[Senate Hearing 116-460]
[From the U.S. Government Publishing Office]
S. Hrg. 116-460
MEDICAID: COMPLIANCE WITH
ELIGIBILITY REQUIREMENTS
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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
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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
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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\
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\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
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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.
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\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
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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.
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\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.
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\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.
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\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:
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\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
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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\
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\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
ctly
Deter
mine
Medic
aid
Eligi
bilit
y for
Some
Newly
Enrol
led
Benef
iciar
ies
Kentuc A-04-16-08047 August 2017 0 - 69,931 $72,800,000
ky
Did
Not
Alway
s
Perfo
rm
Medic
aid
Eligi
bilit
y
Deter
minat
ions
for
Non-
Newly
Eligi
ble
Benef
iciar
ies
in
Accor
dance
With
Feder
al
and
State
Requi
remen
ts
Kentuc A-04-15-08044 May 2017 0 - 34,593 $105,075,377
ky
Did
Not
Corre
ctly
Deter
mine
Medic
aid
Eligi
bilit
y for
Some
Newly
Enrol
led
Benef
iciar
ies
To 1,685,069 $1,777,920,809 3,915,268 $4,521,183,382
t
a
l
s
Gr 5,600,337 $6,299,104,191
a
n
d
T
o
t
a
l
s
----------------------------------------------------------------------------------------------------------------
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
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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\
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\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/.
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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.
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\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\
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\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.
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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\
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\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
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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\
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\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.
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\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\
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\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.
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\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.
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\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
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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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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.)
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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
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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
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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:
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\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
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\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.
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\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).
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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.
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\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.
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\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,
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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.
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\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.
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\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.
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