$500 Million in Stimulus Funding Went Toward Medicaid Costs

$500 Million in Stimulus Funding Went Toward Medicaid Costs

Approximately 25 percent of all federal stimulus funds awarded to Rhode Island over the last three years went toward Medicaid, according to a GoLocalProv analysis of stimulus data compiled by ProPublica.

In total, the state was granted $518,435,910 to help cover Medicaid costs at a time when enrollments surged nationwide in part due to the struggling economy.

The data also shows that Rhode Island received the tenth-most stimulus funding per capita (not counting Washington D.C.) in the country, totaling $2,088. The stimulus was designed to help create and maintain jobs while also offering help to programs particularly hard hit by the recession.

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But critics in Rhode Island have questioned the stimulus’ overall impact on the Ocean State, which saw its unemployment rate increase by 1.8 points between December 2008 and December 2011. At 10.8 percent, the state currently has the third-highest unemployment in the nation.

“It's always easy to 'Monday-morning quarterback' and it's certainly easy in Rhode Island,” said Lisa Blais, who heads up the Ocean State Tea Party in Action. “There is just too much low-hanging fruit to critique. Rhode Island is sorely in need of a massive institutional culture shift. Bailouts, unanticipated tax revenue, federal help to offset Medicaid expenses, stimulus dollars - all flowing from taxpayers, yet we do not have a strong, consistent track-record of tackling and overcoming administrative inefficiencies, waste and fraud. We have yet to hear any detail that addresses these issues through public policy and over the long-haul.”

Stimulus Funds Dried Up

About $100 billion in stimulus funds nationwide were directed toward Medicaid, but those dollars dried up last summer, raising concerns about how states will cover expenses moving forward.

Rhode Island has received national recognition for savings when it comes to Medicaid costs thanks to a waiver granted during Governor Carcieri’s tenure that created a “block grant” program that capped the amount of money the state could receive in federal funding in exchange for the state having more of a say in how it operates its Medicaid program. Secretary of Health and Human Services Steven Costantino has said it is unclear exactly how much money was saved.

But the savings and the influx of stimulus dollars haven’t been able to prevent local hospitals from falling on hard times. Several community hospitals have nearly gone belly up and Lifespan has said it is now providing nearly $100 million in uncompensated care annually between charity care and bad debt.

Blais said she isn’t surprised by the amount of money that went toward Medicaid.

"If money comes into RI that is not specifically earmarked under federal guidelines, then it comes as no surprise that that money is used to get us out of trouble or is put into the black hole of RI's general fund,” she said.

Waste & Fraud Questioned

Because those stimulus dollars for programs like Medicaid are no longer readily available, several state lawmakers have called for an increase in oversight by the state to prevent waste and fraud. State Rep. Patricia Serpa has introduced a resolution that requests Governor Chafee to implement programs and methodology to improve the program integrity of both Medicaid and the Children’s Health Insurance Program (CHIP) in the state.

“As with everything, it’s all about having the right tools at your fingertips,” Serpa said. “There have been talks about cutting services to generate a balanced budget, but there are surefire ways to save the state money and fill in the gaps here - this is one of them. We can’t continue to slash services when we haven’t taken the necessary steps here to prevent massive amounts of waste and fraud. This needs to be a top priority before we even consider taking another step forward with the budget.”

Serpa’s resolution requests that the governor seek to shift the programs from a retrospective “pay and chase” model to a pre-payment model. It also asks the state Department of Human Services to implement provider data verification and screening technology solutions to check health care billing, as well as provider rendering data against a well-maintained provider information database. Furthermore, the resolution states that the department should implement state-of-the-art clinical code editing technology solutions to enhance cost containment. The technology would be critical to preventing any kind of errors, including potential overbilling or inappropriate payments to deceased and sanctioned providers. The upgrade would also make the state capable of confirming wrong addresses and sending a red flag to the department when a provider has either retired or carries an expired license.

Serpa pointed to a Woonsocket woman who pleaded guilty in January to defrauding Medicare of more than $70,000. She predicted that if the state government can catch more fraud in its Medicaid programs, the state could see savings in the millions. The federal government has estimated that fraud, waste and abuse have cost state Medicaid programs across the country about $18 billion annually.

“The savings that we can achieve with these adjustments will be enough to cover the cost of practicing these new measures,” Rep. Serpa said. “This is a step forward the state must consider in the economic downturn. It’s not only saving the taxpayers money, it’s making government more efficient. We took a big leap with pension reform, and now we must continue to analyze our weaknesses.”

Overall Impact of Stimulus

Still, when assessing the overall impact of the stimulus, University of Rhode Island professor Dr. Edward Mazze says you have to consider what would have happened in the state if the government never awarded the money.

He said the Recovery Act created thousands of jobs.

“The Recovery Act funds were used in Rhode Island to create new jobs in a number of employment sectors, support existing jobs to avoid layoffs and support infrastructure projects,” Mazze told GoLocalProv late last year. “Without these funds, the state would not have gained over 1,500 new jobs and in all probability would have created layoffs in areas critical to the state in safety and security and education and health care. Many of the saved jobs were at the town and city level because local government received less funding from the state.”
 

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