HealthWatch Wisconsin

January 31, 2012

HWW Reporter - the 2011 Medicaid Audit, Beyond the Highlights

ABC for Health, in partnership with HealthWatch Wisconsin, a membership organization that focuses work on maximizing access to care and coverage for the people of Wisconsin, has developed “The HealthWatch Wisconsin Reporter.” 

This special edition newsletter tackles the big issues, providing in-depth analysis and insight into complex public health and health coverage questions.

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Special Report, Analysis & Commentary:

The Issue of Accountability

DHS Responds to Audit

DHS Secretary Dennis Smith sidestepped most of the criticism of DHS financial management of Medicaid programs and the extensive, loosely supervised use of contractors in the audit and instead heralded the creation of the Office of the Inspector General and its mission to crack down on fraud and abuse. (By the way--DHS hired or plans to hire contractors that expect to play a big role in fraud detection.) Deputy Secretary Kitty Rhoades echoed the Secretary, saying, “Taxpayers, health care providers and Medicaid recipients should expect zero tolerance for inefficiency, waste and fraud.” Some legislators, like Representative Jon Richards (D-Milwaukee) have already reacted to the audit report, blasting DHS for perpetuating the myth of fraud when, in thousands of investigations, they turned up no widespread abuse.

Missing from the Audit

1.    The “Real Medicaid Fraud”

While the audit sheds light on the administration of Wisconsin’s public health programs, it leaves many serious questions unanswered. Missing from the audit is the identification of fraud AGAINST the 1.2 million Medicaid and BadgerCare beneficiaries in Wisconsin, as well as anyone who has been wrongfully turned away from one of those programs. When the Legislative Audit Committee meets this Wednesday, there are questions that deserve attention:

Fraud:

• Where is the evidence base for fraud?
• What is the evidence base to support more fraud investigators?
• What is the value of any new contract to pay vendors for fraud investigations?
• Are "fraud investigations" just an attempt to suppress enrollment?

Contracting issues, particularly in light of the LAB report:

• How many new contracts were awarded by the Administration in 2011-12?
• What were the contracts worth?
• What was the bidding process for vendors?
• How will the State compensate people wrongly accused or suspected of fraud?
• Will fraud investigation suppress legitimate attempts at program enrollment?

Given the current administration’s zealous, albeit one-dimensional, investigation into fraud and fraud investigation, HealthWatch wonders about the evidence base to support these expenditures. Is there an evidence basis of fraud that supports such financial expenditures by the State? Neither the 2004 nor the 2011 Medicaid audit shows it. ABC for Health produced numerous examples for LAB review of instances of inappropriate Medicaid denials or terminations of needed services for families. These examples stand and should be more thoroughly reviewed by the LAB. Unfortunately, DHS apparently lacks the initiative to fully address or investigate these wrongful denials of service. Consequently, fraud investigations focus only on the small fraction of consumers that wrongly secure health coverage. The State fails to care about or investigate people that receive wrongful terminations or denials of Medicaid coverage. In fact, Secretary Smith touted the new inspector general position and their new anti-fraud effort. But what fraud is Smith chasing? According to the audit, documented cases of fraud resulted in 2010-2011 recoveries equal to approximately .005 of 1% of Medicaid spending. HealthWatch agrees that the people of Wisconsin should not tolerate inefficiency, waste and fraud. But the real waste is unnecessary efforts to root out phantom cases of fraud, conducted while pitching a red herring to the people of Wisconsin. There are real inefficiencies in DHS’s management of Medicaid programs—not the struggles of people working to get needed health care coverage.

2.    Projected Medicaid Deficit of $141 Million Looms

The Legislative Fiscal Bureau reported a new State shortfall in Medicaid of $141 million. DHS lacks any straightforward strategy to address the shortfall. The Walker Administration backed away from terminating 53,000 adults from BadgerCare programs and acted under federal direction to eliminate the Family Care caps. Could the real rationale for new, aggressive fraud investigations be to suppress Medicaid and BadgerCare enrollment? State-funded investigators "going after people," asking accusatory questions and threatening penalties certainly chills enrollment. As advocates, we know that even discussion of heightened penalties, enrollment cutbacks, or administrative barriers to programs chills enrollment. Families are nervous about very limited coverage options in the future, and the specter of fraud only worsens the fear and gloom. Is this the way to treat 1.2 million people in Wisconsin who depend on these vital programs?

