Targeting Medicaid Fraud Could Hit Nursing Homes Hard

Reducing Medicaid fraud and waste has been a talking point among many administrations, but with recent reports that 10% of Medicaid payments last year contained an error, several government offices are ready to take action. A meeting between the House Oversight Committee’s Subcommittee on Government Operations and the Subcommittee on Intergovernmental Affairs was planned for this past Wednesday and then cancelled. It was expected that lawmakers from both sides of the table would offer suggestions for reducing waste within the program.  No future meeting date has been announced.


Medicaid Recipients Fearful of Losing Benefits

It’s estimated that fraud and erroneous payments in all public assistance programs cost federal and state governments nearly $140 billion in 2015. Medicaid is considered particularly vulnerable to fraud because there are so many parties involved in the administration of the program. Each state is tasked with day-to-day management of Medicaid, but there are also managed care companies and companies they subcontract with to offer plans. It’s hard for states to police all of the groups involved, making Medicaid a relatively easy area for things to slip between the cracks.

One of the largest recipients of Medicaid payments are nursing homes, with AARP estimating that 65% of payments to nursing homes made by Medicaid. Nursing homes rely on their reimbursements from Medicaid and reports seem to come in weekly about instances of fraud, specifically billing for services and therapies that are considered unnecessary.

The fear among many upon hearing of a crackdown on Medicaid is that enrollees will be unfairly targeted. Nursing homes are notoriously expensive and families worry that a cut in benefits will affect their loved one’s ability to receive care. Many lawmakers are also arguing this same point, saying that the focus should instead be on those who order unnecessary tests, procedures, services, and drugs.  In other words, no one deserving of Medicaid benefits should have to fear that their benefits will be cut because of greed on the part of doctors, pharmacists, nursing homes, and other healthcare providers.


Illinois Targets Medicaid Enrollees with Mixed Results 

It’s not irrational to fear being cut from Medicaid or having benefits slashed given the constant chatter about drastically reducing costs. It’s happened before and in fact, it happened right here in our state. In 2012, Illinois outsourced confirmation of Medicaid eligibility to a private contractor. As a result, almost 150,000 enrollees were cut, saving the state $70 million. Experts estimate that by keeping the task in house, they could’ve saved even more.

While the savings sound great, it’s important to consider that those asked to confirm eligibility were only given 1o days to respond with the necessary documentation. For many enrolled in the Medicaid program, addresses frequently change, mail isn’t a priority, and various other factors affect their ability to receive and respond to requests.  Roughly 30,000 of the 150,000 cut recipients were later re-enrolled in the program once they provided the proper documentation, making the state’s actual savings much less.

Ultimately no one knows what will happen to the Medicaid program, but we do know that any cuts would impact nursing homes that rely on the program to operate, as well as many of those who are currently eligible for the program. Any time changes are suggested that could alter Medicaid benefits, the nursing home industry scares the public by saying that desperately needed programs and services will have to be cut in order to make ends meet. If reckless providers would have adhered to the rules of the program in the first place, they could have prevented the very real threat of having those who deserve Medicaid suffer from the loss of having their benefits slashed.

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