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Waste Not, Want Not

dollar wastedPennsylvania Auditor General Jack Wagner released some pretty disturbing news this month, after conducting an audit of the state’s Medicaid program, which is known as Medical Assistance (MA).

He found that Pennsylvania wasted millions of dollars on improper Medicaid payments over the last three years.

  • Mr. Wagner’s auditors looked at a random sampling of 11,700 Medicaid cases between 2005 and 2008 that were drawn from the state’s 79 county assistance offices.
  • Of those cases, 1,600 or 14.1% had eligibility errors, such as failure to verify a person’s age, income level, family relationships or other eligibility criteria.
  • $3.3 million were wasted during this period as a result, with potentially millions more spent in error- but not identified by the audit.
  • “A dollar wasted is a dollar that could have gone to help a truly needy person receive the medical assistance he or she deserves,” Wagner said.

This is upsetting because administrative errors lead to public distrust of, and reduced support for, government programs like Medicaid.

  • This important program currently helps 1 out of every 7 Pennsylvania residents to access insurance coverage and medical services.

The audit is also upsetting because we simply cannot afford to waste a single dollar in our current economic climate.

The news coming out of Harrisburg these days is grim:

  • The state is anticipating a $2.3 billion deficit this fiscal year, due to a decline in both state sales tax and income tax revenues.
  • Governor Ed Rendell has already slashed $400 million for program spending this year. Several of the programs cut were for education, and he is also considering laying off government employees in the months ahead.
  • His proposed budget for 2009-2010 is significantly lower than the budget adopted for 2008-2009, although he is hoping to receive an additional $2.4 billion from the federal government as part of the stimulus package.

That’s not all.

While available revenues are dwindling, the demand for services is rising.

  • More than one million Pennsylvanians are now uninsured, which is 8.2% of the state’s total population. This is compared with 7.5% of the state’s population in 2004.
  • Of those, 50% lost their coverage within the last year, and 18% have been without coverage for five or more years.
  • The state’s Medicaid program now covers 2.2 million people, a number which has increased by 500,000 since 2004.
  • The adultBasic program, which offers basic coverage to adults who have been uninsured for more than three months, has a waiting list of 183,000. The list is expected to grow to 282,000 by June, 2009.

The economic stimulus package passed last week allocates $87 billion to help the 50 cash-strapped state governments to pay for the Medicaid program.

Pennsylvania must take steps NOW to reform the administration of Medical Assistance, both to restore public confidence and to make sure that our neediest residents are able to benefit as the funding becomes available.

Mr. Wagner recommends that:

  • Eligibility be reviewed quarterly, rather than every six months or yearly, as is currently the case.
    • This is especially critical since the majority of the payments made on behalf of ineligible recipients were for monthly premiums to managed care organizations.
    • These payments were submitted regardless of whether the individual was actually receiving care.
  • Improved technology should be implemented to help with case management.

The Auditor General offered these comments in his press release:

“With the commonwealth facing widening budget deficits, the Department of Public Welfare must do all that it can to monitor the state’s Medicaid program, to make sure all funds are being spent efficiently, effectively, and for their intended purpose. I strongly urge DPW to take immediate steps to tighten its administration and oversight of this vitally important program to ensure that people who are eligible for Medicaid benefits will be able to receive every dollar they’re entitled to for their care.”

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