Agency Failing to Oversee State’s Largest Expense

TALLAHASSEE — A recently released audit of Florida’s Agency for Health Care Administration (AHCA) reveals a disturbing trend of waste and fraud concerning Florida’s largest single budget item: Medicaid.  Among the five separate findings reported by the Auditor General, two stood out: AHCA failed to properly oversee cost claims that hospitals submitted to the agency, and there was a lack of written policies and procedures to scrutinize cost reports that showed symptoms of fraud.

AHCA is an enormous bureaucracy of 1,700 employees and a proposed 2012-13 budget of $20.5 billion—$1.8 billion less than last year.  It is tasked with dispensing Medicaid funds—taxpayer provided health care for low-income families and individuals.  In 2009-10, some 54 percent of the Medicaid budget was paid to hospitals, nursing homes, and intermediate care facilities for the developmentally disabled (ICF-DDs) even though there were not adequate safeguards in place to ensure accountability in the use of this enormous sum.

The Auditor General’s report also found that AHCA failed to release information showing which audits of cost reports were performed in a timely manner. The delays limited the agency’s ability to correct overstated per diem rates and other improper payments to facilities.

Despite protests from hospitals and others denouncing the proposed funding cuts for 2012-13, AHCA’s budget allotment still totals roughly 31 percent of Florida’s entire state budget. Worse, these staggering costs stand to dramatically increase as millions of beneficiaries are added to Medicaid rolls in 2014, when the Patient Protection and Affordable Care Act (Obamacare) is fully implemented–provided the U.S. Supreme Court doesn’t rule the law unconstitutional.

Federal taxpayers also have something at stake when money is misspent. Medicaid is a joint federal/state program in which the federal government matches state funds to cover an average of 55 percent of the total Medicaid costs to the states. In Florida alone in 2012-13, this amounts to some $25 billion in federal matching funds on top of Florida’s $20.5 billion. That’s approximately $14,250 in taxpayer funds per Florida Medicaid recipient.

One attempt to correct the massive structural inefficiencies in the current Medicaid system is the Florida Managed Care Program, which has had a trial run in a pilot program in five Florida counties, and which recently received a renewed federal waiver allowing the pilot program to continue.

Managed care is a system that relies on determining services upfront and paying for those services going forward. This is different from the currently prevailing fee-for-service model in which the state pays for medical services when it receives the bill, then asks a state bureaucracy to determine the accuracy of providers’ cost submissions. Florida law enforcement officials have called this latter approach “pay and chase.”

Fortunately, managed care—by stipulating ahead of time which medical services will be provided to patients—has the potential to drastically reduce fraud and to correct the failures outlined in the Auditor General’s report.

As it stands, the Florida Legislature has already voted to turn the Medicaid program over to managed care statewide, however Florida must await final federal approval due to the federal government’s massive involvement in the program.