Halfway through review, Illinois Medicaid eligibility error rate at nearly 60%

Illinois’ Medicaid program has long been plagued with wasteful spending. The U.S. Government Accountability Office designates Medicaid as a high-risk program, largely because it is “particularly vulnerable to fraud, waste, abuse and improper payments” and has inadequate oversight to prevent wasteful spending. Indeed, the U.S. Department of Health and Human Services, or HHS, reports an improper payment...

Illinois’ Medicaid program has long been plagued with wasteful spending. The U.S. Government Accountability Office designates Medicaid as a high-risk program, largely because it is “particularly vulnerable to fraud, waste, abuse and improper payments” and has inadequate oversight to prevent wasteful spending. Indeed, the U.S. Department of Health and Human Services, or HHS, reports an improper payment rate of nearly 10 percent. HHS officials estimate that eligibility determination errors account for most of the improper payments.

Illinois law requires state workers to perform annual eligibility checks to ensure that those receiving Medicaid benefits were actually eligible for the program. But, as the Auditor General has frequently reported, state workers have consistently failed to ensure the program’s integrity.

The Auditor General found that several cases were missing documentation in their eligibility files. Some files were missing evidence that income had ever been verified. In some cases, state workers didn’t bother to collect paystubs at all, but simply “verified” the applicants’ wages verbally, through handwritten notes or by comparing it to previous applications. Other files were missing evidence that the state workers had verified Social Security numbers, citizenship or residency. In fact, some files were missing the redetermination applications altogether.

And those problems were just for the annual checks that the state workers bothered to do at all. The Auditor General also noted that between 15 percent and 20 percent of Medicaid cases were overdue for their annual redetermination. The delays for these cases ranged anywhere from three months to more than five years.

So the state signed a two-year contract with Maximus Inc. to verify eligibility for the state’s Medicaid enrollees. Maximus, which specializes in this type of work, began checking an assortment of databases to verify income, residency and identity for individuals on Medicaid in January 2013.

It’s been roughly a year since Maximus began its review. So how is the project going? So far, Maximus reviewed eligibility for nearly 538,000 case files. These cases can represent more than one individual. At the end of fiscal year 2012, for example, the state had roughly 1.3 million Medicaid and CHIP case files, though it had nearly 2.8 million enrollees.

Of the cases reviewed, the independent experts have recommended that the state cancel roughly 250,000 cases, as those individuals were no longer eligible for benefits. Another 60,000 cases were eligible for some benefits, but not the benefits they were receiving. For example, some individuals enrolled in Medicaid may only qualify for programs with greater cost-sharing. In other cases, the parents may no longer be eligible for benefits, but their children are. Overall, the review has yielded an eligibility error rate of roughly 58 percent.

When the state receives a recommendation from the independent vendor to cancel benefits for a particular case, the state gives the enrollee an additional 20 days to submit documentation showing they are still eligible for benefits. The state then removes individuals from the program after verifying that they are no longer eligible.

So far, the state has only processed about 60 percent of the recommendations it has received. Of the cases it has finalized, nearly 140,000 cases have been canceled, with another 45,000 cases changed. In all, nearly 55 percent of the cases finalized had eligibility errors. Another 200,000 cases have been completed by the vendor but await state review.

Maximus identified hundreds of thousands of individuals who were improperly receiving Medicaid benefits. So how has Gov. Pat Quinn rewarded them? By showing Maximus the door.

The American Federation of State, Municipal and County Employees initiated a legal challenge last year. AFSCME, which has donated more than $300,000 to Quinn since 2002, wanted the state to terminate its contract with the expert vendor reviewing eligibility and instead hire new, dues-paying state workers to do the job. Never mind the fact that state workers’ failure to do the job adequately prompted the state to hire an independent vendor in the first place.

After promising to fight the challenge, Quinn signed a backroom deal with AFSCME to send Maximus packing. This important task will now fall to a new fleet of state workers. AFSCME couldn’t be happier.