover these working-age individuals over the 
traditional populations, which are the disabled, the indigent, and the 
elderly poor.

    For every working-age able-bodied adult it enrolls, a State gets 90 
cents on the dollar, but just about 60 cents when it enrolls a disabled 
individual.

    It doesn't take a math wizard to figure out how States can game 
this formula.

    Making matters worse, in 2014 the Obama administration stopped 
auditing States' eligibility determinations. Payment Error Rate 
Measurement, or PERM audits, gave Congress insight into each State's 
eligibility errors. Without these reports, we don't have an complete 
picture of the Medicaid improper payment rate, meaning the estimated 30 
percent of improper payments due to eligibility errors could in fact be 
much higher--resulting in much more perhaps than the $36 billion of 
taxpayer money being spent improperly.

    Ensuring a taxpayer benefit like Medicaid goes to the intended 
recipient shouldn't be a partisan issue.

    States must do a better job of adhering to Federal eligibility 
requirements and the Federal Government must do a better job enforcing 
the law.

    Given the precarious financial condition of Medicaid, if we can't 
stop eligibility errors today, this safety net for millions of elderly 
and disabled may not be there for future generations.

                                 ______
                                 
    Prepared Statement of Carolyn L. Yocom, Director, Health Care, 
                    Government Accountability Office
October 30, 2019

    Medicaid Eligibility: Accurate Beneficiary Enrollment Requires 
           Improvements in Oversight, Data, and Collaboration

Why GAO Did This Study

Medicaid, a joint Federal-State health-care program, is one of the 
Nation's largest sources of funding for medical and other health-
related services for tens of millions of low income and medically needy 
individuals. In fiscal year 2018, estimated Federal and State 
expenditures for Medicaid were $629 billion. The size and complexity of 
Medicaid make the program particularly vulnerable to improper 
payments--including payments made for people not eligible for Medicaid.

States have significant flexibility to design and implement their 
Medicaid programs based on their unique needs. These programs are 
administered at the State level, overseen at the Federal level by CMS, 
and jointly funded by the States and Federal Government. The Federal 
Government matches most State expenditures for Medicaid services based 
on a statutory formula. Under the Patient Protection and Affordable 
Care Act, States have the option to expand their Medicaid programs to 
cover nearly all adults with incomes at or below 133 percent of the 
Federal poverty level. States that choose to expand their programs 
receive a higher Federal matching rate for the Medicaid expansion 
enrollees.

This testimony will cover improvements needed to ensure accurate 
eligibility determinations and focuses on (1) CMS's oversight of 
Medicaid eligibility and related expenditures; (2) CMS's efforts to 
improve Medicaid data; and (3) other opportunities to improve oversight 
and ensure appropriate enrollment. This testimony is generally based on 
GAO findings and recommendations on the Medicaid program issued from 
2015 through 2018, and steps taken to address them through September 
2019.

What GAO Found

The Centers for Medicare and Medicaid Services (CMS) has taken steps to 
improve its oversight of the Medicaid program; however, GAO has 
identified areas where additional actions could improve program 
oversight and ensure that only eligible individuals are enrolled in the 
Medicaid program. These actions include closing gaps in oversight of 
eligibility determinations and related expenses, improving data, and 
furthering Federal-State collaboration.

Gaps in oversight of Medicaid eligibility determinations and related 
expenses. Since 2014, CMS has not estimated improper payments due to 
erroneous eligibility determinations; it plans to report these 
estimates in November 2019. GAO found that for fiscal year 2017 
Medicaid expansion enrollees accounted for nearly a quarter of all 
Medicaid enrollees and Federal Medicaid expenditures. GAO's prior work 
has identified gaps in CMS oversight, which affects the Federal match. 
An accurate determination of eligibility is critical to ensuring that 
only eligible individuals are enrolled, that they are enrolled in the 
correct eligibility group, and that States' expenditures are 
appropriately matched with Federal funds for Medicaid enrollees. GAO 
recommended that CMS conduct reviews of Federal Medicaid eligibility 
determinations to ascertain their accuracy and institute corrective 
actions where necessary, and revise the sampling methodology for 
reviewing expenditures for the expansion population. CMS concurred with 
these recommendations, though has since indicated that it will not 
revise the sampling methodology. We continue to believe that additional 
steps are needed to fully implement these recommendations.

Better Medicaid data. Improvements in Medicaid data could aid program 
oversight to ensure that only eligible beneficiaries are enrolled. CMS 
officials acknowledged the need for improved data and cited the 
Transformed Medicaid Statistical Information System (T-MSIS) initiative 
as its primary effort--conducted jointly with States--to improve the 
collection of Medicaid expenditure and utilization data. According to 
CMS officials, aspects of T-MSIS are designed to broaden the scope and 
improve the quality of State-reported data, as well as the data's 
usefulness to States. GAO made a series of recommendations related to 
T-MSIS. CMS concurred with the recommendations, but some have not been 
fully implemented, including expediting the use of T-MSIS data for 
oversight, and outlining a plan and associated time frames for using 
the data for oversight.

Further Federal-State collaboration needed for oversight and 
appropriate enrollment. GAO has previously reported that collaborative 
activities between the Federal Government and the States are important 
to improving oversight of the Medicaid program. CMS has ongoing efforts 
to engage State agencies and others through a national Medicaid 
training program for State officials and partnerships to combat 
Medicaid fraud. Recently, steps were taken to better enable State 
auditors to audit States' eligibility determinations to ensure 
beneficiaries qualify for the Medicaid program and are enrolled in the 
correct eligibility group. GAO has previously suggested that CMS could 
leverage the unique qualifications of State auditors and help improve 
program integrity by further providing State auditors with a 
substantive and ongoing role in auditing State Medicaid programs.
_______________________________________________________________________

    Chairman Toomey, Ranking Member Stabenow, and members of the 
subcommittee:

    I am pleased to be here today to discuss the importance of ensuring 
that only eligible individuals are enrolled in the Medicaid program. 
This Federal-State program is one of the Nation's largest sources of 
funding for medical and other health-related services for over 75 
million low-income and medically needy individuals. In fiscal year 
2018, estimated Federal and State Medicaid expenditures for Medicaid 
were $629 billion. The size and complexity of Medicaid make the program 
particularly vulnerable to improper payments--including payments made 
for people not eligible for Medicaid. In fiscal year 2018, the national 
Medicaid improper payment estimate was approximately $36 billion--
nearly 10 percent of Federal Medicaid expenditures. Due to concerns 
about the adequacy of fiscal oversight, Medicaid has been on our list 
of high-risk programs since 2003.\1\
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    \1\ GAO, High-Risk Series: Substantial Efforts Needed to Achieve 
Greater Progress on High-Risk Areas, GAO-19-157SP (Washington, DC: 
March 6, 2019).

