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Medicaid needs an audit, House GOP leaders say

RICHMOND—House Republican leaders are calling for a comprehensive audit of the state’s Medicaid program, something that would certainly postpone—for at least a year—any talk of expanding eligibility for coverage.

House Speaker Bill Howell, R–Stafford, and other GOP leaders said they will ask the legislature’s study arm, the Joint Legislative Audit and Review Commission, to conduct “an independent, comprehensive operational and financial audit” of the Medicaid program.

Howell and the others say such an audit hasn’t been done and is critical before Republicans would consider expanding Medicaid to cover more low-income Virginians.

“We cannot expand a program plagued with waste and fraud and abuse,” Howell said in a news conference. “We’re very concerned about the long-term costs.”

House Appropriations Committee Chairman Chris Jones, R–Suffolk, reeled off a list of numbers to demonstrate how much the Medicaid program’s costs have risen over the years. It is one of the fastest-growing cost drivers in the state budget, jumping 1,600 percent over the past 30 years. Virginia’s spending on Medicaid has doubled in the past decade, from $1.8 billion in 2004 to $3.7 billion in 2014.

The amount of waste or fraud in the program is more difficult to measure. Secretary of Health and Human Resources William Hazel told the Medicaid Innovation Reform Commission last year that out of $49 billion spent on health care—public and private—in Virginia in 2009, about $15 billion, or 30 percent, could be considered wasteful spending.

That “waste” included unnecessary services, excessive administration costs, inefficient services and overly high prices. Only 10 percent, Hazel guessed, was actual fraud.

But he warned lawmakers that his guesses were just that—imprecise estimates based in part on national figures.

“I don’t know that we have a good number for fraud,” Hazel said. “It’s really hard to know what you don’t know.”

Nevertheless, that estimate plus the hard numbers of increasing costs in Medicaid are a big reason why Republicans in the House have resisted the expansion that Democratic Gov. Terry McAuliffe supports. They created the MIRC to work on reforms they want to help control the program’s increasing costs, and gave that commission authority to decide whether to expand Medicaid.

McAuliffe wants the MIRC to make up its mind this session or give the choice back to him.

Republicans say no way.

“It’s disturbing to see him rushing this process,” Howell said. “We’re certainly not going to rush the MIRC.”

Medicaid expansion, Howell added, is “not going to happen this year.”

The House GOP call for an audit comes after the McAuliffe administration last week announced that new estimates of the cost of Medicaid expansion show it would save the state $1 billion through 2022, instead of costing $137 million.

But the House group mistrusts those figures. House Majority Leader Del. Kirk Cox, R–Colonial Heights, ticked off a list of programs that ended up costing more than originally projected.

“I can almost guarantee you [that when] we get to 2020, these numbers are not going to be correct,” Cox said. “It really is Lucy with the football.”

JLARC regularly conducts studies on behalf of the General Assembly. Senators have warned their peers who are proposing bills to create new studies that JLARC already has a close-to-full roster of studies to carry out over the next year or two.

Del. Steve Landes, R–Augusta, said he envisions JLARC supervising the Medicaid audit, but contracting out the bulk of the work to an outside firm. He said House members are currently working to figure out how much that would cost, so they can put it in this year’s budget.

He and others said they consider this audit a more pressing need than some of JLARC’s other studies.

“From the House standpoint, this is going to be a priority,” Landes said.

Supporters of Medicaid expansion said the House GOP’s call for a lengthy audit is a “delay tactic” to avoid expansion, and questioned why the party of fiscal responsibility would call for the audit without knowing its price.

Jill Hanken with the Virginia Poverty Law Center and the pro-expansion coalition Healthcare for All Virginians said Medicaid reforms could continue concurrently with expansion, not as a prerequisite.

“It’s not a justification to delay this expansion,” Hanken said. “We cannot forget about the people who are uninsured and waiting.”

Fred M. Rankin, president and chief executive officer at Mary Washington Healthcare, said a delay in Medicaid expansion is hurting people.

“The health care needs are here now, the patients are in our hospitals and emergency rooms now,” Rankin said. While I would agree that Medicaid, especially fee-for-service, needs a closer look, I do not agree that we must let that stand in the way of expanding coverage in some fiscally conservative way now.”

Chelyen Davis: 804/343-2245


Under the Affordable Care Act, states were to expand the Medicaid program to cover people earning up to 138 percent of the federal poverty level ($15,856 for an individual or $26,951 for a family of three in 2013). The law requires the federal government to pay for 100 percent of expansion costs the first three years, then 90 percent thereafter.

But the U.S. Supreme Court struck down the Medicaid expansion provision in the law, saying it should be an option for states.

As of January 2014, 25 states and the District of Columbia have opted to expand Medicaid. Virginia so far has opted not to do so but has a legislative commission charged with looking into reforms including expansion.


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