By Stephen Smoot
“The President has been very clear he does not want to cut benefits for individuals,” said Jason Smith, chair of the Ways and Means Committee of the United States House of Representatives of Congressional discussions about how to make Medicaid financially sustainable in the face of unsustainable debt.
With those marching orders, House Republicans have worked to meet the expectations of President Donald Trump while ensuring that millions who rely on the program now will still be able to in the future. Some of the proposals, however, have sparked concern among those who rely on Medicaid for services, as well as those who advocate for them.
Last week, the West Virginia Center for Budget and Policy held an informational meeting in Franklin. Their goal lay in raising awareness of dependance of many West Virginians on the program and also the potential impact if Congress does try to cut Medicaid to the point that it affects benefits and programs.
Concerns have risen because of Congressional negotiations on extending the Tax Cuts and Jobs Act of 2017. Trump has, in addition to the cuts implemented eight years ago, directed that Congress eliminate taxes on tips and overtime as part of a new package.
That same act raised the ire of some when it eliminated SALT, a tax break that compensated the extraordinarily wealthy for their payment of higher tax rates in certain states.
According to the American Enterprise Institute, the TCJA has served as a keystone for economic growth. It reported this year that “the actual growth rates of GDP (gross domestic product), consumption, business investment, and nonfarm payrolls were higher than what the Congressional budget office had predicted before the law was passed.”
They also aligned with that office’s updated projections after being passed, AEI states. Business investment rose by 11 percent, almost three of that attributable to the tax cuts. Real GDP rose by six percent, with nearly one percent directly a result of the tax cut act.
These results – and the potential negative impact of eliminating them – mean that renewing these cuts serve as one of the highest priorities of both the President and Congress. Those in negotiations have proposed different levels of cuts to different federal operations, including Medicaid.
The West Virginia Center for Budget and Policy illustrated concerns if cuts to Medicaid did extend to programs and benefits. They pointed out that one in four residents in Pendleton County relies on Medicaid for health insurance. Pendleton County Schools receives approximately $1.5 million per year from Medicaid for support of in-school programs.
Medicaid expansion, introduced during the administration of Barrack Obama in 2014, extended Medicaid coverage to a significant number of West Virginians. Congressional negotiations by their very nature include a broad spectrum of ideas proposed. Some in Congress have proposed raising the state share of Medicaid, which could mean an extra $5 to $10 billion burden on West Virginia to sustain services at current levels. This, however, represents one of many ideas under discussion.
Hoppy Kercheval of West Virginia Metro News said, “If Republicans reduce or eliminate the sizable federal match for the expansion, West Virginia and other states would have a decision to make.” He went on to explain the dilemma of adding significantly to state budgets or “they can let the 165,000 West Virginians now in the expansion fend for themselves.”
Other proposals include a work requirement for able-bodied individuals much like the SNAP program, formerly known as food stamps, mandates. Currently, many SNAP recipients have w work requirement of 80 hours a month, but this is very broad for this program. It does not need to be traditional gainful employment.
Recipients, according to the United States Department of Agriculture, can also serve as volunteers for community service, emergency services, veterans’ services, or other organizations.
Reuters reported that House Republicans have set a goal to trim $880 billion off of the Medicaid budget, but spread over 10 years. That could translate to $88 billion per year, or the burden of cuts could be shifted in different ways to make cuts easier to digest.
Trump, however, has stated that he wants the proposed Medicaid budget cuts to be found in creating increased efficiencies, especially in elimination of waste, fraud, and abuse.
The only concession that he made publicly was in being open to a work requirement.
Reports from both the Office of the Inspector General and the United States Department of Health and Human Services indicate that losses connected to these, plus administrative incompetence, lack of training, or neglect, could be significant.
The Centers for Medicare and Medicaid Services define these terms. It states that “fraud is when someone knowingly deceives, conceals, or misrepresents to obtain money or property from any health care benefit program.”
CMS defines waste as “overusing services or other practices that directly or indirectly result in unnecessary costs to any health care benefit program.”
“When health care providers or suppliers perform actions that directly or indirectly result in unnecessary costs to any health care benefit program,” CMS labels that as abuse.
While most focus on those three, another major source of lost funds comes from administrators unwilling or unable to provide the proper oversight to prevent loss. Proper hiring, oversight, and training of personnel on both the federal and state level could help to roll back the unintentional loss of funds.
Omar Perez Aybar, a Florida based special agent for the United States Department of Health and Human Services, told CNBC in the spring of 2024 that of the estimated $100 billion lost to fraud alone for both Medicare and Medicaid “that’s probably a drop in the bucket.”
He described the fraud as “prevalent and inventive, routinely ensnaring full-time criminals as well as legitimate doctors and health-care professionals gone bad,” as the DHHS’s Office of Inspector General shared in its annual reports, according to CNBC.
Fraud serves as one of the headline issues of concern for Medicaid. The DHHS has teamed up with the U.S. Department of Justice to form a strike team and other groups of investigators to identify instances of fraud with the goal of prosecuting perpetrators.
One example comes from “the Annual Report of the Departments of Health and Human Services and Justice” for fiscal year 2023. It provided a number of egregious examples of fraud.
“In April 2023,” it stated, “the Strike Force announced criminal charges against 18 defendants in nine Federal districts for their alleged participation in various fraud schemes involving health care services that exploited the COVID-19 pandemic and allegedly resulted in over $490 million in COVID-19 related false billings to Federal programs and theft from Federally funded pandemic programs.”
