What You Need to Know About the PA House Plan to Reign in Medicaid Fraud

Medicaid fraud bill

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By Cassandra Stone

July 2, 2020

The problem, critics point out, is that it takes taxpayer dollars to investigate claims of fraud.

As the future of health care for hundreds of thousands of Pennsylvanians remains uncertain, state lawmakers have focused their attention on fighting insurance fraud.

A coalition of Republicans is pushing legislation that seeks to offer expanded protections to whistleblowers who report Medicaid fraud, which costs taxpayers millions of dollars each year. Those who oppose the anti-fraud bill package say an increase in plaintiff lawsuits on behalf of the state will lead to more taxpayer dollars to cover the investigation of such claims. 

The proposed Medicaid fraud legislation consists of a package of six bills created in response to a grand jury report released by Attorney General Josh Shapiro’s office on fraud in Pennsylvania’s Medical Assistance Program. The main focus is the False Claims Act bill, which is “designed to identify, detect, and prevent improper payments before they happen.”

The additional bills aim to increase penalties for making false claims, require Medicaid providers to use a National/State Provider ID, require agencies to determine their vulnerability to fraud, and create an agreement between Medicaid and the Department of Human Services to recoup Medicaid funds spent on “preventable” conditions.

Medicaid currently provides services to 2.8 million Pennsylvanians of all ages, from children to seniors. Pennsylvania’s program obtains a majority of its $33 billion in funding directly from the federal government. The rest of the money is collected through state taxes, tobacco settlements, state lottery revenue, and assessments on service providers. 

RELATED: 850,000 Pennsylvanians Will Lose Healthcare Coverage If Republicans Don’t Do Something

According to Shapiro’s office, the Medicaid Fraud unit made 292 arrests in 2017 and 2018, resulting in 173 convictions and $34 million in recovery. 

State Rep. Wendi Thomas (R-178) is one of the lawmakers championing legislation to crack down on fraud. Her bill, which increases penalties for those convicted of making a false Medicaid claim, passed the House unanimously in late June. 

“Medicaid fraud hurts both Pennsylvania taxpayers and those who depend on the Medicaid program,” Thomas said in a statement. “To reform and protect the system, we must encourage whistleblowers to speak out, put tools in place to better guard the system, and make the penalties for fraud so harsh there will be no incentive to commit the crime.”

The problem, critics point out, is that it takes taxpayer money to investigate these claims.

“False Claims incentivizes private individuals and plaintiffs lawyers to file lawsuits on behalf of the Commonwealth for alleged Medicaid fraud by increasing the percentage of the recovery,” Gene Barr, the president and CEO of the Pennsylvania Chamber of Business & Industry, told The Pennsylvania Capital-Star. “This leads to the plaintiffs’ lawyers recovery increasing, while the Commonwealth’s portion of the recovery decreases.”

According to the Hospital and Healthsystem Association of Pennsylvania (HAP), a non-partisan political action committee for Pennsylvania hospitals and health systems, adopting a state version of the False Claims Act could jeopardize access to care for patients in rural communities in particular.

“Pennsylvania’s hospitals work hard to prevent any kind of billing mistakes and prevent fraud by working with state and federal agencies and developing internal processes,” a HAP spokesperson said in a statement to The Keystone. “It is never a good use of hospital resources, time, and money to be spent on responding to requests for information and defending lawsuits brought against them for baseless and innocent mistakes.”

HAP also said the hospital industry is already heavily regulated by state and federal compliance entities. “All hospitals maintain corporate compliance programs—which include written policies, a compliance officer and committee, education programs, a compliance hotline, and ongoing monitoring/auditing—to ensure that dollars go to patient care.”

Though the Pennsylvania House has voted in favor of fighting Medicaid fraud, there has been little legislative action in protecting access to health care should the Affordable Care Act (ACA) be overturned later this year.

This fall, the U.S. Supreme Court is set to hear arguments on the constitutionality of the ACA. Though this is a federal case, Pennsylvania lawmakers can still act on the state level in order to protect access to affordable coverage, and particularly so for residents with pre-existing conditions. 

Rep. Peter Schweyer (D-22), has sponsored a bill to specifically put pre-existing conditions including COVID-19-—into state law. Another bill seeks to uphold the ACA provision that children may remain on their parents’ health insurance plans until they reach the age of 26. Both bills are currently sitting in the House, despite receiving bipartisan support.

RELATED: Trump Administration Admits It Doesn’t Have ‘Exact Details’ of Possible ACA Replacement

It’s also important to point out that the Trump administration has yet to announce a replacement plan should the ACA be overturned. Health and Human Services Secretary Alex Azar told CNN that “the exact details will be dependent on the—frankly, the composition of Congress if and when the Supreme Court does strike down all or a large part of Obamacare.” 

More than 850,000 Pennsylvanians would lose their coverage in this scenario, according to a 2019 study from the Urban Institute. Those numbers are likely to be even higher now, as more than 1.1 million newly uninsured Pennsylvanians have become eligible for coverage via the ACA or the state’s expanded Medicaid program during the coronavirus pandemic.

While Democrats agree with Republicans on the importance of reducing fraud, essentially using legislation to turn plaintiffs into bounty hunters who will receive cash for costly investigations isn’t the solution. Eligible families and people on welfare can be swept off the system when they can’t provide timely proof of eligibility. 

The number of at-risk Pennsylvanians with inadequate healthcare coverage has grown substantially since the onset of the coronavirus pandemic in March. According to a Gallup poll released earlier this spring, tens of millions of Americans would avoid seeking treatment for COVID-19 symptoms due to financial uncertainty. 

As the pandemic rages on and COVID-19 survivors face an uncertain future with their health, lawmakers concerned with Medicaid fraud are now tasked with prioritizing protective legislation for its constituents.


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