Category: Medicaid

Only 20 to 40 Cents of Each Medicaid Dollar Benefits Recipients

One of the problems with Medicaid is that it does not appear to improve recipients’ health (although the evidence can be described as mixed). The best evidence on Medicaid comes from Oregon, which ran a lottery to allow eligible people to enroll. This approximates a randomized clinical trial, the gold standard of clinical research and hard to achieve when examining the real world. Plenty of research indicates that the Oregon Medicaid did not improve health outcomes very much.

The original researchers continue to publish results, and have written a paper that might offer the best explanation why Medicaid does so little. Only 20 to 40 cents of Medicaid spending actually goes towards patients’ welfare:

Medicaid Paid $9.6 Million for Dead Patients

From the statement of Seto Bagdoyan, Director, Forensic Audits and Investigative Service (June 2, 2015):

Approximately 8,600 beneficiaries received benefits worth about $18.3 million concurrently in two or more states –- even though federal regulations do not permit beneficiaries to have payments made on their behalf by two or more states concurrently.

…… our work raises concerns about whether payments made on behalf of certain beneficiaries were appropriate, including the following:

  • The identities of about 200 beneficiaries received $9.6 million worth of Medicaid benefits subsequent to the beneficiary’s death, based on our matching Medicaid data to SSA’s full DMF.

  • About 3,600 beneficiaries supposedly received about $4.2 million worth of Medicaid services while incarcerated in a state prison facility even though federal law prohibits states from obtaining federal Medicaid matching funds for health-care services provided to inmates except when they are patients in medical institutions.

  • Hundreds of thousands of beneficiaries had irregularities in their address and identifying information, such as addresses that did not match any United States Postal Service records and Social Security numbers that did not match identity information contained in SSA databases.

Further:  About 90 providers had suspended or revoked licenses in the state where they performed Medicaid services yet they received a combined total of at least $2.8 million from those states in fiscal year 2011.

The Human Face of Medicaid’s Poverty Trap

NCPA has long recommended a universal, refundable tax credit to replace welfare programs that impose effectively high marginal income tax rates on their dependents. A story from Chicago shows the human cost of Medicaid’s poverty trap:

McDonald’s grill cook Douglas Hunter is literally the poster child for a $15 minimum wage: The Chicago man’s picture and story are featured in the “Fight for $15″ national campaign.

Hunter’s minimum pay goes to $10 an hour in July, but a steep pay raise would bring unintended consequences for Hunter, a diabetic with multiple medical conditions whose care is covered by Cook County’s program for the uninsured and poor.

So any salary gains could be wiped out by the price of his medications and supplies, including two kinds of insulin at $403 a month and drugs to control high cholesterol and blood pressure that add an extra $330 a month.

And that’s not including the syringes, health checkups and eyeglasses he receives for free, allowing him to avoid choosing between maintaining his health and providing for his teenager.

At $15, he figures he’d need to reduce his total work hours to ensure his new income didn’t disqualify him from his current benefits. (Don Lee, “For this McDonald’s cook, wage hike could do more harm than help,” Los Angeles Times, June 1, 2015)

Banned from Medicare; Still Billing Medicaid

Yahoo! News has a special report about physicians who have been banned from billing Medicare or some state Medicaid programs because of fraud, but are still billing other states’ Medicaid programs:

 A doctor who took kickbacks from a Pennsylvania hospice involved in a multimillion-dollar fraud. An Ohio psychiatrist who billed for treating no-show patients. A Georgia optometrist who claimed he conducted 177 eye exams in one day.

Their transgressions vary. What these doctors have in common is that each was paid by a state Medicaid health insurance program after being kicked out of another state’s Medicaid system or the federal Medicare program.

More broadly, 32 states and the District of Columbia supplied data showing they paid at least $79 million to 269 of the 1,800 providers after their terminations elsewhere. But the data was incomplete. Extrapolating from what could be verified, Medicaid payments to banned providers could easily reach into the hundreds of millions of dollars.

Mind boggling incompetence? Or government business as usual?

Medicaid Block Grants = Unconstitutional Coercion?

Professors Sara Rosenbaum and Timothy Westmoreland have an interesting opinion piece in the New England Journal of Medicine with a curious response to the proposal that federal Medicaid funding should be re-structured as block grants (via the Patient CARE Act, proposed by some Congressional Republicans).

It is a pretty well established Republican proposal. It falls short of NCPA’s proposal to convert federal subsidies for health care into refundable tax credits. Nevertheless, it removes the perverse incentive for states to ramp up Medicaid spending beyond what is necessary to pull down more federal funds. In the current system, a state that spends one more dollar on Medicaid will attract between one and nine more federal dollars. This causes states to spend themselves into penury to recover federal dollars.

Ms. Rosenbaum and Mr. Westmoreland suggest that the same Supreme Court that ruled Obamacare’s expansion of Medicaid unconstitutional would do the same for block grants:

Medicaid Expansion Already Blowing Budgets

The Foundation for Government Accountability has examined every Medicaid expansion state with enrollment data available. The report:

discovered a systemic problem of under-projection and over-enrollment. The proponents of expansion have an incentive to keep their projections low when selling the massive welfare expansion to state lawmakers and the public, so the program appears less expensive than it really is.

