In a recent report released from the HHS Office of Inspector General, it was found that despite not meeting state and federal requirements, the state of California made Medicaid payments on behalf of newly eligible enrollees.

Resulting in billions of dollars defrauded from the government, California has enrolled hundreds of thousands of individuals in Medicaid who were not eligible to receive such benefits.

Spectator reports that the OIG reviewed a random sample of newly eligible beneficiaries from October 2014 to March 2015. The sample included those for which Medicaid payments were made for services provided.

The OIG said this in the assessment released:

“On the basis of our sample results, we estimated that California made Medicaid payments of $738.2 million ($628.8 million Federal share) on behalf of 366,078 ineligible beneficiaries and $416.5 million ($402.4 million Federal share) on behalf of 79,055 potentially ineligible beneficiaries. (These estimates represent Medicaid payments for fee-forservice, managed-care, the drug treatment program, and mental health services.) These deficiencies occurred because California’s eligibility determination systems lacked the necessary system functionality and eligibility caseworkers made errors.

“We also identified a weakness in California’s procedures related to determining the eligibility of individuals who may not have intended to apply for Medicaid.”

States who offer the Medicaid expansion program are required by law to determine whether new enrollees meet the requirements for eligibility.

According to Spectator, HHS labels the following as applicant eligibility standards: “The state must verify that the applicant meets citizenship and residency requirements, have a household income at or below 138 percent of the federal poverty level, be from 19 to 64 years of age, not be eligible for any other mandatory coverage group, not be pregnant, not be entitled to Medicare benefits, and furnish a Social Security number.”

The sample collected by OIG revealed that 18 percent of participants were clearly not eligible for benefits, while another nine percent were also very likely ineligible.

Moreover, California has no incentive to stop the fraudulent Medicaid activity. While the Affordable Care Act remains intact, at least 90 percent of the state’s Medicaid costs for new enrollees are paid by the federal government.

The OIG states:

If the State agency does not determine Medicaid eligibility according to Federal and State requirements, there is an increased risk that the State agency will make payments on behalf of ineligible beneficiaries. If the State agency makes payments on behalf of ineligible beneficiaries, it may claim unallowable Federal reimbursement for those beneficiaries.”

The OIG lists its recommendations for California in the assessment.

We recommend that California (1) redetermine, if necessary, the current Medicaid eligibility of the sampled beneficiaries; (2) ensure its eligibility determination systems have the functionality to verify eligibility requirements and perform eligibility determinations in accordance with Federal and State requirements; and (3) develop and implement written policies and procedures, as appropriate.

However, there is no real risk for California in regard to getting eligibility wrong. The more individuals who sign up for the program, the more money the state receives from the federal government, resulting in a vicious, fraudulent cycle of insufficient use of taxpayer dollars.

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BY Kate Clark

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Kate is a staff writer for DC Statesman.