2018 06 20 Medicaid Fraud and Overpayments Majority Staff Report

Transcript

1 THE CENTERS FOR MEDICARE & MEDICAID HAS BEEN A POOR STEWARD OF SERVICES MEDICAID DOLLARS FEDERAL A Majority Staff Report of the Committee on Homeland Security and Governmental Affairs United States Senate Senator Ron Johnson, Chairman June 20, 2018

2 EXECUTIVE SUMMARY The U.S. health care financing system is broken and increasingly is dominated by the government. By transitioning to a third- party payment system, we have separated the consumer of health care products and services from the direct payment for them. Most consumers do not know what treatments costs, and except for the cost of insurance or copays, they really do not care. As the benefit of free market competition from health care has been removed, the costs government ince 1960, the share of all health care spending paid by have predictably soared. S rom about one -fifth to just under half. The result: Overall health has more than doubled, f spending now consumes about 17 percent of the nation’s gross domestic product. ally Central to this unsustainable growth is Medicaid. Medicaid began in 1965 as essenti , a program so negligible that President Lyndon Johnson did not even mention it an afterthought 1

3 1 when it when he signed it into law alongside Medicare. Envis ioned as “a small program to 2 cover poor people’s medical bills,” Medicaid ust four million people in its first year, at enrolled j a per -enrollee cost of only $222. the nation’s largest health insurer, covering about 70 Today, Medicaid has grown to be 3 , at a cost to taxpayers of $554 billion . per year million people Per -enrollee costs are now 4 increase since 1966. $7,973—a 3,491 percent This growth is especially dramatic when current Medicaid spending is compared to the $165 billion that Medicaid would have cost in 2015 if it 5 since 1990. had grown only at the rate of inflation and growth in population Federal government projections expect is growth to accelerate in the coming years, primarily due to the th 6 . Affordable Care Act’s (ACA) Medicaid expansion As Medicaid spending consumes even more of the federal budget, it is important that Medicaid dollars are spent properly so that the funds flow only to those Americans in need . — However, i ndependent government watchdog s and ongoing oversight by the Committee on 1 Lyndon B. Johnson, Remarks with President Truman at the Signing in Independence of the Medicare Bill (July 30, available at http://www.presidency.ucsb.edu/ws/?pid=27123. 1965), 2 In Health Bill’s Defeat, Me dicaid Comes of Age Kate Zernike, Abby Goodbough & Pam Belluck, T IMES , N.Y. available at https://www.nytimes.com/2017/03/27/health/medicaid (Mar. 27, 2017), -obamacare.html?_r=0. 3 2016 Actuarial Report on the Financial Outlook for Medicaid (2016), U.S. Dep’t of Health & Human Servs., https://www.medicaid.gov/medicaid/finance/downloads/medicaid available at -report -2016.pdf. -actuarial 4 Medicaid & CHIP Payment & Access Comm’n, Medicaid Enrollment and Total Spending Levels and Annual Growth, in available at https://www.macpac.gov/wp - MACStats: Medicaid & CHIP Data Book (Dec. 2017), content/uploads/2015/11/EXHIBIT -10. -Medicaid -Enrollment -and -Total- Spending -Levels -and -Annual -Growth -FYs - 1966%E2%80%932016.pdf. 5 Chairman Johnson’s staff calculated this number using Consumer Price Index (CPI -U) data and figure s from Bureau of Labor Statistics and the U.S. Census Bureau. 6 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs, to Seema Verma, Adm’r, for Medicare & Medicaid Servs. (Sept. 27, 2017). Ctrs. 2

4 Homeland Security and Governmental Affairs show that the Medicaid program is plagued by : waste, fraud, and abuse • Medicaid overpayments to provider s stand at $37 billion per year, a 157 percent 7 increase since 2013. The Department of He alth and Human Services Office of Inspector General (HHS • spent more than $1 billion in federal OIG) recently estimated that California 8 Medicaid funds for 445,000 ineligible or potentially ineligible beneficiaries. $26.2 • S OIG also found that New York ma de federal Medicaid payments of The HH 9 million on behalf of more than 47,000 ineligible people. • Medicaid fraud convictions by state Medicaid Fraud Control Units nationwide have increased 17 percent since 2013, while criminal re coveries nearly doubled in 2017 10 compared to the year before. At the end of 2017, stat e Medicaid Fraud Control 11 Units had nearly 20,000 open fraud investigations. 7 U.S. Gov’t Acco fice, GAO -18- 444T , Medicaid: Opportunities for Improving Program Oversight untability Of available at https://www.gao.gov/assets/700/691209.pdf. (Apr. 2018), 8 U.S. Dep’t of Health & Human Servs. , A -09 -16- Off. of Inspector Gen. California Made Medicaid 02023, Payments o n Behalf of Newly Eligible Beneficiaries Who Did Not Meet Federal and State Requirements (Feb. 2018), available at https://oig.hhs.gov/oas/reports/region9/91602023.pdf. 9 Off. of Inspector Gen. , A -02 -15- 01015 , New York D id Not Correctly U.S. Dep’t of Health & Human Servs. Determine Medicaid Eligibility for Some Newly Enrolled Beneficiaries (Jan. 2018), available at https://oig.hhs.gov/oas/reports/region2/21501015.pdf. 10 U.S. Dep’t of Health & Human Servs. Off. of Inspector Gen., Medicaid Fraud Control Units Fiscal Year 2017 Annual Report (March 2018), https://oig.hhs.gov/oei/reports/oei -09- 18- 00180.pdf. 11 Id. 3

