Exchange fix could fuel Medicaid costs, fraud

The Obama administration, which quietly fixed a problem with Medicaid sign ups on HealthCare.gov on Black Friday, may have inadvertently placed states and insurers at risk for higher Medicaid costs and fraud, Politico reported.

Medicaid enrollment had been a high point in the rollout of the health insurance exchanges with states reporting almost 400,000 people applied for Medicaid during the launch of the online marketplaces, FierceHealthPayer previously reported.

But HealthCare.gov was having trouble sending Medicaid applications to the appropriate states for final processing. By mid-November, HealthCare.gov did not transmit a single Medicaid application to states for processing, even though enrollment is expected to start on Jan. 1, FierceHealthFinance previously reported.

So Obama officials found a workaround by allowing states to use incomplete sets of data, called flat files, to enroll consumers in the state-federal health program, according to Politico.

The problem, however, is those files don't include critical information states need to verify consumers' eligibility for Medicaid coverage. And if states can't accurately determine Medicaid eligibility so they can process applications, consumers might not obtain coverage next year.

Since the flat files don't say whether applicants have already tried to enroll in Medicaid directly through a local agency, some states worry they could have duplicate sign-ups, which could lead to fraud. Plus, the Obama administration hasn't conducted any end-to-end testing to uncover potential issues with the information given to states.

Kip Piper, a former federal Medicaid adviser, said the latest HealthCare.gov fix signals the Obama administration is more concerned about boosting enrollment than ensuring new Medicaid members actually belong in the program.

"It certainly risks big problems down the road, with greater confusion, duplication and even a degree of fraud, and abuse," Piper told Politico. "The administration frankly does not care about the risk of over spending or duplicate enrollments or ineligible people getting enrolled in Medicaid in the first year."

Although Obama officials said they will increase the amount of detail available in the flat files, which would help states more accurately determine consumer eligibility for Medicaid, it's unclear when they will make those enhanced files available.

To learn more:
- read the Politico article

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