In the last quarter of the fiscal year, the Social Services Department avoided $2.6 million in fraud-related expenses through the pre-certification screening of applicants for benefit programs, according to a recent report.
In its quarterly early fraud detection letter to lawmakers, DSS reported saving $2.6 million from April to July by conducting “front-end investigations” into applicants of social benefit programs administered by the department.
The investigations were conducted by 13 employees, resulting in a quarterly savings of about $200,000 per investigator.
But the number represents a fraction of the amount of spending the department will be expected to avoid in the next two fiscal years with the help of a group of consultants. The budget reduces Medicaid expenditures by $169 million over the biennium in anticipation of consultant groups identifying “patterns of waste, fraud and abuse in government programs.”
When he announced his budget proposal in February, Gov. Dannel P. Malloy recommended reducing Medicaid expenditures by $60 million in each year of the two-year budget. The legislature anticipated even more savings. The budget they passed reduced spending by $65 million in the first year and $104 million in the second.
Benjamin Barnes, Malloy’s budget director, said the savings can be realized, but outright fraud will be only one piece of the puzzle. He said there are a number of other “inappropriate payments” the state can avoid in order to achieve the savings factored into the budget.
“Obviously people committing fraud against the state and submitting false claims in order to get rich should be addressed. On the other hand there are duplicate bills that are filed through these big, complicated electronic systems. There are overpayments made for a whole variety of technical reasons without necessarily rising to the level of fraud or criminal acts, and we need to do our best to identify those as well,” he said.
Barnes said a consultant is already working with the Social Services Department to try and identify trends pointing to errors in Medicaid billing systems. He said the state is currently accepting bids on a consulting contract to recognize systematic overpayments in other areas.
Rooting out fraud and identifying savings in social services is an idea embraced this year by both Democrats and Republicans. Last year, the legislature’s Republican minority called for adding a dozen employees to the department’s Medicaid Fraud Control Unit. They predicted new investigators would help save the state more than $100 million. At the time, Democrats dismissed the idea.
“While reducing Medicaid fraud is a laudable goal, assuming that we can find more fraud simply by hiring more investigators is like saying that a violin would sound better if it had more strings,” Roy Occhiogrosso, who at the time was Malloy’s senior communications adviser, said last March.
Sen. Joe Markley, the ranking Republican on the legislature’s Human Services Committee, said Tuesday that he was encouraged by the current effort, but not sure the state would achieve the savings it was looking for in the short term.
“If I say these sorts of [Medicaid savings] numbers are plucked from the air, it’s almost not a criticism. It’s very tough to anticipate,” he said.
Markley credited the state for seeking to tighten its administration of Medicaid benefits. He pointed to the aftermath of Tropical Storm Irene in 2011, when the state handed out $12.4 million in disaster food stamp assistance to 74,230 individuals in 23,726 households. The applicants were asked to list their incomes on their applications and an unknown number of state employees listed amounts that were lower than what state records indicated.
Markley said a poorly-run program “encourages people to commit fraud.”
But that was in the past. Markley said he’s confident going forward the state will save money on Medicaid benefits by making sure it goes to those who need it, and not those who don’t.
“They’re moving in the right direction. Even if the number isn’t the right number, I think the department increasingly sees it as a priority,” he said.
Barnes said the savings anticipated in the budget were ambitious, but not impossible to achieve. Although $65 million in savings in the first year of the budget seems like a large number, he said it would be only a small percentage of the money spent on Medicaid.
“I think you have to put it in context: the Medicaid program is very, very large,” he said. “. . . I think we’ve set ourselves an ambitious but achievable target for the coming year.”