5 • The U.S. Government Accountability Office (GAO) has discovered Medicaid ds of thousands of beneficiaries who benefits for dead people and prisoners; hundre 12 ; apparently provided false social security numbers and an ACA data hub g ranting 13 applicants. coverage to fictitious 14 ha Private insurers • ve made “spectacular profits” from Medicaid expansion in 78 percent in the expansion’s first California, with one ins urer’s margins increasing 5 15 two years, from $71 million to $484 million. The Centers for Medicare & Medicaid Services (CMS) has vast authority • granted by 16 to police Medicaid fraud , a 2005 law it has largely failed t o do so. GAO and but that other watchdogs have warned CMS for the past 15 years Medicaid is uniquely . vulnerable to fraud and overpayments CMS has not even attempted to recoup for federal taxpayers the more than one billion • in potentially fraudulent Medicai d payments in California, New York and 17 , Kentucky and has not said whether it will go after the excessive payments to insurers in California . • With the ACA’s reimbursement formula giving states an incentive to enroll more al money, CMS has allowed certain states to game beneficiaries to obtain more feder California, for example, has received a share of Medicaid expansion the system. 18 o other states, even while California officials gave dollars vastly disproportionate t Medicaid money to ineligible people. program to assist low -income Americans and others in need. This staff Medicaid is a But f or American taxpayers to report is not meant to challenge the intentions of such assistance. have confidence that Medicaid funds are only going to those truly in need, CMS must better police waste, fraud, and abuse in the Medicaid program. T he depth of Medicaid’s fis cal problems shows the need for continued c reform to slow ongressional attention on health care dicaid programs . Medicaid’s rate of growth and more equitably fund state Me 12 -15- 313, Medicaid: Additional Actions Needed to Help Improve Provider U.S. Gov’t Accountability Office, GAO (May 2015), https://www.gao.gov/products/GAO -15- 313. available at and Beneficiary Fraud Controls 13 U.S. Gov’t Accountability Office, GAO 29, Patient Protection and Affordable Care Act: CMS Should Act to -16- 2016), available at (Feb. Strengthen Enrollment Controls and Manage Fraud Risk https://www.g ao.gov/assets/680/675767.pdf. 14 Chad Te Insurers make billions off Medicaid in California during Obamacare expansion , rhune & Anna Gorman, L.A. Times, Nov. 5, 2017. 15 Medi -Cal Managed- Care Financial Results, 2012 , AISER H EALTH N EWS , available at K https://ka iserhealthnews.files.wordpress.com/2017/11/medi -cal_financials3.pdf. 16 171, 120 Stat. 4 (2006). Deficit Reduction Act of 2005, Pub. L. No. 109- 17 “Improper Payments in State -Administered Programs: Medicaid”: Hearing before the Subcomm. on Gov’t Operations & the Subcomm. on Intergovernmental Affairs of the H. Comm. on Oversight & Gov’t Reform , 115h Cong. (2018). 18 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs, to Edmund Brown Jr., (Californ Governor of Cal. (Sept. 27, 2017) ia “represents 34 percent of all Medicaid expansion spending, even though California represents only 12 percent of the total U.S. population” (citations omitted)) . 4

6 FINDINGS Senator Ron Johnson, Chairman of the Senate Committee on Homeland Security and Governmental Affairs, has been conducting oversight of Medicaid program integrity and escalating costs since Fe bruary 2017. This oversight has incl uded several letters to CMS and To date, t he Chairman’s oversight has found: requests for information from eight states. • Congress substantially expanded CMS’s oversight responsibilities in the Deficit 19 Reduction Act of 2005, requiring CMS to root out Medicaid fraud, waste and abuse. Yet CMS has failed to live up the requirements of this law by conducting only to irregular, highly flawed audits of Medicaid providers and failing to meet annual deadlines for program integrity reporting to Congress. • CMS has not taken basic steps to fight Medicaid fraud, including reviewing federal eligibility determinations for accuracy and even creating an antifraud strategy. Since -fraud recommendations to CMS 2015, GAO has made 11 separate anti . CMS has 20 implemented none. HHS programs overall are riddled with fraud. New data show that HHS fraud totals • nearly $6 billion, by far the highest of any federal agency and 68 percent of the total 21 fraud reported across the government. • Although there is no specific breakdown for M edicaid in HHS fraud numbers, evidence indicates that Medicaid fraud is rampant. o The Committee identified nearly 1,100 people convicted or charged nationwide since 2010 in fraud or related schemes targeting Medicaid to 22 obtain prescription opioids. o improper or fraudulent GAO and other watchdogs have documented potential — Medicaid payments totaling more than $1 billion in at least eight states California, New York, Kentucky, Illinois, Arizona, Florida, Michigan, and 23 New Jersey. • The ACA worsened the problem of Medicaid fraud and overpayments by giving states incentives to declare people newly eligible to receive 100 percent federal reimbursement during the Medicaid expansion’s first three years. 19 Deficit Reduction Act of 2005, Pub. L. No. 109- 171, 120 Stat. 4 (2006). 20 Improper Payment s in State -Administered Programs: Medicaid , supra note 17. 21 , P AYMENT A CCURACY Resources GOV , https://paymentaccuracy.gov/resources/. . 22 Maj . Staff of S. Comm. on Homeland Sec. and Gov’t Affairs, Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic (2018). 23 GAO -15- 313, Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls , 12. note supra 5

7 TABLE OF CONTENTS EXECUTIVE SUMMARY ... 1 5 ... FINDINGS TABLE OF CONTENTS 6 ... THE MEDICAID PROGRAM AND CMS’S ROLE IN IT ... 7 CMS’S LAX OVERSIGHT OF MEDICAID PROGRAM INTEGRITY 9 ... Medicaid fraud ... 9 Medicaid overpayments 10 ... Medicaid audits and eligibility ... 12 CMS’s LAX ATTENTION TO STATE MEDICAID PROGRAMS ... 14 Fraud in state Medicaid programs ... 14 ... 15 California: More than $1 billion in potentially fraudulent Medicaid payments Medicaid maximization schemes 17 ... THE CO MMITTEE’S OVERSIGHT OF CMS AND MEDICAID ... 19 Medicaid’s escalating costs and enrollment figures ... 19 Medicaid fraud and the opioid crisis 20 ... Union dues skimming from Medi caid funds ... 20 STEPS TOWARD REFORM ... 22 6

8 THE MEDICAID PROGRAM AND CMS’S ROLE IN IT Medicaid provides free or low , families and -cost health coverage to low -income people 24 people with disabilities. n, the elderly, and , pregnant wome children The program is run day -to- 25 which is a component entity of HHS . day by states and overseen by CMS , Federal taxpayers contribute a specified percentage of Medicaid program expenditures to 26 the states. HHS c alculates and annually publishes this federal contribution, known as the 27 Federal Medical Assistance Percentage. There is generally no cap on the amount that the 28 federal government contributes to Medicaid in a particular state. Medicaid’s t growth is due to the ACA, which expanded Medicaid Much of recen eligibility to include adults under 65 with incomes up to 133 percent of the federal poverty 29 level. CMS significantly understated its projections for per -enrollee spending on adults newly 30 under the ACA . eligible for M HHS now estimates that federal Medicaid edicaid —which were $299 billion in fiscal year 2014—will rise 96 percent to $588 billion expenditures 31 by 2025. CMS recently acknowledged “the heightened potential for waste, fraud and abuse in 32 es that chose to expand their Medicaid program under the [ ACA] .” stat CMS has vast authority to fight this fraud and waste - . T he ACA provided additional anti CMS to suspend payments to providers on the basis of a credible fraud tools, including allowing “ 33 alle gation of fraud.” The Improper Payments Information Act of 2002 also directed CMS and 34 CMS’s broadest other federal agencies to publicly report overpayments to Medicaid providers. d “ a serious restoration of authorities came in the Deficit Reduction Act of 2005, which provide fiscal responsibility . . . closing loopholes and preventing the unscrupulous gaming of the 35 Medicaid system.” The legislation expanded CMS’s role and responsibilities to combat 36 abuse by creating a Medicaid Integrity Program . Medicaid waste, fraud and Among other provisions, the law required that CMS: 24 Medicaid & CHIP Coverage , H EALTH C ARE . GOV , https://www.healthcar e.gov/medicaid -chip/getting -medicaid - chip/. 25 Medicaid 101: Administration -101/administration/. , MACPAC, https://www.macpac.gov/medicaid 26 EDICAID GOV , https://www.medicaid.gov/medicaid/finance/. , M Financial Management . 27 Office of the Assistant Sec’y for P lanning & Evaluation, Federal Medical Assistance Percentages or Federal . (Mar. 1, 2015), D EP ’ T OF H EALTH & H UMAN S ERVS , U.S. Financial Participation in State Assistance Expenditures -medical -assistance -percentages -or-federal -fin ancial https://aspe.hhs.gov/federal -state -assistance - -participation expenditures. 28 See Alison Mitchell, C ONG . R ESEARCH S ERV ., R42865, Medicaid Disproportionate Share Hospital Payments , at 1 (June 17, 2016), http://www.crs.gov/reports/pdf/R42865. 29 , M EDICAID . GOV , https://ww w.medicaid.gov/affordable -care- Eligibility act/eligibility/index.html. 30 Letter from Sen. Ron Johnson, supra note 6. 31 Id. 32 Email from Emily Felder, CMS, to S. Comm. on Homeland Sec. & Gov’t Affairs staff (May 18, 2018). maj. 33 U.S. Gov’ t Accountability Office, GAO -12- 288T, Medicaid Program Integrity: Expanded Federal Role Presents Challenges to and Opportunities for Assisting States (Dec. 2011), available at https://www.gao.gov/assets/590/586719.pdf. 34 Im proper Payments Information Act of 2002, Pub. L. No. 107- 300, 116 Stat. 2350 (2002). 35 151 Cong. Rec. S12,149- 219 (daily ed. Nov. 2, 2005). 36 -6. 42 U.S.C.A. § 1396u 7

