Counterpoint | Minnesotans deserve transparency about Medicaid

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I read the July 10 opinion piece “Minnesota Republicans’ waste, fraud and abuse committee gets stuck in the mud.” I also watched the July 8 committee hearing that was referenced.

This is a troublesome issue. Minnesota is a so-called “donor state.” Such states are those where residents and businesses pay more federal taxes than the state receives back in federal spending. This is determined by calculating the “balance of payments,” which compares tax contributions to federal funding received. A negative balance indicates a donor state. Minnesota is one of about 20 donor states.

Some officials in the Minnesota Department of Human Services (DHS), and some legislators, seem to believe that Minnesota’s donor-state status justifies the Minnesota’s Medicaid program overcharging the federal government for its share of the cost of the program. (The feds are supposed to pay about 50%.) Thus, rate inflation, cross subsidization of other programs and inflated, fictitious vendor insurance reserve requirements might all be seen as justifiable to get more money from the feds (and from all of us who pay federal taxes). Manipulations like these might reasonably be seen as abuse.

In January 2015 the executive director of the Minnesota Council of Health Plans wrote the following, which was published in the Star Tribune:

“When looking at HMO financial statements, it is easy to miss that, contrary to what the commentary claimed, HMO reserves are not cash on hand. In fact, more than half of what appears on paper to be HMO reserves is actually money the state has yet to pay the HMOs. Many policy wonks are familiar with the education funding shift that helped the state balance its budget in the past. Well, there is an HMO shift that totals more than $1.3 billion.”

This “funding shift” was again referenced just this past legislative year by others.

Questions:

Shouldn’t legislators, such as the members of the Fraud Prevention and Oversight Committee, be asking these questions? When I watched the July 8 hearing, I thought it curious that DHS, an agency with more than 7,000 employees, keeps sending to this legislative committee people who say that they’re new and unsure about how anything works. I also found it strange that when the question was asked about how an outside investigation could result in DHS losing federal funding (as DHS has claimed), the answer was incomprehensible.

It has been noted that 90% of Medicaid, a nearly $20 billion program in Minnesota, is overseen by managed-care providers and not the state (although the state remains responsible for the integrity of the program). The managed-care providers are responsible for oversight including, apparently, investigating themselves. It’s difficult to blame the federal government for this bizarre aspect of the organization of our state’s system.

Minnesota now reaps the whirlwind after decades of misappropriation of federal Medicaid funds. This is not a criticism of either Democrats or Republicans, but rather of those who concocted, operated and concealed this scheme.

Gov. Tim Walz himself has repeatedly said we must do something to address this rampant abuse in Minnesota, but nothing has yet been done about this problem, because DHS opposes outside investigation.

Clearly, something should be done but, alas, there’s no evidence that anything will ever be done at the state level.

Given these circumstances, isn’t the only effective fraud prevention and intervention strategy one that involves the federal Department of Justice (DOJ), just as Republican state Rep. Kristin Robbins suggested in a Feb. 10 letter to U.S. Attorney General Pam Bondi?

In the final analysis, the taxpayers will continue to foot the bill. Shouldn’t they be told who gets the money and for what purpose? Some real, independent investigation might get us unstuck and out of the mud.

David Feinwachs, of St. Paul, is former general counsel of the Minnesota Hospital Association.