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Last year's MFCU recoveries are woefully low, and that's a problem


Certain things--wine, some people, various cheeses--are supposed to get better with age. Medicaid fraud control, apparently, isn't included in that distinguished category.

Each year, around this time, the Office of Inspector General (OIG) data on every Medicaid Fraud Control Unit (MFCU) accompanied by a handy little interactive map. Hover over Texas, and you'll see the state brought in an impressive $210 million in total recoveries last year, more than three times that of New York, this year's runner up.

Dollar amounts don't often tell the full story, though. I'm partial to judging states based on their efficiency. For instance, Texas received $17.6 million in grant funding, which works out to a $12 to $1 return on investment. That's pretty good. California recovered $57.9 million, but did so with a budget of $32 million, hardly enough for a 2-1 return. Could be worse, though. Wyoming recovered just over $44,000 valued at less than 10 cents on the dollar.

This year, there was something unusual in MFCU recoveries as a whole. Across the United States, total Medicaid fraud recoveries in fiscal year 2015 clocked in at $744 million. That's a 63 percent decline in recoveries from FY 2014, and just one-quarter of the nearly $3 billion recovered in FY 2012.

That's a concerning trend, particularly with Medicaid's growing enrollment numbers, an ever-expanding budget and a significant jump in improper payment rates within the program.

Late last year, the Department of Health and Human Services revealed Medicaid's improper payment rate had climbed to 9.78 percent in FY 2015, up from 6.7 percent in 2014. Patrick Conway, M.D., principle deputy administrator and chief medical officer of the Centers for Medicare & Medicaid Services, explained the away the increase, blaming new provider enrollment and screening requirements within the Affordable Care Act (requirements that were finalized in 2011, by the way).

Put all of this data together, and Medicaid has an unusually unbalanced equation: Higher spending + higher improper payment rates + significantly fewer recoveries = an unprecedented amount fraud that's unaccounted for.

Plug in some actual numbers to that equation and you'll see just what that figure really is. Based on the $548 billion Medicaid spent last year, an estimated $53.6 billion (9.78 percent) of that should be categorized as improper payments. Actual MFCU recoveries represent 1.39 percent of that figure, and less than 0.14 percent of overall Medicare spending.

To be fair, no one is expecting states to recover every last dollar of improper payments. Even in 2012, the year MFCUs captured a record $2.9 billion, the total recoveries represented less than 10 percent of more than $30 billion in estimated improper payments.

So, what is reasonable? Is 2 percent of potential improper payments too low to set the bar?

I know what you're thinking. I'm getting my licks in on a horse that died years ago. The Government Accountability Office and countless others have repeatedly pleaded for better Medicaid fraud controls, specifically those that stop payments from going out the door, rather than chasing down recoveries. I'm not the first to point out the inefficiencies of the entire process, and I won't be the last.

At the same time, Medicaid spending is churning relentlessly upward. Since 2010, Medicaid expenditures increased 38 percent, and according to projections, spending will climb to $786 billion by 2022. Furthermore, the improper payment rate is expected to climb to 11.53 percent next year. 

It's entirely possible that this year's drop in recoveries is just an anomaly. On the other hand, maybe it's just another indication that Medicaid spending is simply vastly outpacing our existing fraud-control tools.

After all, not everything gets to age gracefully. - Evan (@HealthPayer)