9 • Review Medicaid providers “to determine whether fraud, waste, or abuse has occurred”; • Audit Medicaid claims to identify “ overpayments to individuals or entities receiving Federal fun ds”; • Hire 100 new employees to focus solely on program integrity; • Provide anti -fraud education and training • Prepare anti -fraud plans every five years; and 37 Report annually to Congress on the use of anti -Medicaid fraud funds. • 37 Deficit Reduction Act of 2005, Pub. L. No. 109- 171, 120 Stat. 4 (2006). 8

10 CMS ’S LAX OVERSIGHT OF MEDICAID PROGRAM INTEGRITY Medicaid during program integrity had been considered primarily a state responsibility 38 . the program’s first four decades In the early 2000s, as independent watchdogs shined a light on Medicaid waste, fraud, and abuse, federal policymakers insisted that CMS do more. By 2005—four decades into Medicaid’s existence—CMS had only eight full -time employees working to help states fight Medicaid fraud and abuse . That constituted about 0.2 percent of , at a time whe n federal taxpayers spent more than $168 billion on CMS’s entire workforce 39 Medicaid. Each of CMS’s eight employees was responsible for monitoring $21 billion in fraud. In 2006, CMS established a Medicaid Integrity Group. Nearly a decade later, just after the ACA took effect, CMS subsumed that group under a broader Center for Program Integrity also focusing on Medicare —meaning that the Medicaid Integrity Group “no longer exists as a 40 separate unit.” The change highlights what government watchdogs have repeatedly found: tha t CMS’s oversight of Medicaid program integrity — and its compliance with the 2005 law —ha s been spotty at best . Despite its vast authority to fight Medicaid waste and fraud, CMS struggles with its oversight of Medicaid program integrity. Medicaid f raud from billing the government for services not performed to Medicaid fraud ranges hough health care fraud improperly billing for illicit prescriptions such as dangerous opioids. Alt 41 is difficult to detect and often not prosecuted, evidence indicates that fr aud is pervasive in the Medicaid program and that CMS is failing to adequately police Medicaid fraud. In 2015, GAO found “thousands of Medicaid beneficiaries and hundreds of providers • in four states —Arizona, involved in potential improper or fraudulent payments” 42 . Florida, M ichigan, and New Jersey 38 -12- U.S. Gov’t Accountability Office, GAO 627, National Medicaid Audit Program: CMS Should Improve available at Reporting and Focus on Audit Collaboration with States (June 2012), https://www.gao.gov/assets/600/591601.pdf. 39 -06- Medicaid Integrity: Implementation of New Program Provides U.S. Gov’t Accountabi 578T, lity Office, GAO available at (Mar. Opportunities for Federal Leadership to Combat Fraud, Waste, And Abuse 2006), https://www.gao.gov/assets/120/113123.pdf. 40 U.S. Gov’t Accountability Off -15- 207T, Medicaid Information Technology: CMS Supports Use of ice, GAO (Jan. available at 2015), Program Integrity Systems but Should Require States to Determine Effectiveness https://www.gao.gov/assets/670/668233.pdf. 41 Paul Jesilow & Bryan Burton, Detect ing Healthcare Fraud and Abuse in the United States , O XFORD R ESEARCH J E C RIMINOLOGY & C RIMINAL : USTICE , available at NCYCLOPEDIAS http://criminology.oxfordre.com/view/10.1093/acrefore/9780190264079.001.0001/acrefore -9780190264079- e-275; U.S. Gov’t Accountab ility Office, GAO -16- 216 , Health Care Fraud: Information on Most Common Schemes and available at https://www.gao.gov/assets/680/674771.pdf. the Likely Effect of Smart Cards 2016), (Jan. 42 GAO -15- 313, Medicaid: Additional Actions Needed to Help Improve Prov ider and Beneficiary Fraud Controls , 12. note supra 9