    The Medicaid program is a partnership between the Federal 
Government and the States, with the Federal Government matching most 
State expenditures for Medicaid services on the basis of a statutory 
formula known as the Federal Medical Assistance Percentage (FMAP).\2\ 
Within broad Federal requirements, States have significant flexibility 
to design and implement their programs based on their unique needs, 
resulting in over 50 distinct State Medicaid programs.\3\ These 
programs are administered at the State level and overseen at the 
Federal level by the Centers for Medicare and Medicaid Services (CMS), 
within the Department of Health and Human Services (HHS).
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    \2\ The FMAP is calculated using a statutory formula based on the 
State's per capita income, with the Federal Government paying a larger 
portion of Medicaid expenditures in States with low per capita incomes 
relative to the national average, and a smaller portion for States with 
higher per capita incomes.
    \3\ Medicaid programs are administered by the 50 States, the 
District of Columbia, American Samoa, Guam, the Commonwealth of the 
Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

    The Patient Protection and Affordable Care Act (PPACA) gave States 
the option to expand their Medicaid programs by covering nearly all 
adults with incomes at or below 133 percent of the Federal poverty 
level (FPL) beginning January 1, 2014.\4\ States choosing to expand 
their programs receive a higher Federal matching rate for these 
Medicaid expansion enrollees.\5\ PPACA also includes a new approach to 
assessing individuals' financial eligibility for Medicaid.
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    \4\ Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the 
Health Care and Education Reconciliation Act of 2010 (HCERA), Pub. L. 
No. 111-152, 124 Stat. 1029 (2010). For purposes of this report, 
references to PPACA include the amendments made by HCERA. PPACA also 
permitted an early expansion option, whereby States could expand 
eligibility for this population, or a subset of this population, 
starting on April 1, 2010.
    \5\ In this testimony, Medicaid expansion enrollees refer to (1) 
individuals who would not have been eligible under the rules in effect 
on December 1, 2009, and whose coverage began after their State opted 
to expand Medicaid as authorized by PPACA; and (2) individuals who were 
not traditionally eligible, but were covered by Medicaid under a State-
funded program or pre-existing State demonstration as of December 1, 
2009, in States that subsequently opted to expand Medicaid as 
authorized under PPACA.

    My testimony today will cover improvements needed to ensure 
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accurate beneficiary enrollment and will focus on:

        1.  CMS oversight of Medicaid eligibility and related 
        expenditures;

        2.  CMS's efforts to improve Medicaid data; and

        3.  Other opportunities to improve Medicaid oversight and 
        ensure appropriate enrollment.

    My remarks are based on our large body of work examining the 
Medicaid program, specifically our reports issued and recommendations 
made from 2015 through 2018, and steps HHS and CMS have taken to 
address these recommendations through September 2019. Those reports 
provide further details on our scope and methodology. (See app. I for 
selected recommendations and a list of related GAO reports at the end 
of this statement.) For further context, my remarks reference the most 
recently available data from CMS on Medicaid beneficiary enrollment and 
expenditures, including enrollment and expenditures for Medicaid 
expansion enrollees in fiscal year 2017, information reported by State 
auditors, and the Office of Management and Budget's (OMB) 2019 
Compliance Supplement. We conducted all of the work on which this 
statement is based in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.
                               background
    The Federal Government and States share responsibility for the 
financing and administration of the Medicaid program. With regard to 
financing, Medicaid is funded jointly by the Federal Government and 
States, with FMAP rates ranging from a statutory minimum of 50 percent 
to a statutory maximum of 83 percent. Under PPACA, expenditures for 
Medicaid expansion enrollees are matched at 90 percent for fiscal year 
2020.

    Program administrative responsibilities are shared between States 
and the Federal Government. State administrative responsibilities 
include, among other things, determining eligibility, enrolling 
beneficiaries, and adjudicating claims. With regard to eligibility, 
States are primarily responsible for verifying eligibility and 
enrolling Medicaid beneficiaries. These responsibilities include

          Verifying and validating individuals' eligibility at the 
        time of application and periodically thereafter,

          Accurately assigning enrollees to the appropriate 
        eligibility group, and

          Promptly disenrolling individuals who are not eligible.\6\
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    \6\ Factors that States verify include, among others, citizenship, 
immigration status, age (date of birth), Social Security number, 
income, residency, and household composition.

    PPACA requires States to use third-party sources of data to verify 
eligibility to the extent practicable. Consequently, States have had to 
make changes to their eligibility systems, including implementing 
electronic systems for eligibility determination and coordinating 
systems to share information.\7\ In addition, States have had to make 
changes to reflect new sources of documentation and income used for 
verification. In certain circumstances, States may delegate 
responsibility to the Federal Government to make eligibility 
determinations.
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    \7\ For additional information on States' changes to their 
eligibility systems, see GAO, Medicaid: Federal Funds Aid Eligibility 
IT System Changes, but Implementation Challenges Persist, GAO-15-169 
(Washington, DC: December 12, 2014).

    At the Federal level, CMS is responsible for overseeing States' 
design and operation of their Medicaid programs and ensuring that 
Federal funds are appropriately spent. CMS oversees State enrollment of 
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beneficiaries and reporting of expenditures. For example:

          CMS reviews and approves States' Medicaid eligibility 
        verification plans, which rely primarily on information 
        available through data sources--including Federal data sources 
        such as the Social Security Administration and the Internal 
        Revenue Services, or State data sources such as State tax 
        records or unemployment information--rather than paper 
        documentation from families.

          CMS has various review processes in place to ensure that 
        expenditures reported by States are supported and consistent 
        with Medicaid requirements. The agency also has processes to 
        check whether the correct Federal matching rates were applied 
        only to expenditures receiving a higher than standard Federal 
        matching rate, which can include certain types of services and 
        populations.

          CMS estimates Medicaid improper payments, including improper 
        payments due to erroneous beneficiary eligibility 
        determinations. Although CMS has not calculated the improper 
        payments related to beneficiary eligibility determinations 
        since 2014, it plans to begin reporting this estimate in 
        November 2019.
         cms oversight of medicaid eligibility determinations 
                   and related expenditures has gaps
    Our previous work has identified gaps in CMS oversight of Medicaid 
eligibility determinations, which affect the Federal matching rate. An 
accurate determination of eligibility is critical to ensuring that only 
eligible individuals are enrolled, that they are enrolled in the 
correct eligibility group, and that States' expenditures are 
appropriately matched with Federal funds for Medicaid enrollees. The 
implications of inaccurate eligibility determinations can be 
significant, especially given the growth in enrollment and spending of 
the expansion population, which represented nearly one quarter of 
program enrollment and Federal expenditures in fiscal year 2017.\8\ 
(See fig. 1.)
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    \8\ Our analysis of Medicaid expansion enrollment excludes totals 
reported by the U.S. territories of American Samoa, Guam, the 
Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. 
Virgin Islands. Federal Medicaid expenditure totals exclude New York, 
which had a significant adjustment from the prior period in fiscal year 
2017.

[GRAPHIC] [TIFF OMITTED] T0309.012


     Notes: Figure excludes totals reported by the U.S. territories of 
American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, 
Puerto Rico, and the U.S. Virgin Islands. Federal expenditure totals 
exclude New York, which had a significant adjustment from the prior 
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period in fiscal year 2017.

     Enrollment data represent enrollment for the month of September 
2017, the last month of fiscal year 2017.

     Traditionally eligible enrollees are eligible under historic 
eligibility categories.

     Expansion enrollees are (1) individuals whose coverage began after 
their State opted to expand Medicaid as authorized by the Patient 
Protection and Affordable Care Act (PPACA), and (2) individuals who 
were not traditionally eligible, but were covered for Medicaid under a 
State-funded program or a State demonstration as of December 1, 2009 in 
States that subsequently opted to expand Medicaid as authorized by 
PPACA.

    In September 2016, we reported on our undercover testing for 
determining Medicaid eligibility and the vulnerabilities we found.\9\ 
We found weaknesses that led to inaccurate eligibility determinations. 
For example, three of eight fictitious applications we submitted to 
Federal and State marketplaces were approved for Medicaid, despite 
having identity information that did not match Social Security 
Administration records.\10\ These results, while illustrative of the 
challenges of assuring accurate eligibility determinations, cannot be 
generalized.
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    \9\ See GAO, Patient Protection and Affordable Care Act: Final 
Results of Undercover Testing of the Federal Marketplace and Selected 
State Marketplaces for Coverage Year 2015, GAO-16-792 (Washington, DC: 
September 9, 2016). To do this testing, we submitted eight fictitious 
applications through Federal marketplaces for two States and States' 
marketplaces in two States in 2015. All four States' Medicaid programs 
had expanded eligibility. Our testing also included attempts to obtain 
other subsidized health-plan coverage in addition to Medicaid.
    \10\ PPACA provides for the establishment of health insurance 
marketplaces to assist consumers in comparing and selecting among 
insurance plans offered by participating private insurers of health-
care coverage. Under PPACA, States may elect to operate their own 
health-care marketplaces, or they may rely on the Federal Health 
Insurance Marketplace, known to the public as HealthCare.gov.

