Report: Oregon Medicaid Agency Misspent Taxpayers’ Money

Published January 9, 2018

Ahead of a voter referendum on a new tax to fund the state’s Medicaid program, Oregon Health Authority (OHA), the state’s health care agency, disclosed hundreds of millions of dollars in fraudulent and wasteful spending.

A November 2017 letter from OHA director Patrick Allen to Gov. Kate Brown stated OHA has overpaid contractors by more than $152.3 million since Oregon expanded Medicaid coverage through Obamacare in 2014.

Over the same period, OHA also improperly spent at least $78 million in state and federal taxpayer money on Medicaid services for undocumented immigrants, pregnant women seeking abortions, and prisoners, Allen wrote.

The November letter follows an October OHA report identifying $74 million in improper payments to Oregon coordinated-care organizations, which are community networks of general and specialized health care providers for Medicaid recipients.

On January 23, 2018, voters will decide whether to approve Measure 101, a ballot question that would add a 1.5 percent tax to residents’ health care premiums to finance Oregon’s 2014 Medicaid expansion.

The federal Affordable Act Care, commonly known as Obamacare, rewards states by substantially subsidizing Medicaid expansion with federal funds, gradually decreasing those payments over time.

Years of Overpayments

Steve Buckstein, a senior policy analyst for the Cascade Policy Institute, says OHA has a poor fiscal track record.

“There are 55,000 Medicaid recipients that the state has been paying for who were not eligible or did not complete their eligibility forms,” Buckstein said. “That’s $280 million per year. Then, overpaying the coordinated-care organizations, that’s $74 million over the past three years.

“They were overpaying for lots of people,” Buckstein said.

‘Trouble with Program Integrity’

Jonathan Ingram, vice president of research at the Foundation for Government Accountability, says Oregon’s entitlement fraud crowds out other government priorities.

“Oregon has long had trouble with program integrity,” Ingram said. “A recent audit found the state wasn’t doing the required eligibility verification to ensure benefits were only going to those who actually qualified.

“Every dollar spent on those who aren’t eligible is a dollar that can’t be used to fund services for poor children, seniors, and individuals with disabilities,” Ingram said. “It’s a dollar that can’t be used for other core priorities, like education, public safety, and infrastructure.”

Calls for Better Eligibility Checks

Oregon must act to reduce Medicaid fraud and waste, Ingram says.

“The state can and should do more to preserve resources for the truly needy,” Ingram said. “Oregon should use existing state data and enhanced tools to check income, residency, identity, employment, citizenship status, and more, to ensure those applying for welfare are actually eligible. It should conduct frequent and automatic reviews to ensure those on the program still belong there. When someone’s eligibility has changed, the state should immediately remove them.”