In a war of words that has implications for Pennsylvania's budget crisis, Governor Edward Rendell on Monday released data from a U.S. Department of Health and Human Services report that showed the state's Medicaid error rate was 4.07 percent, much lower than the rate in excess of 15 percent claimed last month by Auditor General Jack Wagner.
The HHS reported rate was less than half the national average of 8.98 percent and is a decrease from the previous report, using 2006 data, that showed Pennsylvania with an error rate of 5.21 percent.
"Even three years ago, Pennsylvania had an error rate far lower than state auditors are now claiming, and our performance has only improved since then," Rendell said. "In every single area of Medicaid reviewed by federal authorities, we have an error rate that is relatively small and getting smaller – so we know we are heading in the right direction in making our Medicaid program accountable and fiscally responsible."
Rendell's comments follow a report released last month by Wagner, who, after examining nearly 14,000 case files from county assistance offices in all 67 counties, reported Medicaid error rates higher than 15 percent statewide.
The war of audits comes as Pennsylvania legislators get set to tackle a projected budget shortfall of nearly $5 billion and could mark the dividing line between lawmakers who believe tightened oversight of the Medicaid program can deliver significant savings and those who believe the program is efficient and doesn't present a big margin for savings.
"With Pennsylvania facing a projected $5 billion budget deficit in fiscal year 2011-12, we must eliminate this wasteful spending," Wagner said last month when his report was issued. "These errors can and should be corrected, which would result in a significant sustainable savings to Pennsylvania taxpayers while ensuring that those entitled to the benefits continue to be served."
But the governor's office contends those savings are already being realized through ongoing state efforts to reduce payment errors and ferret out fraud and abuse. In fiscal year 2009-10, the governor noted, those efforts resulted in savings of nearly $690 million – $614 million in Medicaid costs avoided or recovered from third-party sources and $75 million saved through fraud and abuse detection and other cost monitoring efforts.
Wagner is standing by his audit and the contention that a 10 percent reduction in Medicaid errors could potentially save the state $436 in fiscal year 2011-12 and as much as $1.5 billion over five years.
"There is a serious problem, both nationally and in Pennsylvania, relating to waste, fraud and abuse in the Medicaid system," he said. "Corrective measures are needed to make sure that medical assistance is available for those who truly need help, but I remain concerned that those who manipulate the system are permitted to do as a result of those who manage the system by not putting proper checks and balances in place."
Michael Nardone, the state's acting Secretary of Public Welfare, said reducing error rates doesn't necessarily translate to saving money.
"Because not all Medicaid errors have a financial impact, it is misleading to say, for instance, that a 4 percent error rate represents an equal percentage of the state's Medicaid budget," he said.
Pensylvania's Department of Public Welfare administers the state Medicaid program, which provides health and long-term care assistance to more than 2.1 million people. Last year, the state's share for administering the program was more than $7 billion.