    With respect to CMS's reviews of eligibility determinations, in 
2015, we also found that CMS did not review Federal Medicaid 
eligibility determinations in the States that delegated such authority 
to the Federal Government.\11\ Based on our findings, we made the 
following recommendations.
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    \11\ GAO, Medicaid: Additional Efforts Needed to Ensure That State 
Spending Is Appropriately Matched With Federal Funds, GAO-16-53 
(Washington, DC: October 16, 2015).

          CMS should use information obtained from State and Federal 
        eligibility reviews to inform the agency's review of 
        expenditures for different eligibility groups in order to 
        ensure that expenditures are reported correctly and matched 
        appropriately. In February 2019, we considered this 
        recommendation implemented, as CMS confirmed that it was 
        sharing information between its eligibility reviews and 
        quarterly expenditure reviews regarding Medicaid expansion 
        enrollees.\12\
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    \12\ States report data on their aggregate expenditures to CMS, 
which then uses that data to reimburse States for the Federal share of 
program spending. CMS conducts quarterly expenditure reviews of this 
State-reported data. The CMS-64 is used to collect State-reported data 
on aggregate expenditures. These data are used to reimburse States for 
the Federal share of program spending.

          CMS should conduct reviews of Federal Medicaid eligibility 
        determinations to ascertain their accuracy and institute 
        corrective action plans where necessary. CMS has taken some 
        action to review Federal eligibility determinations; however, 
        until the review results are publicly reported, which CMS 
        expects to occur in November 2019, this recommendation is not 
        fully implemented. We will continue to monitor CMS's 
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        implementation of this recommendation.

    In August 2018, we reported that improvements in oversight of State 
expenditures could help CMS ensure that individuals are enrolled in the 
correct Medicaid eligibility group.\13\ CMS processes for reviewing 
expenditures reported by States and FMAP rates collectively have had a 
considerable Federal financial benefit, with CMS resolving errors that 
reduced Federal spending by over $5.1 billion in fiscal years 2014 
through 2017. However, we identified weaknesses in how CMS targets its 
resources to address risks when reviewing whether States' expenditures 
are supported and consistent with Medicaid requirements. For example:
---------------------------------------------------------------------------
    \13\ See GAO, Medicaid: CMS Needs to Better Target Risks to Improve 
Oversight of Expenditures, GAO-18-564 (Washington, DC: August 6, 2018).

          CMS devotes similar levels of staff resources to review 
        expenditures despite differing levels of risk across States. 
        For example, the number of staff reviewing California's 
        expenditures--which represent 15 percent of Federal Medicaid 
        spending--is similar to the number reviewing Arkansas' 
        expenditures, which represents 1 percent of Federal Medicaid 
---------------------------------------------------------------------------
        spending.

          Additionally, CMS reviews a sample of claims for expansion 
        enrollees to examine Medicaid expansion expenditures, but the 
        sample size does not account for previously identified risks in 
        a State's program. Specifically, as we noted in a 2015 report, 
        CMS's sampling review of expansion expenditures was not linked 
        to or informed by reviews of eligibility determinations 
        conducted by CMS, some of which identified high levels of 
        eligibility determination errors.\14\
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    \14\ See GAO-18-564 and GAO-16-53. We previously found that eight 
of the nine States we reviewed reported errors resulting in incorrect 
eligibility determinations. We recommended that CMS use information 
obtained from assessments of State eligibility determinations to inform 
its review of expenditures for different eligibility groups. In 
February 2019, CMS confirmed that the agency will continue to share 
information as it conducts eligibility determination reviews for 
estimating improper payments. This will allow CMS to continue using 
information on eligibility determination errors to better focus the 
expenditure reviews.

    To address these weaknesses, we made three recommendations, 
including that the Administrator of CMS revise the sampling methodology 
for reviewing expenditures for the Medicaid expansion population to 
better target reviews to areas of high risk. CMS concurred with this 
recommendation, but in November 2018, CMS officials indicated that 
given the agency's resources, they believe the current sampling 
methodology is sufficient and have no plans to revise it. However, we 
continue to believe action is needed to better target areas of high 
---------------------------------------------------------------------------
risk and this recommendation remains unimplemented.

    Our examination of Medicaid eligibility determinations will 
continue as we have work underway that will describe:

          How selected States decide the basis of eligibility for 
        individuals who may qualify for Medicaid under more than one 
        category of eligibility, such as a low-income individual with a 
        disability;

          What is known about the accuracy of Medicaid eligibility 
        determinations and selected States' processes to improve the 
        accuracy of determinations; and

          CMS efforts to recoup funds related to eligibility errors.

    We expect to complete this work early next year.
  cms efforts to improve medicaid data could benefit program oversight
    Improvements in Medicaid data could benefit program oversight, 
including ensuring that only eligible beneficiaries are enrolled. CMS 
has acknowledged the need for improved Medicaid data and the 
Transformed Medicaid Statistical Information System (T-MSIS) initiative 
is the agency's primary effort--conducted jointly with States--to 
improve its collection of Medicaid expenditure and utilization 
data.\15\ According to CMS officials, aspects of T-MSIS are designed to 
broaden the scope and improve the quality of State-reported data, as 
well as the data's usefulness for States. T-MSIS also includes 
automated quality checks that should improve the quality of data that 
States report. In addition:
---------------------------------------------------------------------------
    \15\ See GAO, Medicaid: Program Oversight Hampered by Data 
Challenges, Underscoring Need for Continued Improvements, GAO-17-173 
(Washington, DC: January 6, 2017).

          T-MSIS is designed to capture significantly more data from 
        States than was previously reported. For example, T-MSIS will 
        include a beneficiary eligibility file that will have expanded 
        information on enrollees, such as their citizenship, 
        immigration, and disability status; and expanded diagnosis and 
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        procedure codes associated with their treatments.

          T-MSIS also is intended to benefit States by reducing the 
        number of reports CMS requires them to submit, and by improving 
        program efficiency by allowing States to compare their data 
        with other States' data in the national repository or with 
        information in other CMS repositories, including Medicare data.

    With the continued implementation of T-MSIS, CMS has taken an 
important step toward developing a reliable national repository for 
Medicaid data. While recognizing CMS's progress, we have made several 
recommendations aimed at improving the quality and usefulness of T-MSIS 
data. For example, we recommended in 2017 that CMS refine its T-MSIS 
data priority areas to identify those that are critical for reducing 
improper payments and expedite efforts to assess and ensure their 
quality.\16\ CMS has implemented this recommendation, yet other 
recommendations that CMS concurred with related to T-MSIS have not been 
fully implemented, including outlining a specific plan and associated 
time frames for using T-MSIS data for oversight.\17\
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    \16\ GAO-17-173.
    \17\ See GAO, Medicaid: Further Action Needed to Expedite Use of 
National Data for Program Oversight, GAO-18-70 (Washington, DC: 
December 8, 2017).
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further collaboration with stakeholders could improve program oversight 
                and better ensure appropriate enrollment
    We have previously reported that oversight of the Medicaid program 
could be further improved through leveraging and coordinating program 
integrity efforts with State agencies, State auditors, and other 
partners.\18\ CMS has engaged State agencies and other partners to 
promote program integrity through the Medicaid Integrity Institute, a 
national training program for States, and other partnerships to combat 
Medicaid fraud. These efforts have created more opportunities for 
program integrity professionals to collaborate, share best practices, 
and ultimately increase the effectiveness of their oversight 
activities.
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    \18\ See GAO, Medicaid: Opportunities for Improving Program 
Oversight, GAO-18-444T (Washington, DC: April 12, 2018); Medicaid: 
Actions Needed to Mitigate Billions in Improper Payments and Program 
Integrity Risks, GAO-18-598T (Washington, DC: June 27, 2018); and 
Medicaid: CMS Has Taken Steps to Address Program Risks but Further 
Actions Needed to Strengthen Program Integrity, GAO-18-687T 
(Washington, DC: August 21, 2018).

