Money Toilet PaperA report by Minnesota’s Office of the Legislative Auditor released last month, found that more than 80,000 Minnesotans were enrolled in Medicaid, and the state’s Obamacare exchange even though they were ineligible for the services. That incredible number of ineligible enrollees cost Minnesota taxpayers hundreds of millions of dollars.

The problems apparently stem from “miscommunication and poor training at the Department of Human Services.” However, the audit found that, “software issues” are were also blamed for the errors, which seems to be an all too standard bureaucratic excuse these days for any expensive failure within government health care programs. The Obama White House has used that same reasoning for the repeated problems with Obamacare’s enrollment and administration.

Here’s how the audit worked:

The nonpartisan Office of the Legislative Auditor took a random sample of 103 people enrolled in Medicaid and 54 people in MinnesotaCare between January and March of 2015. Auditors then used state employment data and tax returns to verify whether those individuals had actually qualified for the programs they enrolled in.

The sample was limited to people who enrolled using the MNsure software and to people who allegedly qualified for programs because of low income. That means the sample represented a population of about 270,000 people, out of more than 1 million receiving public assistance.

Of those 157 people, the audit found 38 percent weren’t eligible for their public program. Three-quarters of those people actually didn’t qualify for any program, while the remainder qualified for a different public program.

The state used this study to estimate “that between 57,000 and 108,000 people received Medicaid or MinnesotaCare benefits but shouldn’t have received any benefits at all.”

More than 100,000 ineligible recipients. Alarming to say the least.

Auditors concluded that the ineligible recipients cost taxpayers somewhere between $115 million and $271 million.

DHS Commissioner Emily Johnson Piper admitted that the report raised “serious” problems and acknowledged that the “need for improvement is critical.” She said, “Accurate eligibility determinations are a basic function that we must get right to ensure the integrity of our public health care programs.”

Republicans pounced on the news saying, “the audit vindicates what they’ve said for years: that the MNsure software is an unsalvageable mess and that Medicaid and MinnesotaCare have lots of waste, fraud and abuse.”

“We’ve spent more than $300 million on this failed Obamacare exchange, and it somehow still can’t figure out how to prevent hundreds of millions in benefits from going to those who aren’t eligible,” said Rep. Greg Davids, R-Preston, in a statement.

Other states have seen similar issues with their Medicaid rolls.

Arkansas Eligibility Issues

In 2014, the Arkansas Department of Human Services removed nearly 5,000 Medicaid expansion enrollees, representing approximately three percent of enrollment, after learning they were ineligible for benefits. The state had not bothered to verify those applicants’ eligibility before enrolling them in Medicaid. In fact, some enrollees were receiving both Medicaid and federal ObamaCare subsidies. An earlier audit found more than 12 percent of individuals in higher-cost Medicaid cases were ineligible for the program. Another 24 percent lacked appropriate documentation to establish eligibility.

Nebraska Eligibility Issues

An audit in 2013 of the Nebraska Health Insurance Premium Payment (HIPP) program—a component of the state’s Medicaid program—found that the state lacked appropriate documentation in every reviewed case file, calling into question the entirety of expenditures made under the program. More than three-quarters of the audited cases had received incorrect payments, with auditors identifying several cases of apparent fraud. One individual, for example, received more than $29,000 from the Medicaid program despite being clearly ineligible for the HIPP program. In all, state auditors found that at least a quarter of all audited expenditures were improper.

New York Eligibility Issues

A 2006 federal audit found that eight percent of New York’s Medicaid payments were made on behalf of individuals who were ineligible, but nevertheless enrolled in the program.30 Approximately 29 percent of payments were made on behalf of enrollees whose case files did not contain the required documentation supporting their eligibility determinations
A follow-up audit in 2013 found a significant number of cases for which case files had missing or invalid Social Security numbers, individuals were enrolled in the same program multiple times, or the files lacked any documentation to support the eligibility determination at all.

Ohio Eligibility Issues

A state and federal review of Ohio’s Medicaid spending in 2008 found that nearly 10 percent of Medicaid payments were improper. Nearly all of these improper payments were caused by errors and insufficient documentation in eligibility determinations.
Auditors also found a payment error rate of roughly 20 percent for Ohio’s TANF cash assistance program, caused primarily by eligibility and documentation errors. Nearly seven percent of audited payments went to individuals who were ineligible for the TANF program, while more than 13 percent went to individuals whose case files were missing the documentation required to establish eligibility.

Some States Take Action on Eligibility

Illinois, Pennsylvania, and Massachusetts have also found fraudulent beneficiaries on their books and the costs have been staggering. Nearly $1.4 billion in fraud was found between just these four states. Fortunately, some states are addressing the fraud and implementing reforms that can avert future multi-million dollar errors like this one in Minnesota.

By embracing advances in technology and e-verify software and encouraging states to monitor welfare enrollees to ensure they are still eligible to receive benefits throughout the year, states can save taxpayers billions. Modern technology should make it easy for states like Minnesota to electronically screen their list of enrollees, to ensure that they are actually supposed to be receiving the taxpayer dollars they are claiming.

Minnesota’s neighbor, Illinois has utilized similar reforms and is saving their taxpayers $350 million each year.

Luckily for Minnesota residents, some lawmakers in the land of 1,000 lakes are willing to suggest changes to their state’s welfare programs. Last year they “proposed a crackdown on waste, fraud and abuse in Medicaid and MinnesotaCare that they predicted would save the state $150 million per year.” In addition, the legislature passed a version of a bill that was projected to save $274 million – $307 million per year by improving eligibility determinations.

That’s a lot of money that could be returned to the taxpayer or put toward programs for those truly in need – not scammers and welfare fraudsters.