As states and localities (and for that matter, the feds) cast about to find ways to save money now and into the future, there's a clear and emerging trend that doesn't involve simply cutting health and human services, it involves cutting health and human services fraud.
This push will clearly be the most pronounced when it comes to Medicaid and Medicare. In fact, as part of the Obama health-care overhaul, new mechanisms were put in place for more actively and aggressively pursuing fraud, and states were handed close to $20 million to aid in investigative efforts. The Department of Heath and Human Services (HHS), meanwhile, claims to have recovered $4 billion in fraudulent payments in 2010.
But the fraud squad will now be looking at every program, whether its Medicaid, Temporary Assistance for Needy Families or the Supplemental Nutrition Assistance Program. The move sharply reverses a long-standing attitude by the feds, states and localities that most providers and recipients are honest, that the system's priority ought to be helping clients and supporting providers and that the system should not be spending an inordinate amount of time or money chasing claims and claimants.
Scrutiny already has begun to trickle down to everyone on the front lines of health and human services. Take North Carolina: Gov. Bev Perdue is in the process of trying to close a $2.4 billion hole in the state's upcoming $20 billion operating budget, and as a result, is aggressively pursuing health and human services fraud.
North Carolina -- where health and human services are delivered by localities with state oversight -- used to follow a strategy that Al Delia, senior advisor to Gov. Perdue, calls "pay and chase." "We'd pay the claim and then it might be as long as six years before we got around to an audit." Worse, there was no prioritization of what claims to chase, says Delia. A $10,000 claim was as high a priority as a $1 million claim. It just depended on where the audit fell in the mounting pile of paper.
In part, the less than speedy and sophisticated approach to following up on claims had as much to do with federal rules as it did anything else. In the past, the instant a state signaled that it was going to question a claim, they were required to immediately reimburse the federal government for its full share of the amount being investigated. This, to say the least, had something of a chilling effect on how aggressive any state wanted to be when it came to chasing down fraud.
But with a recent change in those federal rules -- HHS now gives states a full year to investigate a claim before any reimbursement is due -- numerous states, including North Carolina, have overhauled their whole approach to pursuing fraud. Delia says that the state has virtually wiped out what had been a thick stack of backlogged audits, and that it now also does audit triage, or that is, it pursues investigations involving the largest amounts of money first. The approach is paying off. In 2008-2009, the state recovered a total $13.5 million; in the last six months of 2010, the state recovered more than $44 million, says Delia, or what some in the business would call "real money."
If what is going on in North Carolina hasn't trickled down to your jurisdiction yet, it is surely going to. At Governing's Outlook in the States and Localities conference in February, HHS Secretary Kathleen Sebelius said that pursuing fraud would be a very high priority for the department as the federal government struggles with its own brutal budget issues (and as a way, of course, to prove to Republicans that Democrats can be as tough on crime as anyone).
But this is tricky territory. As David Hansell, acting assistant secretary with the Administration for Children and Families at HHS noted during his presentation at Outlook, the system has been set up to pay first and ask questions later. There's very sensible reasons for that, not the least of which is that many providers are small operators who are living paycheck to paycheck. In other words, they're one paycheck away from flipping over to the other side of the system. So, the bias has been to get the money out the door, and not require a Byzantine construct of checks and balances to ensure that only those deserving of payment get it, and that every payment is correct to the penny.
But Hansell echoed his boss: It is a new day at HHS, and the feds will be watching much more closely. So, on top of the already very difficult jobs that state and local health and human services staffers already have, comes this added pressure to be tough but kind; quick but cautious; responsive but careful. And, ready to follow up.