Last week, Kentucky announced that the state Medicaid program would start paying for dental and vision benefits again after those benefits were cut in a snit-fit when a federal judge noted that the point of Medicaid is to pay for medical expenses. Normal benefits will resume on August 1. Claims will be paid for services rendered in July.
My days as an insurance company plumber forced me to cringe. Paying retroactive claims after a blanket denial is a good way to light administrative money on fire. A well run claim system can process a regular claim that does not need to be touched by a person for under a $1.00 per claim. As soon as a claim needs to be manually reviewed, the cost to process a claim jumps to at least $5.00 per claim. Complex interventions on a claim can drive costs even higher.
Assuming that the Kentucky claims systems are anything like what I am familiar with, these back-ups, reversals, resubmissions and repayments can probably be batched and sent through fairly easily. But it is still a good way to light money on fire for no productive purposes.
Bruce Japsen at Forbes is looking at the administrative costs of validating work requirements:
“In its biennial budget, Kentucky’s Medicaid administration costs increased more than 40%, or $35 million, from prior biennium to $116 million, which Fitch partially attributes to implementing Medicaid work requirements,” Eric Kim, the lead analyst for Fitch on the report, “Medicaid Waiver Actions Limit U.S. States’ Cost Controls,” wrote. “In addition to systems development and ongoing monitoring for the roughly 200,000 Medicaid enrollees, Kentucky estimates could be subject to the work requirements and could also contribute to the higher administration costs…. “Work requirements require tracking systems that few, if any, states have.””
Arkansas spent millions to build a Medicaid premium collection system that collected 5% of the system build-out expense.
Medicaid can be an efficiently run program when its structure is allowed to pay claims and coordinate care. Doing anything else is a good way to light money on fire.
sheila in nc
I just sent your post to my mother in Arkansas.
The willingness of states to impose “virtue” requirements that result in the need for administratively expensive and complex systems in a program that makes them howl constantly about cost in general and the cost of federal regulations in particular never ceases to amaze me. Why aren’t more people willing to just lay down and die?
You talk about lighting money on fire like it’s a bad thing.
Every good republican knows that our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.
Large piles of money draw republicans like shit draws flies.
Besides, the bigger the pile of money the easier it burns!
The additional administrative cost is feature, not bug. Way to say “we just can’t afford it” when the time comes to decide whether to reauthorize Program X, Y, Z. Non-exhaustive example: Mississippi has a work requirement for Medicaid. If you work the number of hours the state requires for eligibility, at minimum wage you have too much income to qualify. So really, it’s a “volunteer/job training/childcare” requirement for Medicaid, which, fine, whatever. Cruel policy choices are still policy choices.
The state has asked for a reinterpretation that would eliminate childcare from the options for fulfilling the work requirements. Because, you know, parents don’t need health care.
For “fiscal conservatives” no amount of public treasure wasted is too much, as long as the purpose is to put the screws to poor and/or brown people.
Reminds me of requiring drug testing for food stamp recipients.
Long ago (Bush II?) Kansas (of course) set up a separate program to bust Welfare Fraud ™. Its uncovered fraud equalled <10% of program costs. And so it goes…
The rich are too poor and the poor are to rich. This must be corrected no matter the cost!
Just read this article today in the San Antonio Express-News (via NYT)
Another cost I haven’t seen is the productivity and opportunity costs of patients spending hours on the phone with their insurance companies.