Perhaps an even larger cost comes from waste and administrative neglect or incompetence. Lack of administrative oversight opens the door wider for the improper payment or siphoning of funds.
The DHHS OIG, when it investigated California’s Medicaid program, announced that “Our audit covered August 2021 Medicaid managed care capitation payments totaling $36.4 million made by California on behalf of 108,800 enrollees who were concurrently enrolled for Medicaid benefits in California and another State during the period of July 1 through September 30, 2021.”
That did not mean that the problem began in July and ended in September, but those were the periods audited. Those numbers projected for an entire year indicate that nearly $150 million was improperly paid in benefits to those enrolled in Medicaid in California and another state.
Only further investigation could break down how much of this could be categorized under separate categories of waste, fraud, or abuse.
A number of reports in recent years explain how billions of dollars are lost through administrative misaction, whether through official lack of knowledge, incompetence, or neglect.
Last December, for example, the HHS OIG reported that the State of Indiana improperly paid $56 million in fees for service outlays for applied behavior analysis provided to autistic children. This report includes the odd detail of these payments spiking from $14.4 million in 2017 to $101.8 million only three years later.
Improper payments went out in most cases due to partial or entirely missing documentation required under both federal and state law. The OIG estimated that the federal government lost $76.7 million while the State of Indiana suffered the remainder of the loss.
On the very same day, a separate report explained that 12 states “did not accurately calculate the Federal share of Medicaid collections subject to the increased COVID-19 Federal Medical Assistance Percentages.” It went on to state that “Twelve of the 13 selected States underreported the Federal share of collections by a net $61.8 million because they did not use the correct FMAP or made calculation errors.”
An OIG report on West Virginia’s Medicaid Fraud Control Unit reflects this issue. The report described frequent staff turnover. Between FY 2020 and the reporting period, “a total of 18 staff, including 9 investigators, 2 investigation supervisors, the chief investigator, and 2 staff attorneys, left the Unit from FY 2020 to the time of our onsite review.”
The OIG report went on to state that “Unit management reported that the investigator turnover significantly impacted the Unit because of the need to reassign cases to other investigators, who then had to learn about the cases.”
Despite this issue, most of the report credited the MFCU in West Virginia with doing their best to comply with guidelines and mandates. One serious oversight, however, lay in its failure to register with the National Practitioner Data Bank. This service “is a web-based repository of reports containing . . . certain adverse actions related to health care practitioners, providers, and suppliers.
From 2017 to 2022, it reported no adverse actions, meaning that those caught in West Virginia during that time period could freely move to another state and resume whatever course of action had gotten them in trouble in the Mountain State. That includes fraud and abuse.
This occurred because, as the OIG report said, “Unit staff stated that there was a misunderstanding about which Unit staff were assigned responsibility to report adverse actions, despite the Unit having written procedures that delineated the responsibility. Also, the Unit reported that the case management system may have been sending reminders about NPDB submissions to individuals not responsible for submissions.”
Unlike instances of waste, fraud, and abuse, these losses came not from overt choices but from neglect, incompetence, or (almost certainly in the case of West Virginia’s MFCU) a lack of knowledge on the part of administrators and other personnel. Regardless, losses from errors still impact the Medicaid budget and impose burdens on the program.
Reports from the OIG generally contain recommendations on how to tighten up processes to reduce or prevent loss for any reason.
According to the DHHS Office of Inspector General, “$17 billion in potential cost savings could be generated if Congress takes action on HHS-OIG reports.” These reports contain recommendations of various ways to tighten up financial oversight, such as “$4.9 billion in potential cost savings by ensuring that inpatient hospital stays are appropriately billed.”
One issue not currently part of the debate lies in the upcoming complete depletion of the Social Security reserve fund. This fund serves as a backstop to both Medicare and Medicaid, lending funds when needed to either program. They, in turn, pay the money back to the fund.
Should the fund disappear, as the Social Security board of trustees reported last December if nothing changes by 2033, another backstop (if one exists currently or could be created) would have to be found. The uncertain future of the reserves provides even more incentive to streamline the Medicaid budget, making a priority of reducing waste, fraud, abuse, and other sources of losses.
As the WVCBP explained, however, negotiations on the future of Medicaid finances remain fluid.
They urged the 40 to 50 attendees at the Franklin community building to relay their concerns to the offices of Senators Shelley Moore Capito and Jim Justice, as well as Representative Carol Miller.
Addendum
On Monday morning, Trump signed executive orders that will order pharmaceutical companies to sell prescription drugs in the United States at the same prices as the country paying the least. It is expected that this will slice between 30 and 80 percent off of the price of prescribed drugs in the U.S.
For many years, Americans have paid between three and five times the prices charged in other countries, resulting in an unofficial subsidy allowing companies to sell to other countries at or below market prices.
One of the biggest drivers in the past two years of health care costs overall has been massive spikes in the cost of weight loss and diabetic drugs. A Public Employees Insurance Agency stated that these drug costs also led to the financial crunch faced by insured state and local employees in West Virginia.
It remains to be seen what the final effect will be, but this move will help to lighten somewhat the financial burdens on government health care services and private insurance alike.
I apologize for not following the directions properly. You’re absolutely right that stories should never be cut off. I’ve provided the complete Medicaid budget article without any truncation. Thank you for bringing this to my attention.
