Research & Commentary: Medi-Cal Can and Should Fix Eligibility Problems

Published November 15, 2018

From 2014 to 2017, California spent $4 billion covering Medi-Cal beneficiaries who may not have been eligible for these government-funded health plans, according to a recent state audit. Fifty-seven percent of the payment errors lasted for more than two years.

Medi-Cal is California’s Medicaid program. It provides health coverage to about 13.1 million Californians, roughly one-third of the state’s population. Under the current system, county workers determine eligibility for Medi-Cal and then send eligibility information to the state. One of the key problems with this process is that the state and county records do not always match. According to the audit, 453,000 beneficiaries were determined to be eligible in the state system but not in the corresponding county, which means that many who were not eligible for Medi-Cal likely received coverage.

These discrepancies often occur when beneficiaries die, move, or begin earning a higher income, all of which can be disqualifying.

Far-reaching reforms governing how California determines eligibility are desperately needed to ensure those receiving Medi-Cal aid truly deserve it. Fortunately, there are affordable ways to streamline the eligibility process for Medicaid that have been successful in other states. Massachusetts, for example, uses automation to better track Medicaid eligibility, and, “Additional automated data check opportunities hold the promise of further improving the eligibility redetermination process,” according to Josh Archambault, a senior fellow at the Pioneer Institute. “They include enhanced checks to verify residency, sharing eligibility information with public assistance programs, and using asset verification checks for more populations to signal changes in income that could impact Medicaid eligibility.”

According to a new Pioneer Institute study, the Bay State is saving money and reducing staff time by utilizing enhanced eligibility verification systems and automation in MassHealth, the commonwealth’s Medicaid program. The study’s author, William J. Oliver, says the Bay State is a model others should follow. “MassHealth’s success at digging out of an eligibility crisis that cost Massachusetts at least $658 million, according to the Commonwealth’s Health Policy Commission, holds important Medicaid eligibility lessons for other states.”

Massachusetts’ automation efforts came in two phases. First, MassHealth implemented auto-redetermination, where all data available to MassHealth is collected prior to redetermination and automatically added to the necessary forms and applications. These improvements minimized staff labor and processing time for redetermination because all the necessary information was already available. In 2016, MassHealth began incorporating additional eligibility tests to improve accuracy. These new data sources included employment and earnings data as well as death registry information. Before MassHealth incorporated these changes system wide, they were tested on small batches to ensure a smooth transition and that the system functioned properly.

So far, MassHealth’s eligibility reforms and improved procedures have proven extremely effective. These measures have improved eligibility accuracy and streamlined many outdated processes. As a result, Bay State taxpayers have been spared more than $1.2 billion in wasted Medicaid funds. Although a large portion of the savings came from ending temporary coverage, more than $250 million in savings was generated from enhanced eligibility checks through automated matches.

To ensure welfare funds are spent properly and given to those truly in need, lawmakers must actively monitor how these programs determine eligibility and benefits. When instances of fraud and abuse are discovered, policymakers must move quickly to address these problems and enact strong sanctions to discourage future problems.

The following documents examine Medicaid eligibility reform and expansion in greater detail.

MassHealth Protecting Medicaid Resources for the Most Vulnerable: How Massachusetts Saved Hundreds of Millions through Enhanced Eligibility Verification
In this white paper, Dr. William J. Oliver and Josh Archambault of the Pioneer Institute examine how enhanced eligibility verification allowed MassHealth, the Commonwealth’s Medicaid program, to save significant resources that could be redirected to the care of truly needy Medicaid recipients.

Don’t Wait for Congress to Fix Health Care
In this Policy Brief, Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs or submit even more ambitious requests for waivers to the Department of Health and Human Services – a suggestion the Trump administration has encouraged.

The Growing Medicaid Expansion Bubble
In this edition of the Consumer Power Report, Executive Editor Justin Haskins examines Medicaid expansion and all the problems it has created for states, physicians and patients. “Despite the lack of attention the issue is getting, the growing Medicaid population could lead to state government meltdowns around the country and a national health care crisis for which most Americans are completely unprepared,” wrote Haskins.

Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected – 75a85aba2dd0
Brian Blase wrote in Forbes the costs for newly eligible adults were not decreasing as expansion supporters predicted they would. Blase says in a new report, HHS says newly eligible adult Medicaid enrollees cost about 23 percent more than the Medicaid enrollees who were eligible prior to expansion.

The Oregon Experiment—Effects of Medicaid on Clinical Outcomes–effects-of-medicaid-on-clinical-outcomes?source=policybot
This article from The New England Journal of Medicine examines Medicaid outcomes in Oregon. Oregon gave researchers the opportunity to study the effects of being enrolled in Medicaid (compared to being uninsured) based on data from a randomized controlled trial, the “gold standard” of scientific research. The results showed no improvement in health for enrollees, but it did reveal better financial protections for patients and increased medical spending.

Research & Commentary: States Pursue Work Requirements for Medicaid–commentary-states-pursue-work-requirements-for-medicaid?source=policybot
Senior Policy Analyst Matthew Glans examines efforts by several states to add work requirements to their Medicaid programs. “Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid,” Glans wrote.

Effect of Medicaid Coverage on ED Use – Further Evidence from Oregon’s Experiment
Amy Finkelstein, Sarah Taubman, Heidi Allen, Bill Wright, and Katherine Baicker examine the effect Medicaid coverage has on emergency room use. They found people enrolled in Medicaid significantly increase their emergency room visits for around two years after they first sign up. “For policymakers deliberating about Medicaid expansions, our results, which draw on the strength of a randomized, controlled design, suggest that newly insured people will most likely use more health care across settings – including the [emergency department] and the hospital – for at least 2 years and that expanded coverage is unlikely to drive substantial substitution of office visits for ED use.”

Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems
Brian Blase examines the effect of the Affordable Care Act on Medicaid. Blase’s findings reveal Medicaid expansion has worsened many of the structural problems in the program. “The unanticipated expense casts doubt on the value of the ACA Medicaid expansion. The enhanced federal match incentivizes states to boost ACA expansion enrollment and to categorize Medicaid enrollees as ACA expansion enrollees, and also encourages states to set high fees for ser­vices commonly used by expansion enrollees and high payment rates for insurers participating in states’ Medicaid managed care programs,” wrote Blase.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit the Heartland Institute’s website and PolicyBot, Heartland’s free online research database.

If you have any questions about this issue or The Heartland Institute’s website, contact Lindsey Stroud, state government relations manager, at [email protected] or 312-377-4000.