Audit uncovers critical flaws in Virginia's Medicaid program

Medicaid payments to ineligible recipients has cost the state of Virginia at least $21 million last year, says an audit conducted by Virginia’s Joint Legislative Audit and Review Commission. “People claiming to have no income have been able to get Medicaid in Virginia — no questions asked,” according to the audit, raising major concerns about the state’s management of money meant for the truly needy.

The audit also found, believe it or not, Virginia doesn’t actually verify that Medicaid applicants are telling the truth when they claim they have not earned any income. According to Linda Nablo, chief deputy director of the Department of Medical Assistance Services, “The policy around not verifying zero income was a holdover from the days when we had to rely on pay stubs . . . to verify income; there is no paper to verify zero.” However, “that is no longer the case in the advent of electronic sources, and we should and will be maximizing their use and treat zero-income reporters the same as we treat people who report $1 of income.”

The Commission “also faulted Virginia’s ‘passive’ approach to recovering money owed from the estates of certain deceased Medicaid patients.” As part of federal law, when a Medicaid recipient dies, the state is required to “seek recovery for long-term care expenses, and Virginia also may seek recovery for other Medicaid services.” But the audit found that Virginia’s Medicaid program “does not proactively identify those recipients,” instead, relying upon the voluntary reporting of that information from estate attorneys or the heirs of the deceased recipient, meaning money that should be returned to strengthen our public safety nets is being handed over as part of an inheritance.

This report comes in the midst of a continuing debate in Virginia over the expansion of Medicaid under Obamacare. The Commonwealth’s Governor, Democrat Terry McAuliffe, has been pushing for Medicaid expansion during the past several legislative cycles. But Republicans have held the line, citing the need for reform as well as the cost of their ballooning Medicaid budget.

“Despite Terry McAuliffe’s best efforts, Virginia’s legislative leaders continue to rebuff Obamacare’s Medicaid expansion — and for good reason,” said Christie Herrera, VP of State Affairs for the Foundation for Government Accountability. “Now, Virginia must take the next step and prevent fraudulent people from bilking the Medicaid system in the first place.”

Herrera has seen the effects of Medicaid fraud in other states and while this is a great first step, there’s more work to be done.


The state’s report suggested recommendations for the Virginia legislature to consider to combat the fraud and abuse in the Medicaid program, which includes stronger asset testing by cross-checking available income data from banks, accessing to employment databases, and streamlining the application and renewal process in order to more easily identify those Medicaid enrollees who are no longer eligible to be receiving benefits.

One of the state’s legislators, Delegate Steve Landes, has introduced a bill, HJ 637, “which gives the Commonwealth access to modern tools to combat fraud and waste in its welfare systems, such as Medicaid.”

Reforms like those Landes has proposed have saved other states millions of dollars and helped rid their rolls of ineligible recipients.

Budget-challenged Illinois recently reduced its costs by clearing out ineligible Medicaid enrollees. In just one year, audits that were authorized with bi-partisan approval found over 300,000 ineligible enrollees in their Medicaid system. In the second year, the audit removed another 400,000 ineligible enrollees. Among these were 8,000 dead folks who were somehow still receiving benefits. All totaled, ineligible enrollees were siphoning off $350 million in funds every single year.

Virginia Senator Janet D. Howell, a Democrat agrees with the need for real reforms telling The Washington Post, “I think we’re all in agreement that we need to be more aggressive. Not only is it wrong, but we can’t afford it.”

Blue states and red states alike are beginning to take on the task of stopping welfare fraud, and there’s no reason Virginia shouldn’t seize this opportunity to preserve scarce resources for both the truly needy and taxpayers alike.


Kristina Ribali is the Senior Coalitions Director for the Foundation for Government Accountability.  You can follow her on Twitter or reach her via email at [email protected]