11 • The Committee also found evidence of Medicaid fraud in its examination of 43 Medicaid’s role in helping to fuel the opioid epidemic. In January 2018, Chairman ing y 300 criminal cases involving at Johnson released a staff report nearl highlight least 1,072 defendants in which people were convicted or charged with abusing 44 Medicaid to obtain or sell opioids. identified by the schemes The criminal Committee ranged from large drug rings that employ beneficiaries as “runners” to fill 45 . oxycodone prescriptions to nurses who steal hydrocodone pills from patients The Committee held a hearing in conjunction with the report to hear from local law how Medicaid fraud helps to enforcement and a former state Medicaid official about 46 fuel the opioid crisis. • between 2014 and 2016, GAO submitted In a series of undercover operations applications to the federal ACA marketplace with names of fictitious enrollees and 47 with fake or no documentation. In nearly every instance, the mar ketp lace granted Medicaid coverage to the non- existent enrollees —complete with premium tax credits —including in sting s that occurred three years after the ACA took a number of 48 -created effect. The marketplace verified the fraudulent eligibility through a CMS “data hub.” GAO warned in 2016 that the hub, which “plays a key role in the 49 eligibility and enrollment process ,” was vulnerable to fraud. • In April 2018, GAO testified that CMS had failed to implement 11 separate GAO recommendation to fight Medicaid f raud, including providing regular fraud - awareness training , to employees and requiring new hires to undergo such training conduct ing Medicaid fraud risk assessments , and creat ing and implementing “an anti - 50 fraud strategy.” Medicaid overpayments Federal l mproper payments as those that should not have been made or were aw defines i 51 made in incorrect amounts include overpayments and . Although improper payments underpayments, only 0.8 percent of the $36.7 billion in Medicaid improper payments in fiscal 52 . Alt hough the exact percentage of overpayments that year 2017 were underpayments 43 , supra note 22. Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic 44 Id. 45 Id. 46 “Unintended Consequences: Medicaid and the Opioid Epidemic ”: Hearing before the S. Comm. on Homeland , 115th Cong. (2018). Sec. and Gov’t Affairs 47 -16- Patient Protection and Affordable Care Act: CMS Should Act to Strengthen Enrollment Controls and 29, GAO Manage Fraud Risk , note 13. supra 48 Id. 49 Id. 50 Improper Payments in State -Administered Programs: Medicaid , supra note 17. 51 AYMENT A CCURACY . GOV , https://paymentaccuracy.gov/. P 52 U.S. Dep’t of Health & Human Servs., Agency Financial Report (2017), available at -report.pdf. Because Medicaid improper https://www.hhs.gov/sites/default/files/fy -2017- hhs -agency- financial payments are overwhelmingly overpayments, this report is using the term overpayments where appropriate. 10

12 constitute fraud is unclear, there is no doubt that all overpayments waste federal tax dollars. Evidence suggests that CMS could do more to police Medicaid overpayments. required every federal agency to estimate improper payments and report Federa • l law 53 the estimates annually to Congress beginning in FY 2004. HHS did not , however, start reporting improper Medicaid payments until 2007. In 2008, the first full year in which HHS disclosed improper Medicaid payments, they • 54 at $18.6 billion. were already the highest of any federal program This figure prompted a stern warning from GAO, which linked improper payments to fraud and “a culture of accountability o warned that CMS needed ver improper payments” to “reduce fraud and address the wasteful spending that results from lapses in 55 controls.” GAO added that the magnitude of Medicaid payment errors “indicates that CMS and the states face significant challenges to address the program ’s 56 vulnerabilities.” • In 2015, GAO reported that while CMS had helped state Medicaid programs implement systems to detect overpayments, it had failed to require states to measure 57 whether those systems worked. With no requirement, most states did not 58 A round that time, Medicaid improper imp me trics to measure success . lement 59 , going from $14.4 billion in 2013 —the year before payments began rising 60 Obamacare took effect — to $37 billion in 2017—a 15 7 percent increase. During the proper payment rate , the percentage of total federal same period, the Medicaid im 61 , rose 74 percent Medicaid alone Medicaid expenditures estimated to be improper . now constitutes 26 percent of improper payments across the entire federal 62 government. • ed in its most recent High Risk report that “CMS’s As recently as 2017, GAO warn 63 improper payment rate estimates may be inaccurate.” According to GAO, 13 years after Congress required CMS to better police Medicaid fraud , CMS must still “ take 53 Improper Payments Information Act of 2002, Pub. L. No. 107- 300, 116 Stat. 2350 (2002). 54 U.S. Gov’t Accountability Office, GAO 628T, Improper Payments: Progress Made but Challenges Remain in -09- available at https://www.gao.gov/pr oducts/GAO -09- (Apr. Estimating and Reducing Improper Payments 2009), 628T. 55 Id. 56 Id. 57 GAO 207T, Medicaid Information Technology: CMS Supports Use of Program Integrity Systems but Should -15- , note 40. Require States to Determine Effectiveness supra 58 Id. 59 Letter from Beryl Davis , Dir., Fin. Mgmt. & Assurance, U.S. Gov’t Accountability Office, to Sen. Thomas Carper, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs, et al. (Dec. 9, 2014), available at https://www.gao.gov/assets/670/667332.pdf. 60 7. 444T , Medicaid: Opportunit ies for Improving Program Oversight , supra GAO -18- note 61 U.S. Dep’t of Health & Human Servs., Agency Financial Report (2016), available at https://www.hhs.gov/sites/default/files/fy -2016- hhs -agency- financial -report.pdf. 62 7. -18- 444T , Medicaid: Opportunities for Improving Program Oversight , supra note GAO 63 U.S. Gov’t Accountability Office, GAO -17- 317 , High -Risk Series: Progress on Many High- Risk Areas, While -17- 317. https://www.gao.gov/products/GAO available at 2017), (Feb. Substantial Efforts Needed on Others 11

13 appropriate measures to reduce improper payments, as dollars wasted detract from our ability to ensure that the individuals who rely on the Medicaid program — including children, and individuals who are elderly or disabled—are provided 64 adequate care.” Medicaid audit ligibility s and e CMS’s lax oversig : ht has extended into the most vital area of Medicaid program integrity ensuring only those eligible for Medicaid receive the program’s benefits. In 2011, C MS was forced to redesign its required • of Medicaid providers , which audits 65 . were then the largest p art of the CMS Medicaid integrity program poor Due to ere missing basic provider information, the audits identified less than CMS data that w , at a cost of $20 million in potential overpayments $102 million for at least 66 contractors to conduct the audits . • Upon the ACA ’s implementation in 2014, evidence emerged that CMS was not -related responsibilities for the fastest- paying enough attention to its fraud growing GAO found that CMS and other federal entities had part of Medicaid: managed care. “taken few steps to address Medicaid m that CMS anaged care program integrity” and had failed to update its managed care program integrity guidance to states since 67 Unless CMS took “a larger role in holding states accountable,” GAO warned, 2000. “a growing portion of federal Medicaid dollars [ would be ] vulnerable to improper 68 payments.” A lthough HHS concurred with several GAO recommendations , it contended that a key anti -fraud recommendation —that CMS hold states accountable by requiring them to audit payments to Medi caid managed care providers —was 69 “unclear.” 2015, CMS had started interim review • By s of Medicaid expansion eligibility CMS officials excluded determinations. However, from review Medicaid eligibility , ade such determinations determinations in states where the federal government m 70 that 67 percent of the country escaped such scrutiny. In the 17 states that meaning fiscal year 2018 —the first four then had their own exch anges, CMS suspended until of the ACA —its requirement that states review their own e ligibility years 64 -18- 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. GAO 65 U.S. Gov’t Accountability Office, GAO -12- 674T, Medicaid: Federal Oversight of P ayments and Program https://www.gao.gov/assets/600/590392.pdf. (Apr. 2012), available at Integrity Needs Improvement 66 Id. ; GAO -12- 288T, Medicaid Program Integrity: Expanded Federal Role Presents Challenges to and , supra note 33. Opportunities for Assisting States 67 U.S. Gov’t Accountability Office, GAO -14- 341, Medicaid Program Integrity: Increased Oversight Needed to 2014), available at May Ensure Integrity of Growing Managed Care Expenditures ( https://www.gao.gov/assets/670/6 63306.pdf. 68 Id. 69 Id. 70 U.S. Gov’t Accountability Office, GAO -16- 53, Medicaid: Additional Efforts Needed to Ensure that State Spending is Appropriately Matched with Federal Funds (Oct. 2015), available at https://www.gao.gov/assets/680/673159.pdf. 12