    We have also testified that State auditors are uniquely positioned 
to help CMS in its oversight of State Medicaid programs, because of 
their roles and responsibilities--which can include carrying out or 
overseeing their State's single audits.\19\ Through their program 
integrity reviews, State auditors have identified improper payments in 
the Medicaid program and deficiencies in the processes used to identify 
them. For example, State auditors have found that in some cases their 
State Medicaid agencies' eligibility determinations did not identify or 
address beneficiaries' changes in circumstances, and in other cases 
relied on incorrect or incomplete income or asset information.
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    \19\ See GAO-18-687T. Organizations based in the United States with 
expenditures of Federal funding of $500,000 or more ($750,000 or more 
for fiscal years beginning on or after December 26, 2014) within the 
organization's fiscal year are required to send an audit report to the 
OMB, in accordance with the Single Audit Act, as amended, and OMB 
implementing regulations. See 31 U.S.C. Sec. Sec. 7501-7507; 2 CFR pt. 
200, subpt. F (2017) (as added by 78 Fed. Reg. 78590, 78608 (December 
26, 2013)). A single audit consists of (1) an audit and opinions on the 
fair presentation of the financial statements and the schedule of 
expenditures of Federal awards; (2) gaining an understanding of and 
testing internal control over financial reporting, and the entity's 
compliance with laws, regulations, and contract or grant provisions 
that have a direct and material effect on certain Federal programs 
(i.e., the program requirements); and (3) an audit and an opinion on 
compliance with applicable program requirements for certain Federal 
programs.

          A 2018 audit of New Jersey's Medicaid program found the 
        State was not identifying and disenrolling some deceased 
        individuals.\20\ When State auditors conducted a data match to 
        a Social Security number verification service, they found 
        managed care payments of $510,834 and fee-for-service claims of 
        $217,913 for 41 individuals after their reported date of death. 
        Auditors recommended that the eligibility system be reconciled 
        with a Social Security number validation service on a periodic 
        basis to better identify deceased individuals.
---------------------------------------------------------------------------
    \20\ New Jersey Legislature Office of Legislative Services, Office 
of the State Auditor, Department of Human Services, Division of 
Medicaid Assistance and Health Services NJ FamilyCare Eligibility 
Determinations, July 1, 2014 to July 30, 2017 (Trenton, NJ: September 
25, 2018).
---------------------------------------------------------------------------
          In 2017, State auditors in North Carolina found that most of 
        the 10 sample county departments of social services did not 
        consistently provide adequate oversight or controls for the 
        eligibility determination of new applications and re-
        certifications.\21\ For new applications, the auditors showed 
        accuracy error rates ranging from 1 percent to nearly 19 
        percent; for redeterminations of eligibility, accuracy error 
        rates ranged from 1 percent to 23 percent.
---------------------------------------------------------------------------
    \21\ State of North Carolina, Office of the State Auditor, North 
Carolina Medicaid Program, Recipient Eligibility Determination 
(Raleigh, NC: January 2017).

          Based on information from an independent verification 
        service, State auditors in New York found, during a 9-month 
        period in 2014, that 354 Medicaid enrollees were actually 
        deceased, and that the State made $325,030 in Medicaid payments 
        for a subset of these individuals.\22\ Auditors noted that the 
        State's eligibility system did not have a standard process to 
        periodically verify the life status of all enrollees and end 
        coverage for deceased individuals.
---------------------------------------------------------------------------
    \22\ New York State Office of the State Comptroller, Division of 
State Government Accountability, Appropriateness of the Medicaid 
Eligibility Determined by the New York State of Health System, Report 
2014-S-4 (Albany, NY: October 28, 2015).

    In April 2019, the Comptroller General and representatives from the 
National State Auditors Association sent a letter to CMS requesting 
changes to the Compliance Supplement to leverage State auditors' 
ability to examine key areas of Medicaid, including improvements in the 
oversight of Medicaid eligibility processes. The Compliance 
Supplement--which is issued by the OMB based on agency input and 
direction--is used by State auditors during their annual audit of State 
entities that administer Federal financial assistance programs, 
---------------------------------------------------------------------------
including Medicaid.

    In June 2019, OMB issued the 2019 Compliance Supplement, which 
included changes related to overseeing testing of eligibility 
determinations that GAO and the State auditors had proposed.\23\ 
Specifically, the supplement now permits State auditors to test 
eligibility determinations to ensure that beneficiaries qualify for the 
Medicaid program and are in the appropriate enrollment category. The 
supplement also notes a requirement for States to coordinate with other 
State and Federal insurance affordability programs, including the 
federally facilitated exchanges.
---------------------------------------------------------------------------
    \23\ 2 CFR pt. 200, subpt. F, app. XI (2019).

    These changes to the Compliance Supplement will better enable State 
auditors to audit States' eligibility determinations to ensure 
beneficiaries qualify for the Medicaid program and are enrolled in the 
correct eligibility group. Such eligibility determinations will 
supplement CMS's eligibility determination reviews and may yield 
insights into program weaknesses that CMS could learn from and 
potentially address nationally. We continue to believe that CMS could 
help improve program integrity by further providing State auditors with 
a substantive and ongoing role in auditing their State Medicaid 
---------------------------------------------------------------------------
programs.

    Chairman Toomey, Ranking Member Stabenow, and Members of the 
Subcommittee, this concludes my prepared statement. I would be pleased 
to respond to any questions you may have.

                                 ______
                                 
  appendix i: selected gao recommendations to strengthen oversight of 
                    medicaid beneficiary enrollment

