Last night an audit of New Jersey’s Medicaid program revealed $13 million worth of extra costs that might have been avoided. This should surprise no one, and should give pause to anyone considering an expansion of the Medicaid program and all the other “features” of the healthcare-reform plan that the two Houses of Congress are still trying to negotiate.
The audit, by the New Jersey Office of Legislative Services, was released yesterday (January 15), according to The Star-Ledger (Newark). It found numerous instances of administrative oversights, double registration, and similar mistakes that have cost the state $13 million dollars, over a two-year period, in payments far in excess of what the law intented for the services involved. But what The Star-Ledger failed to notice was the more fundamental reason why such mistakes were even possible.
That reason is simple: Medicare, Medicaid, and most insurers and health-maintenance organizations (HMOs) reimburse health-care providers, including doctors and hospitals, far less than those same providers and hospitals charge someone who does not have insurance. And the reason for that disparity is the very real risk that providers will receive nothing at all.
The two examples that The Star-Ledger cited illustrate the problems:
- An administrative foul-up at the New Jersey Medicaid office caused a certain family to lose their coverage under an HMO plan. Within a very short time, one of the children was hospitalized for an unspecified illness and required eight months of intensive-care hospitalization–the most expensive kind. The state paid $1.1 million to cover her care under fee-for-service pricing. But, had the HMO remained in force, the bill would have been several hundred thousand dollars less.
- Another patient requiring a liver transplant had two different Medicaid cards. One was for an HMO plan and the other was for the fee-for-service plan. Somehow the hospital was paid out of the fee-for-service plan and not the HMO plan. Very likely (though The Star-Ledger did not make this clear), the patient presented both cards, the wise-as-wolves hospital admissions clerks processed the fee-for-service card–and nobody at the Division of Medical Assistance and Health Services even bothered to check whether the patient had an HMO-based Medicaid card.
The auditors urged DMAHS to try to get some of that $13 million back. But how that would even be possible, or whether the collections methods might be almost as expensive as the loss, was never explained.
For their part, DMAHS say that they will have their Medicaid rolls cleaned up and simplify the process of enrollment and tracking.
None of this is going to solve the basic problem. As long as such disparity between insurance pricing and pay-as-you-go pricing exists, mistakes like these will continue to cost the government as much money as has been found, or more. And the mistakes will continue to be made. Not one government program, at any level, has ever been run with the degree of efficiency achievable in strictly private business.
A decades-old proverb says, “If you like the United States Post Office, you are going to love socialized medicine!” Correction: we already have socialized medicine, in one measure. So that proverb should now say: If you like Medicaid as it now is, as much money that slips through the government’s fingers at highly dubious benefit to patients, then you are going to love its expansion, and the eventually intended replacement by it of all private insurance, and all the administrative foul-ups that will inevitably come with it.
This article is part of the Healthcare-reform series.
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