14 71 determination iting ACA- related changes to Medicaid eligibility standards and . C that operate their own exchanges , CMS required states to state eligibility systems 72 conduct temporary “pilot eligibility reviews.” Those reviews did find Medicaid —including enrollment of people expansion eligibility errors in eight of nine states 73 whose incomes were too high to be eligible . • viewing eligibility determinations in states usin g the ACA’s CMS is still not re 74 -facilitate een recommending since 2015, federally d exchanges as GAO has b or filing annual reports on its Medicaid integrity program to Congress as required by the 75 2005 law. According to GAO’s latest High Risk report, CMS filed the 2013 and 2014 reports in 2016—and was more than a year late with th e 20 15 report. As a result, CMS is still unable to discharge its most fundamental duty to American 76 [ Medicaid ] program .” taxpayers: “to ensure the fiscal integrity of the 71 Id . 72 Id. 73 Id. 74 GAO -18- 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. 75 Risk Areas, While Substantial Efforts Needed on Others -17- 317 , High -Risk Series: Progress on Many High- GAO , supra note 63. 76 Id. 13

15 CMS ’s LAX ATTENTION TO MEDICAID PROGRAMS STATE -state program , Medicaid varies state -to-state. CMS claims it “works As a joint federal closely with [its] state partners to provide them with the tools and knowledge to effectively 77 operate their programs.” While CMS has taken some steps to improve state -based integrity programs —including the establishment of the Medicaid Integrity Institute with the Justice to root out waste, fraud, Department in 2007—evidence suggests that CMS can do much more and abuse in state Medicaid programs . GAO has several problems with CMS ’s oversig ht of and communication with identified state . Medicaid programs • As late as 2014, CMS program integrity guidance issued in 2000 to states for Medicaid managed care was still not available on the CMS website, and st ate officials reported they did not use the guidance to fight fraud or overpayments. CMS told GAO at the time that the 14- year -old guidance was being “updated” but could not 78 a timeline for its completion.” provide “ • CMS has still not provided guidance to states on the availability of automated information through Medicare’s enrollment database, which would help states screen 79 Medicaid providers. GAO has been urging this step since 2015. • CMS has not sought “to identify opportunities to address barriers that limit states ’ 80 participation in collaborative audit Federal s,’’ as GAO has also recommended. officials say CMS has sometimes allowed state officials to refus e to participate in these audits, which limited CMS’s oversight of fraud and other program integrity 81 issues. Fraud in s tate Medicaid programs CMS ’s lax oversight is lead ing, in part, to Medicaid fraud and wasted taxpayer of states money. In March 2018, the Illinois auditor revealed that the state • paid $71 million for Medicaid services for more than 8,000 people without checking whether they were 82 Auditors also within the 12- still eligible aw. month period required by federal l 77 Email from Emily Felder, note 32. supra 78 GAO 341, Medicaid Program Integrity: Increased Oversight Needed to Ensure Integrity of Growing Managed -14- , Care Expenditures note 67. supra 79 GAO -18- 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. 80 Id. 81 Interview with Gov’t Accountability Office officials and S. Comm. on Homeland Sec. & Gov’t Affairs maj . staff (A pr. 23, 2018). 82 Financial Audit for the Year Ended June 30, 2017, S TATE OF I LLINOIS D EP ’ T OF H EALTHCARE & F AMILY S ERVS . (Mar. 6, 2018), available at https://www.auditor.illinois.gov/Audit -Reports/Compliance -Agency- List/DHFS/FY17 - -Fin -Full.pdf. DHFS 14

16 determined that Illinois paid Medicaid costs for people who were never Medicaid eligible because their immigration status was not verified or they lacked a valid social failed to recoup $76 million in overpayments to security number , and that Illinois 83 -program insurers. private Medicaid • In New York, the HHS OIG reported in January 2018 that state officials calculated 30 percent Medicaid eligibility incorrectly for more than of beneficiaries sampled by 84 . auditors The errors resulted in federal Medicaid payments of an estimated $26.2 85 million for more than 47,000 ineligible people. In August 2017, HHS OIG identified $73 million in federal Medicaid an estimated • 86 nearly 70,000 potentially ineligible beneficiaries in Kentucky. payments for California: More than $1 billion in potentially f raudulent Medicaid payments than $1 billion in federal Medicaid In California, t he HHS OIG identified an estimated 87 payments on behalf of 44 Of that total, the OIG 5,000 ineligible or potentially ineligible people. 88 . found $629 million in federal taxpayer funds to have been paid for 366,000 ineligible people CMS appears unwilling to recoup taxpayer dollars wrongly paid out from California’s • . During a hearing of the House Committee on Oversight and Medicaid program Government Reform in April 2018, CMS’s deputy director for Medicaid, Timothy testifie d that CMS did not intend to collect the more than $1 billion Hill, in fraudulent 89 Hill testified : payments fro m California. Rep. Meadows: So, Mr. Hill, are you going after the $1.2 billion? Mr. Hill: The $1.2 [billion] is identified as potential overpayment. There was not a recommendation to collect it because . . . Rep. Meadows: Well, le t me give you a recommendation. Collect it. I mean, it is the American taxpayers ’ dollars. your Is it ...because you did not sworn testimony here today get a recommendation to collect $1.2 billion in improper payments, you are not going after it? 83 O’Connor, Illinois Fails to Recoup $76 Million in Medicaid Overpayment , U.S. N John (March 24, 2018), EWS https://www.usnews.com/news/best -03- 24/illinois -fails -to-recoup -76- -states/illinois/articles/2018 -in- million medicaid -overpayment. 84 U.S. Dep’t of Health & Human Servs., A -02- 15- 01015 , supra note 9. 85 Id. 86 U.S. Dep’t of Health & Human Servs., A- 04- 08047, Kentucky Did Not Always Perform Medicaid Eligibility 16- Determinations for Non- Newly Eligible Beneficiaries in Accordance with Federal and State Requirements (Aug. 2017), available at https://oig.hhs.gov/oas/reports/region4/41608047.pdf. 87 supra Off. of Inspector Gen. , A -09 -16- 02023, U.S. Dep’t of Health & Human Servs. note 8. 88 Id. 89 supra 17. note Improper Payment s in State -Administered Programs: Medicaid , 15

