House GOP, DFL split over expected savings from health fraud bill

Published 10:24 am Thursday, April 30, 2015

By David Montgomery

St. Paul Pioneer Press

It’s the $285 million question: how much waste, fraud and abuse is there in Minnesota’s public health programs?

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In a health and human services budget passed 72-60 early Wednesday morning, House Republicans bank on $300 million in savings from a concerted crackdown on waste in Medicaid and other programs — and believe the actual savings could be even higher.

But an analysis prepared by the Department of Human Services and trumpeted by DFL lawmakers has a much lower savings estimate: $16.5 million in the next biennium.

Those aren’t close. How much money can Minnesota actually save in a waste crackdown?

Eliminating waste, fraud and abuse in Medical Assistance and other public health programs almost would certainly save Minnesota much more than $16.5 million — but it might take time to get those savings, which has implications as lawmakers build this year’s budget. But the $300 million prediction is based not on a study but on several comparisons, each with potential flaws.

The state Department of Health currently rechecks eligibility for Medical Assistance, MinnesotaCare and other programs every year — though in the chaos of the MNsure rollout, some enrollees went longer between checks and are only now being reverified. A crackdown would mean more frequent checks. One likely method: using a computer algorithm to identify high-risk enrollees, who then would be asked for more information or personally checked by caseworkers.

Medical Assistance is Minnesota’s name for its Medicaid program, which covers extremely low-income people as well as elderly and disabled Minnesotans. MinnesotaCare covers people who are low-income but not poor enough to qualify for Medical Assistance.

Dhs: bigger savings after delay

Even if the DHS projection is entirely accurate, its $16.5 million figure understates the savings available from cracking down on waste, fraud and abuse. In fact, the DHS suggests Minnesota actually could save close to $150 million over two years in a waste crackdown — just not the next two years. Their figures for 2016 and 2017 assume a slow startup process with minimal savings, before bigger savings arrive in 2018-19.

Republicans believe a crackdown could be implemented faster — maybe not in the first year, but certainly by the second.

Startup speed was an issue for a similar Medicaid waste crackdown in Illinois. That program predicted $350 million in savings for 2013, its first year, but ended up saving just $2.6 million. In subsequent years, however, it identified hundreds of thousands of possible errors in the Medicaid rolls.

Still, startup speed matters because Republicans use savings from a waste crackdown to fund other parts of their budget. Savings that arrive a year later could leave a big hole in the House budget.

The DHS analysis also could be low in another area. It assumed no savings from cracking down on waste in the MinnesotaCare program because the same House budget calling for a waste crackdown eliminates MinnesotaCare. But if MinnesotaCare stays — something the DFL-controlled Senate wants — then the program could provide waste savings.

The difference between the projections goes beyond timing, however. Even after ramping up, the DHS projections are only about half of what House Republicans expect.

Ill., Penn. inspired GOP plan

How did the Republicans get their $300 million figure?

Rep. Matt Dean, R-Dellwood and the head of the House’s health and human services budget committee, said it was derived from several sources: DHS data, the examples of other states and recent audits of the DHS.

The DHS data were based on earlier, similar bills. Neither found more than $150 million in savings, but the proposal adopted this week goes further, so Dean expects bigger savings.

Illinois and Pennsylvania launched major crackdowns earlier this decade, and each found high error rates. Pennsylvania removed 160,000 people from its Medicaid rolls in 10 months, and at the time claimed savings of almost $300 million. Illinois had a slow start, but in 2014 and 2015 each removed more than 200,000 people from Medicaid.

Officials in the two states weren’t able to provide exact information on savings Wednesday.

Both states are larger than Minnesota and have more people on Medicaid: 2.5 times more in Pennsylvania and three times more in Illinois.