   able 1: Status of Selected GAO Recommendations to Strengthen CMS's
  Oversight of Medicaid Beneficiary Enrollment, Through September 2019
------------------------------------------------------------------------
                                      Status of recommendation; actions
         GAO recommendation          needed to implement recommendations
------------------------------------------------------------------------
 Improving oversight of Medicaid eligibility determinations and related
                              expenditures
Issue guidance to States to better   Recommendation implemented; no
 identify beneficiaries who are       action needed.
 deceased (GAO-15-313) a
Conduct reviews of Federal Medicaid  Not fully implemented.
 eligibility determinations to       Conduct a systematic review of
 ascertain the accuracy of these      eligibility determinations reached
 determinations and institute         by federally facilitated
 corrective action plans where        exchanges, and implement any
 necessary (GAO-16-53) b              corrective actions. The Department
                                      of Health and Human Services
                                      indicated that it will include
                                      results of eligibility
                                      determinations for two States
                                      where there were Federal
                                      eligibility determinations when it
                                      begins reporting improper payment
                                      estimates due to erroneous
                                      eligibility determinations in
                                      November 2019. It is too early to
                                      assess whether this will be
                                      sufficient for identifying and
                                      correcting errors and associated
                                      payments.
Use the information obtained from    Recommendation implemented; no
 State and Federal eligibility        action needed.
 reviews to inform the Centers for
 Medicare and Medicaid Services'
 (CMS) review of expenditures for
 different eligibility groups in
 order to ensure that expenditures
 are reported correctly and matched
 appropriately (GAO-16-53) b
Complete a comprehensive, national   Not fully implemented.
 risk assessment and take steps, as  Conduct a national risk assessment
 needed, to assure that resources     to determine whether resources for
 to oversee expenditures reported     financial oversight activities are
 by States are adequate and           adequate and allocated--both
 allocated based on areas of          across the CMS's regional offices
 highest risk (GAO-18-564) c          and oversight tools--to focus on
                                      the greatest areas of risk, and
                                      take steps to reallocate staff and
                                      resources, as appropriate. 
Clarify in internal guidance when a  Not fully implemented.
 variance analysis on expenditures   Update internal guidance on
 with higher match rates is           conducting variance analyses for
 required (GAO-18-564) c              expenditures with higher Federal
                                      matching rates to assure that
                                      analyses are consistently
                                      conducted.
Revise the sampling methodology for  Not implemented.
 reviewing expenditures for the      Update CMS's sampling methodology
 Medicaid expansion population to     for reviewing expenditures to
 better target reviews to areas of    account for risk factors like
 high risk (GAO-18-564) c             program size and high levels of
                                      eligibility determination errors.
                                      d 
    Improving Medicaid data to benefit program oversight
Take immediate steps to assess and improve the data available for
 Medicaid program oversight, including, but not limited to, the
 Transformed Medicaid Statistical Information System (T-MSIS). Such
 steps could include (1) refining the overall data priority areas in T-
 MSIS to better identify those variables that are most critical for
 reducing improper payments, and (2) expediting efforts to assess and
 ensure the quality of these T-MSIS data (GAO-17-173) e
Take additional steps to expedite the use of data for program oversight.
 Such steps should include, but are not limited to, efforts to(1) obtain
 complete information from all States on unreported T-MSIS data elements
 and their plans to report applicable data elements; (2) identify and
 share information across States on known T-MSIS data limitations to
 improve data comparability; and (3) implement mechanisms, such as the
 Learning Collaborative, by which States can collaborate on an ongoing
 basis to improve the completeness, comparability, and utility of T-MSIS
 data (GAO-18-70) f
Continue taking steps to make T-MSIS data usable for Medicaid program
 oversight, such as (1) obtaining information on the completeness and
 comparability of T-MSIS data, (2) notifying States of their compliance
 status and obtaining corrective action plans, and (3) establishing
 mechanisms for ongoing feedback and collaboration across States.
Articulate a specific plan and associated time frames for using T-MSIS
 data for oversight (GAO-18-70) f
Outline a specific plan and associated time frames for using T-MSIS data
 for oversight.
------------------------------------------------------------------------
Source: GAO | GAO-20-147T.
a GAO, Medicaid: Additional Actions Needed to Help Improve Provider and
  Beneficiary Fraud Controls, GAO-15-313 (Washington, DC: May 14, 2015).
 
b GAO, Medicaid: Additional Efforts Needed to Ensure That State Spending
  Is Appropriately Matched With Federal Funds, GAO-16-53 (Washington,
  DC: October 16, 2015).
c GAO, Medicaid: CMS Needs to Better Target Risks to Improve Oversight
  of Expenditures, GAO-18-564 (Washington, DC: August 6, 2018).
d According to agency officials, CMS believes its sampling methodology
  is sufficient and has no plans to revise it. The agency noted that the
  current methodology requires a minimum sample size, but gives
  reviewers the flexibility to expand the size of the sample if
  warranted by risk and as resources permit. We continue to believe that
  the current methodology does not sufficiently target areas of high
  risk.
e GAO, Medicaid: Program Oversight Hampered by Data Challenges,
  Underscoring Need for Continued Improvements, GAO-17-173 (Washington,
  DC: January 6, 2017).
f GAO, Medicaid: Further Action Needed to Expedite Use of National Data
  for Program Oversight, GAO-18-70 (Washington, DC: December 8, 2017).



                                 ______
                                 
         Questions Submitted for the Record to Carolyn L. Yocom
             Questions Submitted by Hon. Patrick J. Toomey
    Question. Do you recommend States consistently use current and 
verified wage data as part of their Medicaid eligibility determination 
processes to improve payment accuracy and administrative efficiency?

    Answer. An accurate determination of eligibility is critical to 
ensuring that only eligible individuals are enrolled, that they are 
enrolled in the correct eligibility group, and that States' 
expenditures are appropriately matched with Federal funds.

    State Medicaid agencies generally have flexibility in the sources 
of information they use to verify and validate individuals' financial 
eligibility at the time of application. While GAO has not made 
recommendations about the use of wage data for Medicaid eligibility 
determinations, GAO has reviewed audits that used different data 
sources to verify Medicaid beneficiary eligibility and those audits 
indicate that wage and other data sources have limitations:

        Wage data do not capture self-employment income and unearned 
income, such as rents, and royalties. Therefore, individuals may have 
income not captured in wage data.

        Federal and State tax data are available for individuals who 
filed tax returns. However, tax returns may be dated and not reflective 
of current income.

    Also, GAO expects to complete an examination of Medicaid 
eligibility determinations early next year. It will describe: how 
selected State Medicaid agencies decide the basis of eligibility for 
individuals who may qualify for Medicaid under more than one category 
of eligibility, such as a low-income individual with a disability; what 
is known about the accuracy of Medicaid eligibility determinations and 
selected State; Medicaid agencies' processes to improve the accuracy of 
determinations; and CMS efforts to recoup funds related to eligibility 
errors.

    Question. Would you recommend that CMS issue guidance directing 
States to consistently use data sources available at the Federal level, 
such as current employment and income data accessible through the CMS 
Federal Data Services Hub, to accurately verify eligibility for 
Medicaid?

    Answer. Although GAO has not made recommendations concerning the 
use of particular data sources for Medicaid eligibility determinations, 
GAO's work--including its review of others' work--has generally found 
that different data sources have different limitations; for example, 
wage data do not capture certain types of income such as self-
employment, rents, and royalties. Federal and State tax data may be 
dated and not reflective of current income.

    GAO has reported on the enrollment and verification controls of the 
Federal Health Insurance Marketplace and made a recommendation about 
the data hub.\1\ The data hub is a central feature of the Marketplace 
enrollment controls and, among other things, provides a mechanism to 
check applicant-provided information against a variety of Federal data 
sources. GAO recommended that the Department of Health and Human 
Services take steps to improve the data-matching process and reduce the 
number of applicant inconsistencies in the data hub. CMS implemented 
this recommendation, which should improve data-matching capability and 
help ensure that applicants meet program eligibility requirements.
---------------------------------------------------------------------------
    \1\ See GAO, Patient Protection and Affordable Care Act: CMS Should 
Act to Strengthen Enrollment Controls and Manage Fraud Risk, GAO-16-29 
(Washington, DC: February 23, 2016).

                                 ______
                                 
                  Question Submitted by Hon. Tim Scott
    Question. Medicaid enrollment has grown substantially in recent 
years, even for non-expansion States. In South Carolina, for instance, 
Medicaid and CHIP enrollment totaled 1,036,851 in August of this year, 
marking a 17.9-percent increase over August 2014 levels. Over the same 
5-year period, the State's population grew by closer to 5 or 6 percent, 
so population growth alone cannot explain the rise in enrollment. 
Furthermore, whereas South Carolina's unemployment rate was at 6.6 
percent in August 2014, it had fallen to 3.2 percent by August 2019, 
representing a drop of more than 50 percent. Our economy is strong, 
with more South Carolinians entering the workforce to pursue 
sustainable opportunities, and yet our State's Medicaid enrollment 
figures remain high.

    While South Carolina's State government takes important steps to 
ensure program integrity and robust eligibility determination 
processes, programmatic growth across the country will increasingly 
spur the need for additional tools, supports, and resources from 
Federal agencies and other key stakeholders as States seek to bolster 
their internal processes.

    I understand that a number of Federal agencies and States 
incorporate current wage data into their eligibility determination 
processes for Medicaid and other government benefit programs. This type 
of data, for instance, is available at no cost to State Medicaid 
agencies through the CMS Federal Data Hub. However, use of this data is 
not a consistent practice. Do you recommend that States consistently 
use current and verified wage data as part of their Medicaid 
eligibility determination processes to improve payment accuracy and 
administrative efficiency? Are there concrete steps that we can take, 
when working with States, to raise awareness of this type of data and 
to encourage effective utilization thereof?