17 Mr. Hill: No, the recommendations were to fix the systems in California. . . Rep. Meadows: So are you going after it or not? 90 We are not issuing a disallowance to California . . Mr. Hill: . . • CMS’s reluctance to police California is all the more glaring in lig ht of the size of California’s Medicaid program. California received $20.3 billion for Medicaid expansion from the federal government in 2015— 34 percent of all Medicaid expansion spending, even though California represent ed only 12 percent of the U.S. 91 population. to CMS administrator Verma in September Johnson wrote As Chairman s substantially exceeded projections in 2017, enrollment under Medicaid expansion ha 92 California and many other expansion states. • Medicaid expa nsion reimbursement formula California exemplifies how the ACA’s Although the traditional federal has allowed some states to game the system. 73 percent , there is a far higher matching rate ranges from 50 percent to as high as he ACA people made newly eligible for Medicaid under t matching rate for —100 93 This percent through 2016, before phasing down to 90 percent in 2020 and beyond. higher matching rate provides states a tremendous financial incentive to categorize more people as newly eligible to obtain more federal money. • CMS’s lax oversig ht extends t o its review of California’s state Medicaid plan . Because CMS allowed California to pay higher Medicaid rates to managed care companies during the ACA’s first few years, insurance companies profited 94 According to managed care financial results from California’s handsomely. Medicaid program, Health Net, the largest Medicaid insurer nation wide, reported a 95 In 2014, the first year of the ACA’s 71 million in California in 2013. profit of $ Medicaid expansion, Health Net’s profits rose to $170 millio 84 n, and reached $4 96 —a 5 CMS million in 2015 78 percent increase during the ACA’s first two years. whether it will seek publicly has not stated to recoup any of this funding from California . 90 Id. 91 Letter from Sen. Ron Johnson, supra note 6. 92 Id. 93 Robin Rudowitz, Understanding How States Access the ACA Enhanced Medicaid Mat ch Rates , K AISER F AMILY -aca F , https://www.kff.org/medicaid/issue -brief/understanding -how -states -access -the (Sept. 29, 2014) - OUNDATION enhanced -medicaid -match -rates/. 94 Terhune & Gorman, supra note 14. 95 , Medi -Cal Managed- Care Fi nancial Results, 2012 supra note 15. 96 Id. 16

18 Medicaid m aximization schemes Because the federal contribution to Medicaid is generally unlimited, some states choose funding sources for their share of Medicaid’s cost in a manner designed to maximize the federal 97 government’s contribution. Under these so -called “Medicaid maximization schemes,” the states artificially inflate what the federal government contributes while reducing the state 98 Both GAO and the HHS OIG have repeatedly warned that these Medicaid contribution. 99 -state Medicaid partnership. maximization schemes undermine the federal Intergovernmental trans fers (IGTs) include “transfers of . . . funds between State • 100 and/or local public Medicaid providers and the State Medicaid agency.” IGTs “often do not represent a true expenditure for health care services,” which means 101 r share of Medicaid costs as was intended.” “states are not fully financing thei In one instance, Michigan “paid” $122 million of its own funds to county health — and the same day, the county facilities facilities, along with a federal match , a nd the federal match , back to the transferred all but $6 million of the state funds 102 state . States have used federal matching funds received “for a range of purposes 103 with no direct link to improving quality of care or increasing Medicaid services.” According to GAO, CMS “generally does not require (or otherwise collect) information from states on the funds they use to finance Medicaid, nor ensure that the 104 data that it does collect are accurate and complete.” • States tax healthcare providers , then return the funds to the providers and trigger a 97 See generally Non -Federal Financing , MACPAC, https://www.macpac.gov/subtopic/non -federal -financing/ (detailing various sources of funding) (last visited May 22, 2018). 98 See U.S. G ov’t Accountability Office, GAO -14- 627, Medicaid Financing: States’ Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection -3 (July 2014), , at 2 available at https://www.gao.gov/assets/670/665077.pdf. 99 U.S. Gov’t Accountability Office, GAO -16- 195T, Medicaid: Improving Transparency and Accountability of Supplemental Payments and State Financing Methods, at 6 (Nov. 2015), available at https://www.gao.gov/assets/680/673493.pdf; Spotlight on Medicaid: State Policies That Result in Inflated Federal ERVS ., D EP ’ T OF H EALTH AND H UMAN S ., O FFICE OF I NSPECTOR G EN , U.S. Costs -federal -costs.asp (last visited May 22, 2018). https://oig.hhs.gov/newsroom/spotlight/2014/inflated 100 “Examining Medicaid and CHIP’s Fede ”: Hearing before the Subcomm. on ral Medical Assistance Percentage Health of the House Comm. on Energy and Commerce , 114th Cong. (2016) (statement of John Hagg, Dir. of Medicaid Audits, Off. of Inspector Gen., Dep’t of Health and Human Servs.). 101 States’ Use of Medicaid Maximization Strategies to Tap Federal Teresa Co ughlin & Stephen Zuckerman, RBAN I NSTITUTE , at 11 (June 1, 2002), Revenues: Program Implications and Consequences , U States https://www.urban.org/sites/default/files/publication/60176/310525- -of-Medicaid -Maximization - -Use Strategies -Federal -Revenues.PDF . -to-Tap 102 U.S. Gov’t Accountability Office, GAO 574T, Medicaid: Intergovernmental Transfers Have Facilitated State -04- , at 5 -6 Financing Schemes (Mar. 2004), available at https://www.gao.gov/assets/120/110702.pdf. 103 Spotlight on Medicaid: State Policies That Result in Inflated Federal Costs , U.S. D EP ’ T OF H EALTH AND H UMAN ., S O FFICE OF I NSPECTOR G EN ., https://oig.hhs.gov/newsroom/spotlight/2014/inflated -federal -costs.asp (last ERVS visited May 22, 201 8). 104 GAO -16- 195T, Medicaid: Improving Transparency and Accountability of Supplemental Payments and State -627, Financing Methods supra note 99, at 13; see also GAO -14 , Medicaid Financing: States’ Increased Reliance on Funds fr om Health Care Providers and Local Governments Warrants Improved CMS Data Collection , supra note 98, at 39 (“CMS does not collect accurate and complete data from all states on the various sources of funds to eral share . . . .”). finance the nonfed 17

