RICHMOND — People claiming to have no income have been able to get Medicaid in Virginia — no questions asked, according to a new audit, which also found the state wasted at least $21 million last year on benefits for recipients who no longer qualified.
The audit, released Monday and conducted by the Joint Legislative Audit and Review Commission, also faulted Virginia’s “passive” approach to recovering money owed from the estates of certain deceased Medicaid patients.
The findings provided fodder for Richmond’s years-long battle over whether to expand Medicaid under the Affordable Care Act. It came just days after Gov. Terry McAuliffe (D) said that he would continue his push for expansion despite elections last week that left the GOP in control of Virginia’s House and Senate.
Administration officials did not dispute the findings but said they were working to fix flaws in the system, some of them exacerbated by a huge spike in applications triggered by the rollout of the Affordable Care Act two years ago.
Moments after the report was presented, Republican House leaders held a news conference outside the conference room where the commission was meeting.
“This report reinforces where we, in the House, have been for the last several years,” said Del. John M. O’Bannon III (R-Henrico), a physician. “The Medicaid program is not efficient. It’s not lean and clean and mean. There need to be many reforms made.”
Democrats said some of the flaws were the fault of the Republican-controlled General Assembly because it did not provide Medicaid administrators with more funding for staff and technology. They noted that the legislature rejected a measure that would have required banks to provide applicants’ financial information, making it optional instead.
“The governor is confident that we can work in a bipartisan way to make some of the changes that legislators have rejected in the past to address these issues,” said Brian Coy, McAuliffe’s spokesman. “In the meantime, there is no excuse for leaving billions of Virginia taxpayers’ dollars on the table that could be used to expand health care for hundreds of thousands of our friends and neighbors.”
The audit found problems across the Medicaid system, with delays for people entering and exiting the program. On the front end, 25 percent of applications submitted in the first quarter of this year were approved late, delaying care for more than 11,000 Virginians. On the back end, belated processing for renewals left at least 29,000 recipients on the rolls after they no longer qualified, costing the state at least $21 million in fiscal 2014.
Virginia spent $7.9 billion on Medicaid benefits in 2014.
The audit also exposed quirks in the system, such as the practice of verifying the income for applicants who claim earnings of $1 or more but taking the word of those who say they have no earnings.
“The policy around not verifying zero income was a holdover from the days when we had to rely on pay stubs . . . to verify income; there is no paper to verify zero,” said Linda Nablo, chief deputy director of the Department of Medical Assistance Services.
“But that is no longer the case in the advent of electronic sources, and we should and will be maximizing their use and treat zero-income reporters the same as we treat people who report $1 of income.”
Nablo said the agency has gotten more adept in recent years of searching electronic records, examining Internal Revenue Service, Social Security Administration and Department of Homeland Security data to determine eligibility based on income, citizenship and immigration status.
But she said, “There are some areas where we lag behind.”
Under the Affordable Care Act, states that allow more people onto their Medicaid rolls can pass most of the cost to the federal government. Once the law is fully implemented in 2020, states are supposed to pay 10 percent. McAuliffe made expansion the centerpiece of his 2013 campaign, saying that it would create 30,000 health-care jobs and provide health-care coverage to needy Virginians.
Republicans have objected to expanding a program that they say is badly in need of reform.
“We fought very hard to get his study,” House Majority Leader M. Kirkland Cox (R-Colonial Heights) said. “Remember all the people that said Medicaid has been studied over and over and over again and you’d find nothing new. I think they were wrong.”
Sen. Janet D. Howell (D-Fairfax), who favors expansion, said the findings suggests that the state needs to beef up staff and training so it has the resources to verify eligibility and repayment, when appropriate, from the estates of deceased Medicaid recipients.
After certain Medicaid recipient die, the state is required under federal law to seek recovery for long-term care expenses, and Virginia also may seek recovery for other Medicaid services. But Virginia does not proactively identify those recipients, the report found, instead relying on heirs or estate attorneys to volunteer the information.
“I think we’re all in agreement that we need to be more aggressive,” Howell said. “Not only is it wrong, but we can’t afford it.”