Add The California Post on Google If there’s a ground zero for Medicaid fraud in America, Los Angeles is giving Minneapolis a run for its money.
Six months after news broke of massive Medicaid theft in Minnesota’s largest city, it’s now clear that fraud is just as rampant in the California metropolis, if not worse.
The Trump administration announced this month that 800 Los Angeles hospice and home health providers — which heavily depend on Medicaid dollars — have been suspended from federal funding.
The administration says that half the city’s hospices are fraudulent, which isn’t hard to believe.
About a third of all hospice providers in America are in Los Angeles County, despite the county having less than 3% of the national population.
Also telling: After those 800 providers were banned from federal funding, fewer than 20 asked the Trump administration to reconsider. Why aren’t the other 780-plus complaining?
Whether it’s Los Angeles or Minneapolis, the scope and scale of Medicaid fraud is truly breathtaking.
But the bigger issue is that such unbelievable levels of fraud are overshadowing the merely massive fraud that exists almost everywhere else. Put simply, Medicaid theft is a nationwide phenomenon.
Consider the information that our organization has obtained from states in recent months.
We asked every state to tell us how they’re complying with the federal requirement to revalidate their Medicaid providers at least once every five years. Those that have responded are failing this basic test of good government, which is crucial for rooting out fraud.
We found that in Illinois, more than a quarter of the state’s Medicaid providers haven’t been reviewed in the past five years.
In one case, the state failed to revalidate a Medicaid provider for nearly 10 years. In Michigan and Georgia, the state is only checking about 10% of providers a year. But that makes it impossible to review 100% every five years.
This is an obvious invitation to fraud, and it almost certainly helps explain the mess in Los Angeles and Minneapolis, too.
States aren’t even trying to find the bad actors that abound from coast to coast.
Arizona told us it has only suspended a single Medicaid provider for suspected fraud this year.
Wisconsin has only suspended payments to 55 providers over the past five years.
And California’s health regulator only referred 127 Medicaid providers for fraud investigation between January and March.
That’s a ridiculously low statewide number, given that Los Angeles alone has at least 800 potentially fraudulent hospice providers, to say nothing of other medical facilities that accept Medicaid.
But fraudulent medical providers aren’t the only — or even the biggest — source of Medicaid theft.
Even worse is that tens of billions of taxpayer dollars are going to people who aren’t eligible for the program.
Almost every state’s Medicaid policies can be summed as fraud by design.
All but a handful of states let Medicaid recipients self-attest to key aspects of their own eligibility — an obvious invitation to lie. Many states don’t regularly cross-check Medicaid rolls with other data sources, like death records.
Lo and behold: The most reliable federal information indicates that over 27% of all Medicaid payments are improper — i.e., lost to waste, fraud and abuse.
Think about that: More than a quarter of this massive federal welfare program is being flushed down the drain.
The situation is even worse in DC, where the most reliable data shows that 36% of Medicaid spending is misspent. In Connecticut, the error rate is 43%.
And Ohio has dubious honor of misspending the highest percentage of Medicaid funding — a shocking 44.3%.
These numbers come from just before COVID, because since the onset of the pandemic, states have stopped conducting reliable Medicaid audits.
Given the explosion of welfare programs since the pandemic, it’s likely that true improper payment levels are even higher now.
States have effectively thrown away $1.1 trillion in Medicaid payments over the last decade, a full 80% of which are due to eligibility errors.
The Trump administration’s crackdown on California providers heralds a much-needed nationwide campaign.
President Trump and Congress have also required states to get Medicaid fraud under control, or else states will be on the hook for billions of dollars in penalties.
But few states are making the kind of concerted reform effort that such widespread fraud demands –– California certainly isn’t. If they continue to dawdle, the Trump administration will surely take even stronger steps to hold them accountable for this massive theft of taxpayer money.
Such leadership is long overdue. At the end of the day, this isn’t just a Minneapolis problem. Nor is it limited to Los Angeles.
Medicaid fraud is a nationwide crisis that’s worse than almost anyone realizes.
Hayden Dublois is data and analytics director at the Foundation for Government Accountability, where Trevor Carlsen is senior research fellow.
