Pennsylvania Medicaid Waste Estimated at $1/4 Billion a Year

Published May 31, 2016


A new state government report shows fraud in Pennsylvania’s Medicaid program may have cost taxpayers more than $1 billion over the past four years—more than three times what the state had previously reported.

An audit by Pennsylvania Auditor General Jack Wagner found improper Medicaid eligibility determinations on nearly 2,000 randomly selected Medicaid applications between 2005 and 2009. The audit found a 14.7 percent fraud rate, three times the rate anticipated by the Pennsylvania Department of Welfare (DPW).


Lax Oversight Cited

According to Nathan Benefield, director of policy research at the Commonwealth Foundation, a Pennsylvania think tank, the extrapolated rate indicates a frightening level of fraud.

“Wagner’s audit found an error rate of more than triple what the Department of Public Welfare claimed,” Benefield said. “The audit is looking only at a sample but determining the percentage of fraudulent payments—from which we can extrapolate that upwards of $1 billion was spent in this period on those who were not eligible for Medicaid.”

In the wake of the audit, Wagner testified before the Pennsylvania House Insurance Committee on January 28, renewing his call for the DPW to strengthen its oversight of Medicaid eligibility reviews.

“Every dollar that is wasted is one that could have gone to help a truly needy person receive the medical assistance he or she deserves,” Wagner said. “With the commonwealth facing widening budget deficits, DPW must do all that it can to monitor the state’s Medicaid program, to make sure all funds are being spent efficiently, effectively, and for their intended purpose.”


Governor Blamed

Benefield blames the administration of Pennsylvania Gov. Ed Rendell (D) for the high level of fraud.

“The Rendell administration has been very lax at enforcement of eligibility, often celebrating the growing number of people enrolled in Medical Assistance,” Benefield said. “The number of caseloads referred to the Inspector General dropped by 50 percent under Gov. Rendell. Greater verification requirements—including proof of residency, income verification (and using databases at the state’s disposal to verify income), and use of photo ID—were proposed a couple years ago but were shot down by Gov. Rendell.”


Reforms Called For

According to Benefield, more fundamental reforms are necessary to lessen the burdens on Pennsylvania taxpayers.

“Medicaid fraud is a driver of overspending, and Medicaid is a growing burden on Pennsylvania taxpayers. The Commonwealth Foundation has proposed a dramatic overhaul, similar to that implemented in Florida, Louisiana, and South Carolina, which would reduce costs and provide better health care to recipients,” Benefield said.


Sarah McIntosh ([email protected]) teaches constitutional law and American politics at Wichita State University in Kansas.


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