Hundred of millions of dollars of missed prescription rebates. Failing to charge late fees to delinquent providers. A whopping $1.4 billion in cost overruns and excessive payments in New York state alone.
These are the problems uncovered just this month in Medicaid, the government program that helps the poor get medical care and is essential to the future expansion of President Barack Obama's health care law.
For its widespread inability to get taxpayers the best deal possible, the Medicaid program and its supervisory agency, the Health and Human Services Department's Centers for Medicare and Medicaid Services, wins this week's Golden Hammer, a Washington Guardian weekly distinction calling attention to the worst examples of waste, fraud and abuse in government.
Medicaid has long been a poster child for small government conservatives wanting to cut America's entitlement programs. But its performance has increasingly earned it distrust and frustration inside both political parties.
Take for instance a House hearing Thursday in which lawmakers were aghast to learn that that the government was spending $2 million a year per Medicaid patient to provide certain types of health care in New York via developmental centers.
"Medicaid’s spending on New York’s developmental centers alone exceeded the entire Medicaid budgets of 14 states," said Congressman Paul Gosar, R-Ariz., during a hearing of the House Committee on Oversight and Government Reform.
"Hard choices will have to be made on how to reduce federal spending, but ending overpayments to New York State-operated developmental centers should not be a hard choice at all," he added.
The HHS inspector general, the agency's internal watchdog, found Medicaid had allowed $1.4 billion in cost overruns and excessive costs in that state alone.
“Medicaid payments to developmental centers in New York State far exceed New York’s actual costs of providing services to Medicaid beneficiaries,” said John Hagg, Director of Medicaid Audits for the Department of Health and Human Services Office of Inspector General.
“If New York had used actual costs in its rate-setting methodology, Medicaid reimbursements to the developmental centers could have been as much as $1.41 billion less in fiscal year 2009,” Hagg said in prepared remarks before the oversight committee.
The money is provided by the Centers for Medicare and Medicaid Services and is supposed to help New York state pay the medical costs of development centers which treat and house people with developmental disabilities.
But the current set-up allows the facilities to keep the reimbursements even after a patient leaves.
“This formula feature means taxpayers are paying twice for individuals who leave the developmental centers since most of them are transitioned into settings, such as group homes, also financed by Medicaid,” the oversight committee said in a report released Thursday.
In fiscal year 2009, CMS paid New York $2.3 billion, but that was about $1.4 billion higher than the medical facilities reported costs, according to an HHS inspector general report in May.
And the committee is suggesting the payments might have been illegal as well. Caps are in place to ensure that reimbursements for state Medicaid payments are not higher than what Medicare would have paid for the same services. But the committee estimates the payments to New York were more than six times higher than if Medicare had paid for the treatments.
"The Medicaid payments made to New York for the developmental centers were excessive,” Penny Thompson, a deputy director at CMS, told the oversight committee. “CMS is working to correct the payments to New York and to improve CMS’ approval and monitoring processes to detect excessive payments more quickly and to prevent excessive payments from being made in the first place."
New York isn’t the only state to be taken to task this week. The HHS Inspector General released a series of reports detailing Medicaid overpayments, including $11 million for New Mexico personal care services, $6.7 million for South Carolina room and board costs and $1.5 million for Alabama child health insurance.
New Mexico and Alabama disputed the inspector general’s findings, while South Carolina said it agreed with the report and would look for ways to recoup the money.
Likewise, New York officials said they are striving to make sure reimbursements are accurate, and wrote in a response that they wanted to “ensure that the State’s Medicaid daily rate for developmental centers meets the Federal requirement that payment for services be consistent with efficiency and economy.”
Last week, the Washington Guardian reported that CMS had overpaid $8.4 million because it did not deduct late fees owed by Medicare and Medicaid providers. And a separate report found 10 states were not collecting rebates from drug manufacturers that could have saved hundreds of millions of dollars.