It has always seemed obvious to me that if people want to know where Medicare and Medicaid Fraud come from, they need to stop looking for illegal recipients. It isn’t as simple as some might think to defraud programs like SNAP, Social Security, Medicare, and Medicaid by filling out an application with false information.
I don’t know why it bears mentioning, but neither Medicaid nor Medicare provides Beneficiaries with cash. They operate as a substitute for Health Insurance. That might come as a surprise for those of you who have never needed to use one of these programs. So, even if someone successfully applies via Fraud, they aren’t lining their pockets at the expense of Taxpayers.
Even if someone manages to obtain Medicare or Medicaid coverage through fraudulent means, what happens then? In the worst-case scenario, they would obtain medical treatment that they otherwise could not have received. Let’s assume it’s the most expensive surgical procedure from 2024, which is a Heart Transplant. At the most expensive rate, that would cost Medicare or Medicaid $1.3 Million, assuming it would cover the surgery in the first place. It would require more than 38,000 people receiving fraudulently obtained Heart Transplants to equal the $50 Billion House Speaker Mike Johnson claimed was lost to Fraud, Waste, and Abuse of Medicaid each year. If that seems absurd to you, you’re absolutely correct.
Just last week, CVS Health’s Omnicare (pharmacy services for long-term care & senior living communities) was found guilty of fraudulently billing the U.S. Government for invalid Medicare, Medicaid, and Tricare Prescriptions and ordered to pay $948.8 Million in penalties & damages. A massive $406.8 Million of that was for Damages, which were tripled as per the False Claims Act.
All of this came about because a Whistleblower brought attention to more than three million false claims between 2010 and 2018.
In 2021, the average Medicare Spending per Beneficiary was only a little over $15,000. To put that in perspective, it means the Fraud committed by CVS translated into the equivalent of the total annual spending for just under 9,000 Beneficiaries, or just under 1,000 Beneficiaries each year for which CVS was found Guilty of the illegal billing.
And this is just the Fraud from one Corporation. I can assure you that they are not alone.
One thing that people need to understand is that Improper Medicaid payments are not the same as Fraud. It’s a challenge for some people to wrap their heads around that distinction because certain individuals have played fast and loose with conflating the two things…because it suits their agenda.
According to the Centers for Medicare & Medicaid Services, Improper Payments made up only 5.09% of the total payments made by Medicaid in 2024. Of that 5.09%, roughly 80% (or 4.07% of the Total) were caused by missing documentation that would determine whether a payment was correct or incorrect, and payments that went to the right Providers in the right amounts, but that may not have complied with some regulations or statutes. In all of those cases, if the paperwork had been correct, they wouldn’t even factor into these numbers, because the payments wouldn’t have been classified as Improper or because they wouldn’t have been issued in the first place.
It’s the remaining 20% of that 5.09% where we find people who weren’t eligible for Medicaid. But it is also where we locate the individuals who were eligible but received a service that wasn’t covered.
So, while all of these 5.09% of Improper Payments count as Monetary Loss, they do not constitute Fraud. All of the Fraud falls into the minuscule 1.02% of the Total Payments.
Yes, we should be combating Fraud, but it’s not the Beneficiaries of Medicaid and Medicare who are the criminals, guilty of committing the vast majority of Fraud; it’s Ambulance Services, Pharmacies, Nursing Homes, and other Providers who have utilized creative bookkeeping and manipulation of the system. The victims are the Beneficiaries, Legitimate Providers, and Taxpayers alike.
Fighting Fraud doesn’t involve cutting funding for Medicaid, and it won’t have any impact on the rate of Improper Payments, because the Beneficiaries were never the primary Source of them.
What I hate more than anything is that this is ultimately yet another dog whistle for anti-immigration proponents. I’m not going to use Undocumented as a descriptor here, because we’ve all heard the plan, shared far and wide wherever cameras are rolling, that the Trump Administration intends to strip Documented Status from Immigrants, including those who are Citizens. It was never about doing it the right way; it was about being the right ethnic makeup, which is why there was so much support from people who believe in “The Great Replacement” myth.
Across the years 2021, 2022, and 2023, Wyoming and South Carolina were the two states with the highest rates of Improper Medicaid Payments (at 20.7 and 20.5% respectively), with Delaware, Connecticut, and Idaho following close behind. As you might notice, none of these five states are among the most populated, and none of them are near the top of the list of states with the largest immigrant populations.
California, New York, New Jersey, Florida, and Nevada are the states with the largest immigrant populations, yet they all fell below a rate of 9% during those three years.
So, people need to stop pretending this is even remotely connected with our Border Policy or Immigration Statistics, because there isn’t even a Correlation to mistake for Causality.
