Heed findings of Medicaid audit

Medicaid must be accessible to the primarily low-income groups that it serves, but this program, like any other government service distributing public funds, needs careful oversight as well.

And according to a recent state auditor’s report, there’s too much room for error and waste in the federal health insurance program that the state administers under the name Med-QUEST.

After years of post-recessionary growth in Med-QUEST enrollment, when job losses and pay cuts drove more people into poverty, and during another year when the roster will grow even longer, that’s a vulnerability that should be watched more closely than ever.

As pointed out in the audit — and confirmed by officials with the state Department of Human Services, which administers the program — there are some constraints on how much control the state has over costs and losses through fraud or error, even though Medicaid includes both federal and state funding sources.

The problem is compounded with the new enrollments under the Affordable Care Act. For example, the ACA now requires that, without actively re-enrolling, Medicaid beneficiaries be kept on. Unless they are found to have lost eligibility, their benefits will continue.

That’s because the health care reform law is intended to get more people insured, not to allow families to fall out of coverage because of a bureaucratic hurdle. But that puts the onus on the state to ride herd on who still qualifies for the benefit, and currently DHS has insufficient staffing assigned to that.

Further, the ACA no longer requires an asset check. Again, it was all about expedience rather than vigilance. The federal authorities have ready access to data to check earnings, but not on bank accounts or other liquid assets. At least in theory, someone who has a lot of cash but lost a job could be deemed eligible.

The audit did praise DHS for managing administrative costs, despite the Medicaid program growth. In 2008, the rolls stood at 211,000, and in 2011 they topped 300,000. Since the ACA enrollment began Oct. 1, about 18,000 new beneficiaries have signed up, well on the way to the 48,000 additions DHS expected during the first year.

A program that assists one in three Hawaii residents is going to need more fraud oversight, and the auditor’s chief criticism is that DHS does too little to catch it.

DHS officials countered that it has implemented a screening system called KOLEA, which the state bought with ACA aid following a critical federal report in 2011. And DHS officials said more recent data show an improvement in the program’s error rates.

Further, by August DHS officials plan to launch a new system that can use state labor statistics on employee pay that will provide more up-to-date information on an applicant’s income eligibility.

The audit credits DHS with recovering only $241,000 in fraud losses, far below the $49 million average for states.

Whether or not that’s a comprehensive tally — DHS cited, for example, the millions recovered in a state settlement with drug manufacturers — the point is, much more can be done to crack down on potential fraud.

The state should follow through on the audit’s recommendations, including filling new positions devoted to fraud and abuse detection in Medicaid and improving reports to lawmakers on program operations. Additionally, bills that would enable data sharing between departments to help with fraud detection and would harden penalties for Medicaid fraud deserve a hearing.

Hawaii’s poor should get help with accessing health care, but the state must make sure, to the greatest extent possible, that the benefit goes to those who truly need it.