EDITORIAL: More medical waste

Virginia debates whether to enlarge a corrupt health care program

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The Virginia General Assembly is as paralyzed as Congress. Democrats run the state Senate and Republicans the House of Delegates, encouraging disagreements similar to those shutting down the works on Capitol Hill. Richmond’s inability to act is a good thing, since it’s an obstacle in the way of Democratic Gov. Terry McAuliffe’s costly scheme to expand Virginia’s participation in Medicaid.

The House of Delegates voted 67 to 32 last week, almost entirely along party lines, to reject the federal proposal to enlarge the budget-breaking health care program for the poor. As the results were tallied, federal prosecutors in the District of Columbia arrested 24 suspected Medicaid cheats. U.S. Attorney Ronald C. Machen characterized the arrests as the “largest health-care fraud takedown” in the District’s history. The treasury was cheated of tens of millions of dollars when the government was billed for in-home health care services that had not actually been provided.

According to the indictments, employees of home-care and nurse-staffing agencies recruited Medicaid recipients to falsely claim they needed expensive in-home health care. Recipients were coached on tricks to exaggerate complaints and persuade doctors to authorize expensive treatments they didn’t really need. The scammers then billed Medicaid for the phantom services and sent kickbacks to the “patients” as rewards for their cooperation.

It was a clever scheme, but with an obvious flaw: the more money milked from the system, the greater the risk that someone would notice the large spike in payments. Between 2006 and 2013, the number of beneficiaries quadrupled from 2,500 to 10,000, and costs increased sevenfold, from $40 million to $280 million. This set off the alarm. “An astonishing amount of money was stolen from the American taxpayer,” says Valerie Parlave, assistant director in charge of the FBI’s Washington field office.

The scale of the fraud in just one city lends credence to the widespread suspicion that billions in Medicaid spending are wasted every year. No less an authority than Donald M. Berwick, the former head of the Center of Medicare and Medicaid Services, writing in the Journal of the American Medical Association, estimates the rate of fraud between 3 percent and 10 percent annually. Since the program costs $415 billion a year, expanding eligibility for this federal-state entitlement boondoggle is an invitation to ever more cheating.

Obamacare includes an incentive to include able-bodied adults in a program meant to serve low-income families and the elderly poor. States that agree to this enormous expansion in the program are rewarded with federal cash. Gov. McAuliffe and his Democratic colleagues in the Virginia General Assembly can’t resist such “free money,” but once the subsidies disappear the states will be left with the expanded costs.

Both chambers of the Virginia General Assembly adopted versions of the state budget last week, with the Senate’s including the Medicaid expansion, and the House standing against it. Whether the two budgets can be reconciled before the March 8 deadline remains is not clear. In another eerie parallel to a dysfunctional Congress, there’s talk in Richmond of all this leading to a state government shutdown. In this game of chicken, we hope Richmond Republicans show stiffer spines than Republicans in Washington.

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