PA Department of Public Welfare announced this week that 18% of our population is eligible for Medicaid, higher than ever. Medicaid is the federally mandated, state managed provider of health care for people who can’t afford care otherwise. The Rendell administration wants us to believe all increased need is the result of the “Great Recession” and higher cost of health care makes it less affordable to more people.
The General Accounting Office strongly suggests there may be another reason that the states don’t want to address. A GAO study in September, 2006 (Google “GAO-06-862 Medicaid Third-Party Liability”) gathers dust. The report, made to the U.S. Senate Finance Committee, says a large number of 2005 medical, bills were paid by Medicaid when the claims should have been paid by other health care insurers.
This is not chump change. Of nearly $16 billion paid out in claims by Pennsylvania in 2005, the GAO believes 16% or slightly over $2.5 billion should have been paid by someone else. Nationally, of $305 billion paid in 2005 by welfare departments in all 50 states, GAO says $40 billion should not have.
During the health care reform debate that raged late last year and spilled over into early 2010, no one stepped forward and said “Let’s eliminate these errant payments and apply that $40 billion to improving quality and access to everyone’s health care.”
Three years ago a Cleveland medical claims consultant began to bang on doors in Harrisburg, boasting a software system that can flag these wrong payments and make demands of the rightful payer to cough up the dough.
Gov. Rendell and the legislature only needed to have the PA insurance department require all private insurance payers cooperate and improper claims would drop, saving taxpayers tons. The Cleveland consultant offered to run a test at no cost to the state.
Beginning in 2006, the Ohio group met with Rosemary Greco, director, Governor’s Office of Healthcare Reform, who said she was not interested. The following year the consultants learned then-DPW Secretary Estelle Richman was also not interested. Keeping a straight face, she said her department’s bloodhounds recovered just $27 million in errant payments in 2005. GAO estimated the state had wrongfully paid $2.5 billion in the same year. This is just about 100 times more than she recovered! Put another way, Estelle Richman’s DPW’s claims-paying efficiency was 99.85%, a level never achieved anywhere in the US.
Former Secretary Richman is now applying her managerial talents in a new and higher-paying job in the Obama administration.
Other Harrisburg “movers and shakers” were also asked to look into this inefficiency. They included, but are not limited to, Gov. Rendell, then-Budget Sec. Mike Masch, Auditor-General Jack Wagner, the office of then-PA House Majority Leader Bill DeWeese and the Republican leadership of the PA Senate. No attempt to contact Attorney-General Tom Corbett was made because – while the amount of taxpayer funds squandered seems criminal – no criminal laws were broken.
The GAO estimates that 13 per cent of Medicaid beneficiaries have private health care coverage that must be used prior to applying welfare funds. An example is a broken family where the father has access to his employer health insurance for kids, but the mother finds it easier to whip out her green card at the emergency room.
As of a year ago, nearly all other states had an existing Third Party Liability program that was just as inept as PA. Consultants -- like our friends from Ohio -- typically do not charge up front fees or expenses, but merely claim a percentage of what they recover.
Three reasons come to mind as to why this huge waste of public funds is tolerated. First and foremost, shoving the claims back on private insurers will just increase the cost of health care for us citizens not at the public trough. The amount of uncompensated care by hospitals would skyrocket. The last reason has to do with political grease.
We do not believe any of the major health care claims consultants are large political contributors. This problem might go away sooner if Halliburton entered the business!