3.    The Failing Waiver Request

The audit failed to fully address the issue of proposed waivers and plan amendments to Medicaid by DHS and the Walker Administration. The original budget repair and subsequent biennial budget included a provision to terminate 53,000 childless adults and parents from BadgerCare Plus if the feds failed to approve Wisconsin’s Maintenance of Effort waiver request before December 31, 2011. Later, the Wisconsin’s Legislative Fiscal Bureau released a memo that for the first time revealed that almost 65,000 people would not be eligible for BadgerCare Plus under the new waiver proposal. Secretary Smith has consistently stated, “We’re just simply carrying over federal policy.” But advocates, including HealthWatch Wisconsin, believe this to be a blatant and cold attempt to gut part of a well established health care safety net for our most vulnerable families, individuals, and especially children. Although DHS withdrew the threatened termination of coverage for 53,000 adults, the proposed reductions for nearly 65,000 adults and children still loom. The audit report raises questions about the larger issue of the fundamental soundness of DHS projections and budget numbers. The audit identifies the hypocrisy from Department leadership, as they developed a waiver proposal without sound and supportable budget expectations.

4.    Immigrant Health Coverage

Another hot button issue that the audit touched on is immigrant health. There was no evidence of any fraud in the immigrant health programs that provide certain emergency services and service for pregnant women (BC+ Emergency Services, BC+ Prenatal). The numbers attributed to Medicaid services for eligible non-qualified immigrants were surprisingly low. On page 54 of the report, the Audit Bureau indicates that just 1,225 individuals – non-qualified or lawfully present immigrants – had Medical Assistance claims during the five year scope of the audit. These claims totaled just $10.7 million, and the Bureau did not discover any expenses unrelated to an emergency or a pregnancy. The audit also that DHS’s claims processing system is responsible for denying the claims of undocumented individuals that are unrelated to emergency or pregnancy-related services, but advocates know anecdotally that the system precludes many from seeking or receiving coverage in the first place.

5.    Early Periodic Screening Diagnosis and Treatment (EPSDT) in Wisconsin

Access to health care services for children should be a priority for our state. Unfortunately, the audit did not address the use of EPSDT, called HealthCheck and HealthCheck Other Services in Wisconsin. Consider, for example, that Federal Medicaid law requires that every child who receives a HealthCheck referral for a dental screening must be seen by a licensed dentist and that the child must receive not only a screening, but a full diagnostic workup and whatever treatment is need to ameliorate any dental or oral issues identified during the screen. Wisconsin is required to pay for this AND to ensure that it happens. As of now, Wisconsin has one of the worst records in the nation in carrying out EPSDT obligations. In 2007, just 23% of Wisconsin’s Medicaid/BadgerCare eligible children received any dental services. Only three states, Delaware, Florida, and Kentucky, had worse records. HealthCheck referrals for treatment beyond dental screenings are drastically underused. States must ensure timely EPSDT (HealthCheck) treatment, generally within an outer limit of six months after the request for screening services. EPSDT (HealthCheck) also contains outreach requirements. The state must seek out eligible children and inform them of the benefits of prevention and the health services and assistance available, and help them and their families use health services.

HealthCheck is of particular importance in light of Secretary Smith’s proposed cuts to children in households above 100% of the FPL in the form of his proposed “Alternative Benchmark Plan.”  In fact, Smith opined that EPSDT (HealthCheck) was “available” to help provide children medically necessary services. HealthCheck provides for services and benefits, even those not included in the state plan, but a family has to jump through hoops and hurdles to get to these benefits. And remember that DHS and the Walker Administration played a role in terminating consumer assistance for BadgerCare and other health care coverage program beneficiaries. Using HealthCheck means that many of the services children got on the BadgerCare Plus Standard Plan will now have access restricted, with hurdles such as verifications, Prior Authorizations and clinical information. The Department, even under EPSDT retains discretion to approve referrals. Smith never identified a process for DHS to evaluate requests, such as reviewing medical necessity, establishing criteria for provision of services, and determining the amount, duration and scope of services. Nor did Smith identify how the Department would provide outreach and education to assist families seeking EPSDT and "other services" through managed care organizations. 

Conclusion

ABC for Health, Inc.
32 N. Bassett St.
Madison, WI 53703-2606 USA