- The Washington Times - Monday, April 14, 2014

Eleven states ship some of their Medicaid administrative work to foreign countries, including nine that have no specific protections in law to make sure private health information isn’t sent overseas, according to an inspector general’s audit released Monday that raises potentially thorny questions about the policy.

The Health and Human Services inspector general said it’s not illegal to use foreign contractors on some Medicaid work, and the inspector general didn’t report any evidence that privacy breaches have happened. The states all say they have written protections into their contracts to stop any personal health information from being shared.

But the inspector general said there is a danger of moving work to other countries that may not have the same privacy protections as the U.S.

Outsourcing work also runs counter to the Obama administration’s policy of opposing offshoring, something President Obama made clear in his 2012 presidential campaign when he repeatedly attacked Republican nominee Mitt Romney for being a “pioneer” of the practice.


Offshoring of medical work is controversial. Medicaid’s sister program, Medicare, requires written approval from the federal government prior to offshoring, but no such restriction applies to Medicaid.

Indeed, Mr. Obama’s health care law and the Centers for Medicare and Medicaid Services specifically allow offshoring of Medicaid work.

“CMS has issued guidance in accordance with the Affordable Care Act (ACA) stating that Medicaid agencies are permitted to provide payments to contractors operating offshore for tasks — including administrative functions — that support the administration of the Medicaid program,” the inspector general wrote.

Four states have taken steps to specifically ban offshoring of Medicaid, but 11 others allow it, though all of those say it is under controlled circumstances, the inspector general reported.

The 11 states are: Florida, Massachusetts, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Dakota, Pennsylvania, Rhode Island and Tennessee. Most of them listed the outsourced work as related to information technology.

Missouri and New Jersey allow offshoring only in limited circumstances, while the other nine didn’t have any specific limitations on how to handle personal health information.

Instead, they wrote prohibitions on sharing private information into their contracts, the inspector general said.

One question that arose was what happened when a domestic contractor used an offshore subcontractor, and who would be responsible for monitoring to make sure no private information was shared.

States contacted by The Washington Times late Monday either didn’t respond to requests for comment or said it would take time to answer questions about their programs and the safeguards they take.

Offshoring has been a touchy political issue for years.

In the 2012 campaign, Mr. Obama repeatedly attacked Mr. Romney, former head of a venture capital firm, for being involved with companies that did work outside the U.S.

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