The Trump administration is withholding a combined total of more than $1 billion in Medicaid funds from California and Minnesota until those states can prove they were not funding fraud, HHS officials said Tuesday.
The Centers for Medicare & Medicaid Services (CMS) is deferring approximately $867.5 million in federal Medicaid payments to California and $199 million to Minnesota, the agency announced in a press release. The deferrals come “after focused financial reviews identified claims that require additional review” before federal matching funds are released. Both states will have the opportunity to provide documentation showing the claims meet federal Medicaid requirements, the release said.
“If the documentation [the state provides] supports the claims, the funds will move forward,” Dan Brillman, director of the Center for Medicaid and CHIP Services, said at a press conference at HHS headquarters in Washington. “If not, taxpayers should not be paying for these services or these claims … Our objective is to make sure that every Medicaid dollar reaches those who need it.”
In addition to withholding the funds, “we are expanding [HHS’s] exclusion authority,” said HHS Secretary Robert F. Kennedy Jr. “Now both CMS and the Office of Inspector General will be able to use that authority to remove bad actors from federal healthcare programs and, in many cases, permanently ban them from returning.”
Giving exclusion authority to CMS “is going to be a force multiplier,” said T. March Bell, inspector general at HHS. “It’s going to create additional momentum, and it’s going to exclude additional bad actors.”
Bell said he had been speaking to state attorneys general in person. “I’m looking them in the eye and saying, ‘Here’s what we need you to do. Here’s what your numbers are. We need you to do more.’ … I’m getting a gentleman’s agreement from those attorneys general because they’ll be held accountable for that conduct.”
CMS Administrator Mehmet Oz, MD, MBA, gave an example of the types of claims the agency is subjecting to closer scrutiny. “In Minnesota, we’re talking about 14 high-risk programs — high-risk service categories like personal care and home-based services,” he said, noting that $3 million worth of the claims under review were tied to “documentation gaps.”
“One example of a documentation gap is charging us for care you provided to a deceased person,” Oz said. “We’re not going to pay for healthcare for dead people.”
But a big part of the Minnesota funds being deferred — the majority of the $199 million — comes as a result of Minnesota’s own audit of its providers, which resulted in the removal of about 3,000 providers from the rolls. “This raises questions about the claims tied to these same providers in the quarter before they were removed,” Oz said.
In California, the focus is on in-home supportive services, which “provide care for seniors and for people with disabilities, so they can remain safely in their own homes. Done correctly, these programs could make sense,” but California’s spending on this type of care over the past 2 fiscal years increased by 24% compared to an average 12% increase among all other states, he said. “That gap accounts for about $391 million of today’s deferral. Another $250 million comes from claims tied to high-risk providers,” including those billing more than a year after services were provided, or those billing for in-home care for four or more patients.
Federal Trade Commission Chairman Andrew Ferguson said the government is taking a two-pronged approach to this issue. First, “we have to switch from the process of letting money flood out the door from the federal government into the world, and then chasing it, and hope we can get some of it back. It doesn’t work … The way you stop fraud is you prevent the money from walking out the door.”
The second prong is making sure that people who commit fraud go to jail, he said. “The FBI is chasing fraudsters who have bilked billions of dollars from American citizens to every corner of the world and bringing them back here to face justice at the hands of the people that they have hurt.”
“When these programs were set up, they were set up on the assumption that everyone who participates in these programs — federal bureaucrats, state bureaucrats, and people who are going to apply for the programs — are going to play by the rules, and that we can trust everyone to do it,” Ferguson added. “What we have learned is that that’s just not true. Our society has disintegrated from the high-trust society that it has been, and the only way that we can restore that high trust is to make sure that the money stays in the agencies or goes to people who actually need it.”
