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Solving the Improper Payment Problem (Contributed)

Dual participation in public assistance programs, which include Medicaid and SNAP, has been a long-standing and costly problem that can now often be fixed by deploying today’s new technology.

Retired Nevada Medicaid Administrator Marta Jensen is asking the identity and data analytics industry to expedite a solution to a vexing program integrity challenge: dual participation. It happens when an individual receives the same program benefits multiple times either within or across state borders. Dual participation can be inadvertent or intentional. Sometimes it is a simple oversight by the beneficiary; other times it is the result of stolen or misused identity information. Either way, it’s a form of improper payment that is an expensive problem for all public assistance agencies. 

The Government Accountability Office (GAO) estimated in 2015 that almost 10 percent of Medicaid spending consists of improper payments. At that percentage, improper state Medicaid payments are about a $20 billion annual problem. Dual participation can be a leading indicator of several other types of Medicaid fraud, making its detection even more important. This has been a challenge for decades. In 1993, to identify public assistance participation across states, the federal government introduced the Public Assistance Reporting Information System (PARIS). PARIS is based on the quarterly dissemination of information gathered from state public assistance agencies and is still a primary tool used to this day.  

Now, Jensen and others like her are pushing for the private sector to bring to market — and for state agencies to adopt — a solution that takes full advantage of today’s technology. “I wish I would have known the information sooner (when someone is applying outside the state),” Marta wrote to me recently. “If we had the information real-time versus months later, our eligibility folks could have terminated the cases sooner and Medicaid could have saved money on the unnecessary capitation payments.”   

Marta’s vision is not just a futuristic dream. With current technology, it is now a realistic goal. These tools can provide a secure data exchange that facilitates real-time information sharing between states and the public assistance programs, such as Medicaid; the Supplemental Nutrition Assistance Program (SNAP); the Children’s Health Insurance Program (CHIP); public housing; or Women, Infants, and Children (WIC). The long-term vision is a platform that will support the detection of dual participants within and across all public assistance programs.

With the right tools, states submit data daily and receive the intelligence they need in real time, allowing agencies to detect dual participation and out-of-state cross-program participation before a payment is ever issued. Current technology can help eliminate the “pay and chase” model and reduce costs and efforts associated with investigation and recovery activities. This technology empowers states to make high confidence decisions as matches occur in near-real time, which in turn helps prevent improper payments, reduce caseload volumes, and improve application and processing confidence.

Implementation of technology currently available allows states access to a secure contributory database and a collaborative data exchange platform that uses advanced data quality management practices, automated daily monitoring and multi-layered identity resolution. Accurate and effective identity resolution is the key; going beyond simple deterministic matching processes is the only way to effectively combat the challenges of identity matching. The use of identity resolution, coupled with a prioritization of matches by identity attribute combinations, will provide states with the confidence they need for informed decision-making. This technology is currently being used in public assistance programs across the country.  

To test a new way to improve program integrity in SNAP, five states — Mississippi, Louisiana, Florida, Alabama and Georgia — launched the National Accuracy Clearinghouse (NAC) pilot project in 2013. These states, working with their federal partner, the United States Department of Agriculture's Food and Nutrition Service (FNS), competitively procured and selected a company to develop and host the NAC along with a separate organization to independently evaluate its effectiveness. In 2015 a report was issued, by an independent evaluator, that evaluated the effectiveness of the NAC in identifying and reducing dual participation. 

That report showed that from 2014 to 2015, the NAC assisted the pilot states in identifying approximately $5.6 million in SNAP overpayment cost avoidance. The report further estimated the average annual savings of more than $114 million (or more than $1.14 billion over 10 years) would be realized if the NAC were adopted by all states. The evaluator concluded that the NAC is a more robust and effective means of curbing SNAP dual participation than PARIS, stating, “the NAC surpasses PARIS in the capacity to support the prevention of dual participation.” The NAC pilot is still operational today, and the USDA FNS is currently making plans for nationwide expansion to improve program integrity in all states and territories that administer SNAP.

In addition to the NAC pilot, in 2016 six states tested a next-generation data sharing model targeting single-program interstate and intrastate dual participation as well as cross-program dual participation for programs such as Medicaid and Temporary Assistance for Needy Families (TANF).

The results indicated a significant dual-participation problem and cost-avoidance opportunity for each state. For example, a small Western state found 3,074 dual Medicaid participants, representing $17.8 million in potential initial savings. A large Eastern state discovered the potential cost-avoidance savings of $69.2 million due to dual participation in its Medicaid program. Three medium-population states identified hundreds of dual TANF enrollees, averaging $500,000 in upfront savings per state.

States that participate in innovative identity resolution and data sharing programs are having enormous success identifying and preventing dual participation and saving money, and as technology advances these efforts can go even further. The more participation in a clearinghouse-type solution, the better the opportunities for all programs involved to not only improve the integrity of each program through dual program participation prevention but also through collaborative intelligence sharing. The need for states to adopt a stronger dual participation detection system has never been clearer. It’s time to make Marta’s vision a reality.  

William Ornelas is director of State & Local Government, Health & Human Services for LexisNexis Risk Solutions — providing government agencies with access to the most data, analytics and linking technology.