19 105 federal match. This shell game artificially inflates what the federal government 106 contributes. These taxes are “increasingly popular and [have] resulted in billions 107 An Oregon official described the of dollars in additional Medicaid spending.” state’s provide r tax as a “dream tax,” where “we [Oregon] collect the tax from hospitals, we put it up as a match for federal money, and then we give it back to the 108 hospitals.” Connecticut has a similar scheme that, if approved by CMS, would 109 rom federal taxpayers to bolster the state’s bottom line. enable it to pocket funds f Supplemental payments are “payments that are separate from the regular payments • 110 states make based on claims submitted for services rendered.” One type of e share hospital (DSH) payments, help s offset supplemental payment s, disproportionat -income costs that hospitals accrue when serving Medicaid beneficiaries and other low 111 112 patients. -specific level and state level.” Such payments are “capped at a facility -DSH supplemental payments to hospitals and other But states also make non 113 providers that “are not subject to firm dollar limits at the facility or state level.” In fact, these payments “are not necessarily made on the basis of claims for specific services to particular patients and can amoun t to tens or hundreds of millions of 114 They can also exceed the costs of services dollars to a single provider, annually.” 115 provided. According to GAO, “CMS lacks data at the federal level on [these] non - 116 DSH supplemental payments,” and “the payments are n ot subject to audit.” according to GAO, CMS sh Similarly, ould require more “reliable[] and timely 117 information” concerning supplemental payments states make to providers. 105 GAO -14- Medicaid Financing: States’ Increased Reliance on Funds from Health Care Providers and See 627, , supra note 98, at 2. Local Governments Warrants Improved CMS Data Collection 106 Id . 107 Medicaid Provider Taxes: Closing a Loophole , T AX N OTES , at 5 (June 29, 2015), available at Alex Brill, -content/uploads/2015/06/Brill -Medicaid -Provider -Taxes.pdf. http://www.aei.org/wp 108 Peter Wong, Oregon House Extends Hospital Tax , P ORTLAND T RIBUNE , Mar. 11, 2015 , available at http://portlandtribune.com/pt/9 -news/253422- oregon- house -extends -hospital -tax. 123198- 109 . ALL S T , W J. , Dec. 29, 2017, available at Red Jahncke, Why Tax Hospitals? It’s a Medicaid Shell Game -tax -hospitals -its -a-medicaid -shell -game -1514586150. https://www.wsj.com/articles/why 110 GAO 627, Medicaid Financing: States’ Increased Reliance on Funds from Health Care Providers and Local -14- , 98, at 2. note Governments Warrants Improved CMS Data Collection supra 111 -16- 195T , Medicaid: Improving Transparency and Accountability of Supplemental Payments and State GAO Financing Methods , supra note 99, at 5 . 112 Id see also Alison Mitchell, C ONG . R ESEARCH S ERV .; Medicaid Disproportionate Share Hospital ., R42865, Payments , at 1 (June 17, 2016), http://www.crs.gov/reports/pdf/R42865. 113 GAO -16- 195T, Medicaid: Improving Transparency and Accountability of Supplemental Payments and State Financing Methods , supra note 99, at 5 . 114 Id. 115 In 2012, GAO reported that “39 states made non- DSH supplemental payments” that exceeded “total costs of providing Medicaid care by about $2.7 billion.” Id . at 7. 116 Id . at 8. 117 -DSH See id. at 6 -7; see also id. at 8 -9 (describing need for “complete and reliable provider -specific data” on non supplemental payments because such data is needed to identify payments that may be “excessive” and inappropriate). 18

20 THE COMMITTEE’S OVERSIGHT OF CMS AND MEDICAID As the Chairman of the Senate’s chief oversight committee, Senator Johnson has a duty , to ensure th e government federal agencies, including CMS to conduct oversight of spends federal tax dollars efficiently and effectively . Medicaid’s escalating costs and enrollment figures In the e concerned arly days of the Trump Administration, Chairman Johnson became about growing evidence that Medicaid expansion costs and enrollment were spiraling far beyond initial projections majority staff sought CMS’s help in exploring this problem and . Committee 118 understanding ’s actions to address it. CMS • On September 27, 2017, Chairman Johnson sent a letter to Administrator Verma requesting information about the escalating costs of Medicaid expansion and formally 119 Chairman Johnson raised concerns that CMS’s efforts to address the rising costs. the cost surge could stem “from the Medicaid expansion’s reimbursement formula, which gives states a financial incentive to categorize people as newly eligible to 120 Chairman Johnson also se nt letters to eight states obtain more federal money.” 121 with particularly alarming rates of growth in Medicaid costs or enrollment. • In Oct ober 2017, Administrator Verma responded. She wrote that CMS “takes very seriously [ its] responsibility to see that only eligible individuals are enrolled in 122 entitlement programs.” o Administrator Verma wrote that CMS had provided enhanced funding for modernized or new state Medicaid eligibility systems and taken other steps, such as holding “multiple all -person trainings ,” to provide -state calls and in Medicaid ] match rate guidance to states on how to “implement the federal [ 123 methodology appropriately.” Administrator Verma • address the repeated warnings from ’s response did not government watchdogs that CMS’s actions to police Medicaid program 124 CMS conducts quarterly She wrote that int egrity have been insufficient. “over reviews of state Medicaid expenditure reports and had disallowed only 125 In $15 million ” in claims for services for newly eligible beneficiaries. 118 See e.g. meeting with Cntrs. for Medicare & Medicaid Servs. and S. Comm. on Homeland Sec. & Gov’t Affairs maj. staff (May 4, 2017); meeting with Brian Neale, Cntrs. for Medicare & Medicaid Servs. and S. Comm. on Homeland Sec. & Gov’t Affairs maj. staff (Mar. 31, 2017). 119 Letter from Sen. Ron Johnson, supra note 6. 120 Id. 121 E.g. Letter from Sen. Ron Johnson, supra note 18. 122 Letter from Seema Verma, Adm’r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs (Oct. 27, 2017). 123 Id. 124 Id. 125 Id. 19

21 126 comparison to the estimated $37 billion in annual Medicaid overpayments , more to police CMS’s disallowance data shows that it could be doing Medicaid program integrity. opioid crisis Medicaid fraud and the Chairman Johnson also uncovered evidence suggesting a correlation between the caid program and the nation’s opioid crisis. Medi • On January 17, 2018, Chairman Johnson convened a hearing of the Committee and detailing how the structure of the Medicaid program released a staff report creates a 127 series of incentives for opioid abuse. The report detailed hundreds of examples of opioid- explained how Medicaid is serving related fraud in the Medicaid program and 128 as a funding source for obtaining and illicitly distributing opioids. Chairman Johnson sent a copy of the report to Administrator V erma, along with specific 129 questions about CMS’s efforts to eliminate Medicaid’s role in the opioid epidemic. • responded on February 9, focus ing instead on Medicaid’s role Administrator Verma 130 have treatment for substance abuse disorders. While in ensuring beneficiaries treatment is Administrator Verma’s certainly an important element of Medicaid, response failed to address the key questions Chairman Johnson asked, specifically his request that she explain CMS’s “work to improve the structure of the Medi caid 131 The Committee program to limit the perverse incentives that lead to opioid abuse.” sought supplementary materials from CMS, whic h has provided only limited information to date about its work to address Medicaid’s role in the opioid crisis. Union du es skimming from Medicaid funds On April 30, 2018, Chairman Johnson wrote to Administrator Verma urging CMS to ,” in which states allow unions to classify home health review the practice of “dues skimming care workers as government employees for purposes of collecting union dues from Medicaid 132 Dues skimming allows states to take an estimated $200 million each year in union payments . 133 —money that would otherwise help for the care of Medicaid beneficiaries. dues 126 GAO 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. -18- 127 Unintended Consequences: Medicaid and the Opioid Epidemic , supra note 17; Drugs for Dollars: How Medica id Helps Fuel the Opioid Epidemic , supra note 22. 128 , supra note 22. Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic 129 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Se c. & Gov’t Affairs, to Seema Verma, Adm’r, Ctrs. For Medicare & Medicaid Servs., & Eric D. Hargan, Acting Secretary, Dep’t of Health & Human Servs. (Jan. 17, 2018). 130 Letter from Seema Verma, Adm’r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson , Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs (Feb. 9 , 2018). 131 Letter from Sen. Ron Johnson, Chairman, supra note 6. 132 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs, to Seema Verma, Adm’r, Ctrs. For Medicare & Medicaid Servs. (Apr. 30, 2018). 133 Id. 20