    Answer. State Medicaid agencies generally have flexibility in the 
sources of information they use to verify and validate individuals' 
financial eligibility at the time of application. While GAO has not 
made recommendations concerning the use of particular data sources for 
Medicaid eligibility determinations, it has reviewed audits that used 
different data sources to verify Medicaid beneficiary eligibility and 
those audits indicate that wage and other data sources have 
limitations:

        Wage data do not capture self-employment income and unearned 
income, such as rents, and royalties. Therefore, individuals may have 
income not captured in wage data.

        Federal and State tax data are available for individuals who 
filed tax returns. However, tax returns may be dated and not reflective 
of current income.

    GAO has previously reported that oversight of the Medicaid program 
could be further improved through leveraging and coordinating program 
integrity efforts with State agencies, State auditors, and other 
partners.\2\ CMS has engaged State agencies and other partners to 
promote program integrity through the Medicaid Integrity Institute, a 
national training program for States, and other partnerships to combat 
Medicaid fraud. These efforts have created more opportunities for 
program integrity professionals to collaborate, share best practices, 
and ultimately increase the effectiveness of their oversight 
activities. In addition, in June 2019, OMB issued the 2019 Compliance 
Supplement, which included changes related to overseeing testing of 
eligibility determinations that GAO and State auditors had proposed.\3\ 
Specifically, the supplement now provides instructions for State 
auditors to test Medicaid eligibility determinations to ensure that 
beneficiaries qualify for the Medicaid program. The supplement also 
notes that Federal regulations require States to coordinate with other 
State and Federal insurance affordability programs, including the 
federally facilitated exchanges, which should better ensure that 
Medicaid beneficiaries are enrolled in the correct eligibility group, 
and that States' expenditures are appropriately matched with Federal 
funds.
---------------------------------------------------------------------------
    \2\ See GAO, Medicaid: CMS Has Taken Steps to Address Program Risks 
but Further Actions Needed to Strengthen Program Integrity, GAO-18-687T 
(Washington, DC: August 21, 2018).
    \3\ 2 CFR pt. 200, subpt. F, app. XI (2019).

                                 ______
                                 
                 Question Submitted By Hon. Todd Young
                    national directory of new hires
    Question. The Federal Government currently has systems available to 
verify income, like the National Directory of New Hires (NDNH)--which 
has been used for many years in programs such as the Temporary 
Assistance for Needy Families, SNAP, and housing. The President's 
budget proposed using NDNH in Medicaid for program integrity.

    If you had access to this data, do you think it would help with 
preventing, identifying, and recovering improper payments--and how?

    Answer. We thank Congress for confirming GAO's access to the NDNH 
through the GAO Access and Oversight Act of 2017, signed into law in 
January 2017.\4\ Access to the directory has improved our ability to 
oversee Federal programs. For example, in June 2019 we identified 
indicators of potential fraud or error in income information for 
borrowers repaying certain Federal loans with income driven repayment 
plans based on an analysis of NDNH wage data.\5\ We found that about 
95,100 income-driven repayment plans were held by borrowers who 
reported no income, yet may have earned enough wages to warrant monthly 
student loan payments according to NDNH data. We recommended that the 
Department of Education obtain data to verify the income of borrowers 
who report no income on income driven repayment plan applications, and 
implement data analytic practices and follow-up procedures to verify 
borrower reports of no income. These recommendations have not yet been 
implemented.
---------------------------------------------------------------------------
    \4\ Pub. L. No. 115-3, 131 Stat. 7 (January 31, 2017).
    \5\ See GAO, Federal Student Loans: Education Needs to Verify 
Borrowers' Information for 
Income-Driven Repayment Plans, GAO-19-347 (Washington, DC: June 25, 
2019).

                                 ______
                                 
             Question Submitted by Hon. Benjamin L. Cardin
              increase in the number of uninsured children
    Question. There have been an alarming number of reports about 
States taking action to decrease the number of people in their Medicaid 
programs. I think we can all agree about the need to ensure appropriate 
oversight and integrity of the Medicaid program. This is why I am 
concerned about eligible individuals, particularly children, getting 
kicked off of health-care coverage.

    According to the U.S. Census Bureau, about 4.3 million children did 
not have any health coverage in 2018, an increase of 425,000 from 2017. 
That is almost half a million children more uninsured children in just 
one year.

    It is incredible that there was an increase of half a million 
uninsured children because last year this committee made a bipartisan 
commitment to continue funding for the Children's Health Insurance 
Program (CHIP) for 10 years.

    How unprecedented is this increase of uninsured children--now for 
the second year in a row?

    Do you know why the United States is seeing this increase in 
uninsured children? Or what policies could be causing this?

    What should Congress do to address the increase of uninsured 
children?

    Answer. According to the Centers for Disease Control and 
Prevention's (CDC) National Health Interview Survey, the rate of 
uninsured children was 11.6 percent in 1999 and steadily declined to 
4.5 percent in 2015. Since then, the rate has increased to 5.2 percent 
in 2018. The U.S. Census Bureau's American Community Survey, which can 
provide historical rates since 2008, has identified a similar pattern. 
The rate of uninsured children was 9.7 percent in 2008, declined to 4.7 
percent in 2016, and then increased to 5.2 percent in 2018. The Census 
Bureau attributed the increased uninsured rate to declines in the 
percentage of children covered by Medicaid and the Children's Health 
Insurance Program (CHIP). GAO has not assessed recent trends related to 
the rate of uninsured children; however additional study of the reasons 
behind the recent trend could help identify potential policy actions to 
address the issue.

                                 ______
                                 
                Question Submitted by Hon. Sherrod Brown
                  access to vital health-care services
    Question. In Ohio, there are 36,000 children in foster care served 
by Medicaid. And 52 percent of children and adults served by Medicaid 
receive behavioral health services. These services are essential to 
Ohio, as our communities and families are dealing with effects of the 
addiction crisis every day.

    Are there any studies that account for how Medicaid expansion has 
improved access to these vital mental and behavioral health services 
for children and adults?

    Answer. In June 2015, we reported that State officials in six 
States told us that Medicaid expansion generally resulted in greater 
availability of behavioral health treatment.\6\ The changes were 
greater in three States that did not have previous coverage options for 
low-income adults. For example, officials in one State noted that 
individuals had access to services that were not available prior to 
Medicaid expansion, such as peer support services.
---------------------------------------------------------------------------
    \6\ See GAO, Behavioral Health: Options for Low-Income Adults to 
Receive Treatment in Selected States, GAO-15-449 (Washington, DC: June 
19, 2015).

    Further, in September 2018, we reported that the percentage of low-
income adults who reported financial barriers to obtaining mental 
health care was lower in expansion States than non-expansion States.\7\ 
About four percent of low-income adults in expansion States reported 
financial barriers to mental health care, while about 6 percent of low-
income adults in non-expansion States reported such barriers.
---------------------------------------------------------------------------
    \7\ See GAO, Medicaid: Access to Health Care for Low-Income Adults 
in States With and Without Expanded Eligibility, GAO-18-607 
(Washington, DC: September 13, 2018).

                                 ______
                                 

                             Communication



                        Center for Fiscal Equity

                      14448 Parkvale Road, Suite 6

                       Rockville, Maryland 20853

                      [email protected]

                    Statement of Michael G. Bindner

Chairman Toomey and Ranking Member Stabenow, thank you for the 
opportunity to submit these comments for the record to the Subcommittee 
on Health Care Committee. I will rely on the Administration witnesses 
to outline the current case and will focus on options to overcome the 
need for compliance monitoring.

