North Carolina House lawmakers grilled N.C. Health and Human Services Secretary Dev Sangvai and Attorney General Jeff Jackson over allegations of fraud in the state’s Medicaid program during a committee hearing on Thursday.
The Medicaid program is facing a $319 million funding gap, jeopardizing healthcare for about 3 million lower-income or disabled North Carolinians. Sangvai has repeatedly warned that the program will run out of money by the end of May.
NCDHHS officials asked state lawmakers to make up the shortfall last year, but Republican leaders did not agree to provide that funding, questioning whether it was truly necessary and accusing NCDHHS of not doing enough to root out fraud and waste in the program.
“We must ask: How many millions are being lost to waste, fraud or abuse before a single case is opened? How many investigations result in convictions, settlements or recoveries, and how long does it take to intervene once red flags appear?” asked Rep. Grant Campbell (R-Cabarrus), who chaired the session of the House Select Committee on Oversight and Reform.
The Medicaid shortfall has become a political football between the Republican-led General Assembly and the administration of Democratic Governor Josh Stein. Last fall, Stein directed the program to cut reimbursement rates to reduce spending, blaming Republican lawmakers for failing to fully fund it. Lawmakers said they were blindsided by the cuts, which they called unnecessary and politically motivated. The governor ultimately reversed the cuts after court challenges blocked them.
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Comments at Thursday’s meeting made it clear that some lawmakers still harbor resentment about the episode. Campbell accused NCDHHS leaders of engaging in “a PR campaign to twist public opinion, to force the General Assembly to continue the endless flow of taxpayer dollars to Medicaid without allowing questions to be asked about the potential of waste and fraud occurring.”
Sangvai explained that the program has several ways of collecting reports about and investigating allegations of fraud, but many don’t turn out to be criminal behavior. He said the management organizations that implement the Medicaid program are able to catch and eliminate most waste and fraud.
Rep. Allen Chesser (R-Nash) asked the state officials if they see any inefficiencies within the program.
In response, Sangvai pointed out that the program is massive, with total expenditures around $35 billion and about 18,000 employees when fully staffed. A program that large, he said, is bound to have some inefficiencies. One, he said, is the number of different Medicaid plans in North Carolina.
“What that creates is a complexity from which there are some benefits, particularly around maybe the fraud, waste and abuse framework, but also a tremendous amount of work on our Division of Health Benefits to work with multiple plans under the various rules, being able to understand what one plan is doing versus the other and creating some consistency around there,” Sangvai said.
The agency would require action from the legislature to figure out how many plans are suitable for coverage in the state, according to Sangvai.
Rep. Mike Schietzelt (R-Wake) questioned why the state Dept. of Justice hasn’t secured more convictions for Medicaid fraud.
Jackson, a Democrat who previously served a decade in the North Carolina Senate, defended his office’s work. But he said state criminal law lacks teeth when it comes to Medicaid provider fraud, so they often refer cases to federal prosecutors.
“The reason why our criminal Medicaid fraud cases have to go federal is because they have real sentences,” Jackson said. “They can get real time. Under state law in North Carolina, they can’t.”
North Carolina ranks eighth nationally for total Medicaid recovery over the last six years, and fourth in the country when accounting for staff size conducting those investigations, according to Jackson.
“There is no question that North Carolina is punching way above its weight,” he said. “We are nationally regarded as one of the finest and most effective Medicaid Fraud Investigation divisions in the country.”
Jackson asked lawmakers for partial funding for an additional investigator position that would be focused on data mining, which he said would further improve the unit’s performance.
Lawmakers also asked Sangvai and Jackson whether they are confident that fraudulent providers have been removed from the program.
When officials become aware of a fraudulent provider, they’re able to flag it in the system for awareness, Sangvai said.
“We have the opportunity to aggregate all those claims, validate that those types of behavior are happening,” he said. “Then we are able to communicate to other plans about that provider.”
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