22 134 Administrator Verma responded on June 13, 2018. She informed the Chairman that CMS “does not possess” information about the amount of Medicaid funds diverted for union dues, but that CMS was reviewing whether to implement changes to “ensure Medicaid fund are 135 legally spent.” The response enclosed correspondence with the Illinois Governor about 136 Medicaid dues skimming, but otherwise provided no responsive documents. 134 Letter from Seema Verma, Adm’r, Ctrs. For Medicare & Medicaid Servs., to Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs (June 13, 2018). 135 Id. 136 Id. 21

23 STEPS TOWARD REFORM s the Medicaid is an important program that helps millions of Americans in need. But a -century, it has expanded now threaten ing program has grown ove at a pace that is r the past half 137 to overwhelm federal and state budgets. The ACA is putting new strains on CMS and 138 Medicaid, making it vitally important that the federal government ensure that no tax dollars go 139 to waste. report shows, CMS is failing to safeguard the hundreds of billions of Yet as this staff 140 dollars that fund Medicaid each year. A series of government watchdog reports, dating back that CMS is not effectively policing Me more than succession of a decade, show dicaid fraud. A 141 CMS administrators have not provided the effective oversight that Congress required in 2005. 143 142 of soaring expansion costs, the pernicious role of opioids The Committee’s oversight and , 144 the plague of Medicaid fraud further d emonstrates that CMS has not proven an effective trend has continued, despite unfortunate the Trump steward of Medicaid taxpayer dollars. This 145 Administration’s stated goal to reign in Medicaid fraud . The time is ripe for CMS to take proactive steps to reduce Medicaid fraud and improve It must make a more serious commitment to Medicaid program integrity and program integrity. sustain that effort through smart and effective oversight of state Medicaid programs. That commitment must extend through every part of the agency. There are several steps that CMS could take toward improving Medicaid’s program . integrity CMS should e nact the 11 open GAO anti • -fraud recommendations dating to 2015, especially those urging CMS to review federal Medicaid eligibility determinations for 146 accuracy and to provide fraud- awareness training for all CMS employees. • CMS should t ake perhaps the most basic step of all: create, document and implement 147 -fraud strategy. a Medicaid anti 137 Letter from note 6. Sen. Ron Johnson, supra 138 Id. 139 ”: Hearing “Nomination of Seema Verma to be Administrator of the Centers for Medicare and Medicaid Services . , 115th Cong. (2017) before the S. Comm. on Finance 140 Allison Valentine, Robin Rudowitz & , K AISER Medicaid Enrollment & Spending Growth: FY 2017 & 2018 F F OUNDATION (Oct. 19, 2014) , https://www.kff.org/medicaid/issue -brief/medicaid -enrollment AMILY - -spending growth -fy-2017- 2018/. 141 Deficit Reduction Act of 2005, Pub. L. No. 109- 171, 120 Stat. 4 (2006) . 142 Letter from Sen. Ron Johnson, note 6. supra 143 , supra note 22. Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic 144 Letter from Sen. Ron Johnson, Chairman, S. Comm. on Homeland Sec. & Gov’t Affairs, & Claire McCaskill, Ranking Member, S. Comm. on Homeland Sec. & Gov’t Affairs, to Seema Verma, Adm’r, Ctrs. f or Medicare & Medicaid Servs. (May 15, 2018). 145 James Swann, Trump Budget Would Boost Spending to Fight Medicare, Medicaid Fraud , B LOOMBERG (Mar. 20, 2017), https://www.bna.com/trump -boost -n57982085442/. -budget 146 GAO -18- 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. 147 Id. 22

24 • CMS oug ht to c rack down on states that allow fraud or otherwise abuse Medicaid funding, starting with recouping the more than $1 billion California spent on behalf of 148 ineligible or potentially ineligible beneficiaries. • CMS should m ake a sustained effort to slow and then eliminate the $37 billion in 149 overpayments plaguing the Medicaid program each yea r. CMS should t ake seriously Medicaid’s role in the opioid epidemic and make • structural changes to the program that eliminate incentives lead ing to opioid abuse 150 raud. and illicit f CMS must w • especially the non -partisan GAO and ork with government watchdogs, HHS OIG, to better police Medicaid fraud. • CMS must become more responsive to and cooperative with Congressional oversight seeking to identify and eliminate Medicaid fraud . In addition, Congress could take steps to address fundamental incentives that currently Medicaid program integrity . present challenges to • Congress should reduce the “safe harbor” for states’ taxes on health care providers to 151 limit Medicaid maximization schemes that have inflated federal payments to states. • Congress should transition Medicaid to a block grant funding mechanism for existing 152 Medicaid expansion populations instead of the current open- ended federal , entitlement. This mechanism would help reduce incentives for states that seek to maximize federal funds and potentially enroll ineligible people. A block grant system would also provide a more equitable distribution of federal funding to states that have 153 been good stewards of taxpayer dollars. 148 supra U.S. Dep’t of Health & Human Servs . Off. of Inspector Gen. , A -09 -16- 02023, note 8. 149 GAO 444T , Medicaid: Opportunities for Improving Program Oversight , supra note 7. -18- 150 Epidemic , supra note 22. Drugs for Dollars: How Medicaid Helps Fuel the Opioid 151 Limit States’ Taxes on Health Care Providers , C ONG . B O FFICE (Dec. 8, 2016), UDGET https://www.cbo.gov/budget -options/2016/52230. 152 Graham -Heller -Johnson Plan to Replace ACA Funding With a Ne w Block Grant and Cap Medicaid -Cassidy Would Decrease Federal Funding for States by $160 Billion from 2020- 2026; Then a $240 Billion Loss in 2027 if - , https://www.kff.org/health (Sept. 21, 2017) AISER F AMILY F OUNDATION K , the Law is Not Reauthorized funding -rel -cassidy -heller -johnson- plan -to-replace- reform/press ease/graham -with -a-new -block- grant -and -cap - aca- medicaid -would -decrease -federal -funding- for -states -by -160 -billion -from -2020- 2026- then -a-240- billion -loss -in/. 153 Id. 23

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