The five states with the worst differences between projections and actual enrollment:

1) California’s enrollment more than doubled projections at 120 percent above projections.

2) Nevada missed the mark with enrollment, hitting 113 percent above projections.

3) Washington enrolled more than half a million people, exploding projections by 104 percent above projections.

4) Kentucky’s enrollment doubled projections in the first year by 100 percent above projections, costing taxpayers $1.8 billion more in the next fiscal year.

5) Illinois enrolled more than 600,000, exceeding projections by 83 percent above projections, raising the cost to taxpayers by $800 million.

Administration Plays “Medicaid Hardball” With Holdout States

Obamacare was supposed to dramatically increase Medicaid dependency in exchange for reducing some direct federal funding of hospitals. Now, some governors of states that rejected Obamacare’s Medicaid expansion are reacting negatively to the federal government’s cutting back hospital funding.

Governor Rick Scott of Florida is suing the federal government for proposing to cut Low-Income Pool (LIP) funding to hospitals, which he describes as retaliation for the state rejecting Medicaid expansion. Now, it looks like the Administration is issuing the same threat to Texas.

It is not clear why the Administration cares whether federal money sent to a state for health care is sent to Medicaid or directly to hospitals.

NCPA’s long-standing proposal for a universal, refundable tax credit addresses the issue as follows: If people do not claim the tax credit for health insurance, it gets sent to a safety-net facility where they reside. We haven’t gone deep into the details of how that gets executed. Although, my latest proposal is that all federal funding for welfare be bundled into unified Opportunity Grants

Medicaid Managed Care Pharmacy Costs 15 Percent Less Than Fee-For-Service

vbnAmerica’s Health Insurance Plans (AHIP), the main trade association for health plans, has released research comparing pharmacy costs in states where Medicaid pharmacy benefits are “carved in” versus “carved out.”

“Carved in” means that a managed care organization manages the benefit. “Carved out” means the Medicaid bureaucracy manages it directly. The latter costs a lot more:

  • Across 28 states using the carve-in model, the net cost per prescription was 14.6%lower than the average net cost per prescription in states not carving in pharmacy.
  • This 14.6% differential created a $2.06 billion net savings in state and federal expenditures in FFY2014 for states deploying the carve-in model.
  • The seven carve-out states had a 20% increase in net costs per prescription from FFY2011-FFY2014 — in stark contrast to the 1% increase in net costs per prescription experienced by the 6 states that recently switched from a carve-out to a carve-in model.
  • The seven carve-out states “missed” a total of $307 million in savings in FFY2014 which would have occurred had they used a carve-in model.

Churn, Churn, Churn: Measuring the Cost of Fragmented Coverage

F1Low-income Americans face bewildering bureaucratic requirements when they try to obtain welfare benefits. One of the challenges is that they have to frequently re-apply for benefits because the state needs to know whether their incomes are still low enough form them to remain eligible. This moving in and out of benefits is called churn, and Dottie Rosenbaum of the left-wing Center for Budget and Policy Priorities has written an interesting paper discussing the challenges in measuring and understanding it:

States renew Medicaid and CHIP eligibility once a year, as federal rules require, and federal rules have changed to require a minimum eligibility period of 12 months for child care. Many states still review SNAP eligibility every six months……

States are allowed to recertify eligibility of elderly and disabled households for SNAP every 24 months.

There is trade-off here: If people have too much hassle re-applying for fragmented benefits they might not get them and that will cost taxpayers more down the road. On the other hand, welfare that depends on income demands some burden of re-certifying eligibility on the recipient.

NCPA recently published an analysis of the bewildering array of federally funded safety-net programs, and recommended that state, local, and civic agencies be able to apply for block grants that consolidate funding from multiple programs. This would also reduce the challenge of churn, as applicants would be able to re-certify eligibility at one agency.

States Are Bundling Social Services with Medicaid

NCPA recently published a study encouraging Congress to bundle payments to states for Medicaid with payments for other social services, proposing this reform as an adjustment to Representative Paul Ryan’s Opportunity Grants proposal.

New research from the Center for Health Care Strategies, Inc. shows that states are already doing this through Medicaid Accountable Care Organizations (ACOs). One tool, used in Oregon, is the global budget:

Through the global budget, CCOs [Coordinated Care Organizations] can include Medicaid‐covered services, such as non‐emergent medical transportation, as well as services that are not traditionally covered, to support patients’ needs. The latter services can include health education (e.g., healthy meal preparation classes); peer support groups (e.g., post‐partum depression programs); home and living environment improvements (e.g., air conditioners, athletic shoes); housing supports (e.g., shelter, utilities, critical repairs).

Paternalistic? Yes. However, the federal government has funded segregated programs from different departments subsidizing Medicaid and social services for decades. It would be better for Congress to recognize what states are doing at the local level and encourage that by bundling all welfare payments in to one grant for which local service organizations can compete.