An adequate income removes the incentive to cheat. We suggest a $20 per 
hour minimum wage for workers and stipends for students. No worker is 
ever kept on shift absent workload, regardless of wage. No high wage 
worker is allowed to go home when customers are waiting. It is why 
overtime pay exists. No one should have to work for nothing, to be paid 
with only an expanded refundable child tax credit. This will end the 
need for the term ``working poor.''

Students from ESL to Ph.D. (regardless of migration status) who are 
employed will be covered by the plan that the employer participates in, 
or through a public option, a single-payer plan or under a subsidy to 
training providers under the plan that covers their workers. Medicaid 
or a public option will be available to anyone who falls through the 
cracks, even without pre-registration. The latter will be federally 
funded but managed by state and local case workers in governmental or 
charitable settings.

Medicaid compliance should not be an issue. In our proposal, Medicaid 
will be for those individuals who have nowhere else to go. Medicaid 
spending for seniors and the disabled will be shifted to the federal 
government into a new Medicare Part E. This will save state budgets in 
the out-years (as would including base funding of pensions to Social 
Security, with appropriate asset transfers).

Adopting a single-payer option, particularly Medicare for All, removes 
the need for any compliance as to eligibility. Please see Attachment 
One for our previous comments on these options.

There has been discussion of a wealth tax to pay for any such plan. We 
believe that any such tax should be reserved for paying down the debt. 
Please see Attachment Two for our prior comments on why this is 
essential for high income taxpayers. The usual ratio of income taxes to 
gross debt is $6 to $9 of debt liability for every dollar if tax paid. 
The current ratio is $13.

Rather than a wealth tax, which is both complicated and inappropriate 
for funding current operations, the creation of tax prepayment bonds 
will quickly pay down the debt and avoid future interest costs. 
Adopting this solution requires achieving a balanced budget for all 
other expenditures.

Paying for any health insurance subsidy should be accomplished by a 
long-term funding stream; preferably one collected from employers. 
Payroll taxes for this purpose are regressive. A better tool is the 
subtraction value-added tax laid out as part of our standard tax plan. 
The Subtraction Value-Added Tax (S-VAT) is an employer paid Net 
Business Receipts Tax. It will be used as a vehicle for tax 
expenditures including health care (if a private coverage option is 
maintained), veterans' health care for non-battlefield injuries, 
educational costs borne by employers in lieu of taxes as either 
contributors, for employee children or for workers (including ESL and 
remedial skills) and an expanded child tax credit.

An adequate CTC discourages abortion, and as such enactment must be 
scored as a must pass in voting rankings by pro-life organizations (and 
feminist organizations as well). An inflation adjustable credit should 
reflect the cost of raising a child through the completion of junior 
college or technical training. To assure child subsidies are 
distributed, S-VAT will not be border adjustable.

Employer-based taxes, such as a subtraction VAT or payroll tax, will 
provide an incentive to avoid health care taxation by providing such 
care. Employers who fund catastrophic care or operate nursing care 
facilities would get an even higher benefit, with the proviso that any 
care so provided be superior to the care available through Medicaid or 
Medicare for All. Making employers responsible for most costs and for 
all cost savings allows them to use some market power to get lower 
rates.

This proposal is probably the most promising way to arrest health care 
costs from their current upward spiral--as employers who would be 
financially responsible for this care through taxes would have a real 
incentive to limit spending in a way that individual taxpayers simply 
do not have the means or incentive to exercise.

Ultimately, employer taxation should be replaced with employer provided 
care as part of a cooperative system which has members control 
production, distribution finance, consumption and retirement savings. 
There should be many such cooperatives. A state-run entity would 
produce corruption.

The S-VAT can be used for personal accounts in Social Security, 
provided that these accounts are insured through an insurance fund for 
all such accounts, that accounts go toward employee ownership rather 
than for a subsidy for the investment industry. Both employers and 
employees must consent to a shift to these accounts, which will occur 
if corporate democracy in existing ESOPs is given a thorough test. So 
far it has not.

S-VAT funded retirement accounts will be equal dollar credited for 
every worker. They also have the advantage of drawing on both payroll 
and profit, making it less regressive.

Our previous comments on how employee ownership would work is found in 
Attachment Three.

Cooperatives and other companies who hire their own doctors and 
pharmacists, whether as part of a cooperative purchase program or as an 
offset to a single-payer program (whether it is Single Payer 
Catastrophic or Medicare for All) will need no eligibility compliance 
function. All members will be this modality, as well as use of a 
subtraction VAT generally, ends the need for 1099 employment.

Thank you for the opportunity to address the committee. We are, of 
course, available for direct testimony or to answer questions by 
members and staff.

Attachment One--Hearing on Pathways to Universal Health Coverage, June 
12, 2019

There are three methods to get to single-payer: a public option, 
Medicare for All and single-payer with an option for cooperative 
employers.

The first is to set up a public option and end protections for pre-
existing conditions and mandates. The public option would then cover 
all families who are rejected for either pre-existing conditions or the 
inability to pay. In essence, this is an expansion of Medicaid to 
everyone with a pre-existing condition. As such, it would be funded 
through increased taxation, which will be addressed below. A variation 
is the expansion of the Uniformed Public Health Service to treat such 
individuals and their families.

The public option is inherently unstable over the long term. The profit 
motive will ultimately make the exclusion pool grow until private 
insurance would no longer be justified, leading again to Single Payer 
if the race to cut customers leads to no one left in private insurance 
who is actually sick. This eventually becomes Medicare for All, but 
with easier passage and sudden adoption as private health plans are 
either banned or become bankrupt. Single-payer would then be what 
occurs.

The second option is Medicare for All, which I described in an 
attachment to comments presented in June and previously in hearings 
held May 8, 2019 (Finance) and May 8, 2018 (Ways and Means). Medicare 
for All is essentially Medicaid for All without the smell of welfare 
and with providers reimbursed at Medicare levels, with the difference 
funded by tax revenue.

Medicare for All is a really good slogan, at least to mobilize the 
base. One would think it would attract the support of even the Tea 
Partiers who held up signs saying, ``don't let the government touch my 
Medicare!'' Alas, it has not. This has been a conversation on the left 
and it has not gotten beyond shouting slogans either. We need to decide 
what we want and whether it really is Medicare for All. If we want to 
go to any doctor we wish, pay nothing and have no premiums, then that 
is not Medicare.

There are essentially two Medicares, a high option and a low one. One 
option has Part A at no cost (funded by the Hospital Insurance Payroll 
Tax and part of Obamacare's high unearned income tax as well as the 
general fund); and Medicare Part B, with a 20% copay and a $135 per 
month premium and Medicare Part D, which has both premiums and copays 
and is run through private providers. Parts A and B also are contracted 
out to insurance companies for case management. Much of this is now 
managed care, as is Medicare Advantage (Part C).

Medicaid lingers in the background and the foreground. It covers the 
disabled in their first two years (and probably while they are seeking 
disability and unable to work). It covers non-workers and the working 
poor (who are too poor for Obamacare) and it covers seniors and the 
disabled who are confined to a long-term care facility and who have run 
out their assets. It also has the long-term portion which should be 
federalized, but for the poor, it takes the form of an HMO, but with no 
premiums and zero copays.

Obamacare has premiums with income-based supports (one of those facts 
the Republicans hate) and copays. It may have a high option, like the 
Federal Employee Health Benefits Program (which also covers Congress) 
on which it is modeled, a standard option that puts you into an HMO. 
The HMO drug copays for Obamacare are higher than for Medicare Part C, 
but the office visit prices are exactly the same.

What does it mean, then, to want Medicare for All? If it means we want 
everyone who can afford it to get Medicare Advantage Coverage, we 
already have that. It is Obamacare. The reality is that Senator Sanders 
wants to reduce Medicare copays and premiums to Medicaid levels and 
then slowly reduce eligibility levels until everyone is covered. Of 
course, this will still likely give us HMO coverage for everyone except 
the very rich, unless he adds a high-option PPO or reimbursable plan.