House and Senate Republicans upheld their promise not to tamper with Medicare as far as work and age Eligibility Requirements were concerned when drafting the 2025 Congressional Budget Bill. However, Eligibility for certain Immigrant groups will be impacted, as some Non-Citizens who were previously Eligible as Permanent Residents of the U.S. for at least five consecutive years will lose coverage 18 months after the Legislation is passed.
Medicaid, however, was far from off-limits to Congressional Republicans…and where they have tampered with Medicaid and other health coverage through the ACA, it could have dramatic and widespread impacts on healthcare systems across the nation.
Medicaid is funded through a combination of Federal and State Taxes, with roughly 70% of that funding coming from the Federal Budget. States often derive a significant amount of their funding through Provider Taxes, which are taxes paid by Health Care Providers (hospitals, nursing homes, and the like). The House version of the Congressional Budget Bill would have prohibited States from creating new Provider Taxes or increasing the current percentages paid by Providers, which are capped at 6%. The Senate version, however, gradually decreases that percentage to 3.5% by 2031, but only for the 40 States (and the District of Columbia) that employed Medicaid Expansion under the Affordable Care Act, leaving exceptions in place for nursing homes and intermediate care facilities.
This will dramatically decrease the amount of matching funds paid by Federal Taxes, creating a bit of a double-whammy on States that are being penalized for adopting Medicaid Expansion.
The concern here is that States will almost certainly have to make dramatic cuts to Medicaid as a result of the lost revenue, further cutting the number of people covered or the amount paid to Providers.
Of course, there’s also the addition of out-of-pocket expenses for Medicaid enrollees, as a $35 co-pay will be required for some services (again, only in States with expanded Medicaid) for individuals with an annual income of more than $15,650 (Federal Poverty Level). The Senate did add allowances for States to charge an even greater co-pay for Emergency Room visits for Non-Emergencies. The silver lining is that the co-pay policy doesn’t apply to primary care, mental health, or substance abuse services.
Access to insurance coverage through the Affordable Care Act marketplace is about to become more challenging as well. It will also be more expensive as enhanced subsidies are scheduled to expire at the end of 2025, which could result in some costs for ACA insurance coverage increasing by an average of 75%. I don’t know how many people can afford to see their Insurance Premiums go up by 75%, but I would be irate if it were happening to me.
Hundreds of thousands of Lawfully Present Immigrants are likely to lose insurance coverage through the ACA, because additional subsidies that keep those costs down will also be expiring.
All of this is devastating at a time when hospitals and medical facilities across the country are already facing massive budget shortfalls. Part of that comes from Medicaid and Medicare payments not being sufficient to keep pace with rising operating costs. Those skyrocketing operating costs are partially derived from administrative expenses produced by Insurance Companies, due to prior authorizations and the appeals associated with denials.
According to a report from the American Hospital Association last September, administrative costs alone accounted for more than 40% of the average hospital’s total expenses. Not only does the Commercial Insurance Industry delay and often deny necessary care for patients, but it also dramatically increases the costs for Providers to operate in the first place, which leads to increased costs for the rest of us. Of course, the Industry is thriving as a whole, with many Insurance Companies seeing record profits year after year.
You may notice some disdain for Insurance Providers, and that’s something I’m entirely conscious of. I’ve experienced frustration regarding the predatory practices of the for-profit Insurance Industry while researching their standards, profit margins, and actions.
What we’re likely to see if the House and Senate Republicans have their way, in addition to fewer people being covered by Medicaid (and health insurance in general), is staffing cuts at Providers or (in the worst case) closures. This is most likely to happen in areas where the population is lowest, impacting rural Providers more than those in urban areas…though the impacts would still be massive there as well.
Because of this, Senators added a $50 Billion fund ($10 Billion annually) to the Congressional Budget Bill, insulating rural hospitals from some of the worst impacts. The House version of the bill would have allowed rural hospitals that closed between 2014 and 2021 to reopen under the Rural Emergency Hospital designation, which allows Medicare to provide them with a potential lifeline. This could have been good, since 146 hospitals in rural counties closed between 2005 and 2023. The Senate, unfortunately, included no provision to reopen those hospitals under the retroactive designation.
So, there are some small bits of good mixed in with the bad aspects of that portion of the new budget, but none of those “good” things would be quite as necessary if it weren’t for all of the “bad” aspects of the Congressional Budget Bill. And altogether too much of that “bad” is tied up in transparent bigotry directed toward Immigrants, and the false claims that they are responsible for Fraud in the Medicaid and Medicare systems, along with the other things people often refer to as “entitlements.” Of course, while focusing on Legislation to further disenfranchise already disenfranchised people, the same Lawmakers are providing additional handouts to Corporations, the actual sources of Fraud, Waste, and Corruption.