Either Medicare for All or a real single payer would require a very 
large payroll tax (and would eliminate the HI tax) or an employer paid 
subtraction value-added tax (so it would not appear on receipts nor 
would it be zero rate at the border, since there would be no evading 
it), which we discuss below, because the Health Care Reform debate is 
ultimately a tax reform debate. Too much money is at stake for it to be 
otherwise, although we may do just as well to call Obamacare Medicare 
for All and leave it alone.

The third option is an exclusion for employers, especially employee-
owned and cooperative firms, who provide medical care directly to their 
employees without third party insurance, with the employer making HMO-
like arrangements with local hospitals and medical practices for 
inpatient and specialist care.

Attachment Two--The Debt, the Future is Calling: It Wants a Refund, 
2019

In the future we face a crisis, not in entitlements, but in net 
interest on the debt, both from increased rates and growing principal. 
This growth will only feasible until either China or the European Union 
develop tradable debt instruments backed by income taxation, which is 
the secret to the ability of the United States to be the world's bond 
issuer. While it is good to run a deficit to balance out tax cuts for 
the wealthy, both are a sugar high for the economy. At some point we 
need incentives to pay down the debt.

The national debt is possible because of progressive income taxation. 
The liability for repayment, therefore, is a function of that tax. The 
Gross Debt (we have to pay back trust funds too) was $19 Trillion when 
this table was created. Income Tax revenue is roughly $1.4 Trillion per 
year. That means that for every, dollar you pay in taxes, you owe $13 
in debt (although this will increase). People who pay nothing owe 
nothing. People who pay tens of thousands of dollars a year owe 
hundreds of thousands.

The answer is not making the poor pay more or giving them less 
benefits, either only slows the economy. Rich people must pay more and 
do it faster. My child is becoming a social worker, although she was 
going to be an artist. Don't look to her to pay off the debt. Your 
children and grandchildren and those of your donors are the ones on the 
hook unless their parents step up and pay more. How's that for 
incentive?

If that is not enough, let's talk raw numbers. If you look at total 
debt and the fact that it is 13 times income tax collections, then the 
wealthy 1% are in hock to the rest of us to the tune of 7 Trillion 
dollars (yes, with a T). The next 9% owe $6 trillion, the next 40% owe 
$5 trillion, with the bottom half owing slightly less than the top 
1,409 family taxpaying units. Note that this is FY 2016 data. FY 2017 
will be available next month.


------------------------------------------------------------------------
                                                          Amount of Debt
 Strata   Lower Limit in   Effective Tax   Taxes Paid in      Owed in
             $Thousands        Rate          $Billion       $Trillions
------------------------------------------------------------------------
Bottom                $0            3.7%           $43.9           $0.57
 50%
50% to               $40           15.6%          $158.5           $2.06
 75%
75% to               $81           17.8%         $ 238.0           $3.09
 90%
90% to              $140           21.1%          $162.1           $2.11
 95%
95% to              $198           23.5%          $301.6    $3.92 
Top 1%             $ 481           26.9%         $ 538.3          $ 7.00
Top                                                $46.9           $0.61
 1,409
 Househo
 lds
------------------------------------------------------------------------

Attachment Three

A. Employee Ownership, March 7, 2019

Employee ownership is the ultimate protection for worker wages. Our 
proposal for expanding it involves diverting an ever-increasing portion 
of the employer contribution to the Old-Age and Survivors fund to a 
combination of employer voting stock and an insurance fund holding the 
stock of all similar companies. At some point, these companies will be 
run democratically, including CEO pay, and workers will be safe from 
predatory management practices. Increasing the number of employee-owned 
firms also decreases the incentive to lower tax rates and bid up asset 
markets with the proceeds.

Establishing personal retirement accounts holding index funds for Wall 
Street to play with will not help. Accounts holding voting and 
preferred stock in the employer and an insurance fund holding the 
stocks of all such firms will, in time, reduce inequality and provide 
local constituencies for infrastructure improvements and the funds to 
carry them out.

ESOP loans and distribution of a portion of the Social Security Trust 
Fund could also speed the adoption of such accounts. Our Income and 
Inheritance Surtax (where cash from estates and the sale of estate 
assets are normal income) would fund reimbursements to the Fund.

At some point, these companies will be run democratically, including 
CEO pay, and workers will be safe from predatory management practices. 
This is only possible if the Majority quits using fighting it as a 
partisan cudgel and embraces it to empower the professional and working 
classes.

The dignity of ownership is much more than the dignity of work as a cog 
in a machine.

B. Hearing on the 2016 Social Security Trustees Report

In the January 2003 issue of Labor and Corporate Governance, we 
proposed that Congress should equalize the employer contribution based 
on average income rather than personal income. It should also increase 
or eliminate the cap on contributions. The higher the income cap is 
raised, the more likely it is that personal retirement accounts are 
necessary. A major strength of Social Security is its income 
redistribution function. We suspect that much of the support for 
personal accounts is to subvert that function--so any proposal for such 
accounts must move redistribution to account accumulation by equalizing 
the employer contribution.

We propose directing personal account investments to employer voting 
stock, rather than an index funds or any fund managed by outside 
brokers. There are no Index Fund billionaires (except those who operate 
them). People become rich by owning and controlling their own 
companies. Additionally, keeping funds in-house is the cheapest option 
administratively. I suspect it is even cheaper than the Social Security 
system--which operates at a much lower administrative cost than any 
defined contribution plan in existence.

If employer voting stock is used, the Net Business Receipts Tax/
Subtraction VAT would fund it. If there are no personal accounts, then 
the employer contribution would be VAT funded.

Safety is, of course, a concern with personal accounts. Rather than 
diversifying through investment, however, we propose diversifying 
through insurance. A portion of the employer stock purchased would be 
traded to an insurance fund holding shares from all such employers. 
Additionally, any personal retirement accounts shifted from employee 
payroll taxes or from payroll taxes from non-corporate employers would 
go to this fund.

The insurance fund will save as a safeguard against bad management. If 
a third of shares were held by the insurance fund than dissident 
employees holding 25.1% of the employee-held shares (16.7% of the 
total) could combine with the insurance fund held shares to fire 
management if the insurance fund agree there was cause to do so. Such a 
fund would make sure no one loses money should their employer fail and 
would serve as a sword of Damocles to keep management in line. This is 
in contrast to the Cato/PCSSS approach, which would continue the trend 
of management accountable to no one. The other part of my proposal that 
does so is representative voting by occupation on corporate boards, 
with either professional or union personnel providing such 
representation.

The suggestions made here are much less complicated than the current 
mix of proposals to change bend points and make OASI more of a needs-
based program. If the personal account provisions are adopted, there is 
no need to address the question of the retirement age. Workers will 
retire when their dividend income is adequate to meet their retirement 
income needs, with or even without a separate Social Security program.

No other proposal for personal retirement accounts is appropriate. 
Personal accounts should not be used to develop a new income stream for 
investment advisors and stock traders. It should certainly not result 
in more ``trust fund socialism'' with management that is accountable to 
no cause but short-term gain. Such management often ignores the long-
term interests of American workers and leaves CEOs both over-paid and 
unaccountable to anyone but themselves.

If funding comes through a Subtraction VAT, there need not be any 
income cap on employer contributions, which can be set high enough to 
fund current retirees and the establishing of personal accounts. Again, 
these contributions should be credited to employees regardless of their 
salary level.

Conceivably a firm could reduce their S-VAT liability if they made all 
former workers and retirees whole with the equity they would have 
otherwise received if they had started their careers under a reformed 
system. Using Employee Stock Ownership Programs can further accelerate 
that transition. This would be welcome if ESOPs became more democratic 
than they are currently, with open auction for management and executive 
positions and an expansion of cooperative consumption arrangements to 
meet the needs of the new owners.

                                  [all]