Strayhorn Medicaid Fraud Probe Misplaced

She may be "One Tough Grandma," but that doesn't mean Grandma always knows best. Texas Comptroller and former Austin Mayor Carol Strayhorn recently announced a new anti-Medicaid fraud initiative aimed at taking prescription drugs away from foster kids.

Strayhorn's press release claimed to uncover "Medicaid prescription drug fraud and abuse that just in the state’s foster care system alone is costing taxpayers – conservatively – an estimated $4 million a year."

That estimate's completely phony, though. Here's where the $4 million figure comes from:

“More than 272,331 state and federal dollars were spent on anti-psychotics for foster children in one month and more than $74,000 on anti-depressants. That would make the estimated annual cost of anti-depressants and anti-psychotic drugs for children in the foster system conservatively $4 million,” she said. “Mind you that figure is a very conservative estimate for these drug expenses in just the foster care system alone.”

In other words, $4 million is the total cost of these doctor-prescribed drugs to foster children. There's only $4 million worth of "fraud and abuse" if every single prescription is unwarranted. The idea that some children who've lost their parents might be prescribed anti-depressants doesn't strike me as scandalous, but she's spun it that way.

Now, I don't support overmedication of children, and I want the foster care system to be monitoring that subject more carefully. What I object to is labeling Medicaid transactions fulfilling doctors' prescriptions to Medicaid-covered patients as "fraud." It's dishonest demagoguery, a smear on foster families and on an underfunded, overstressed system, to claim all these prescriptions are fraudulent -- thematically akin to right wing stereotypes of "welfare queens." Frankly the Comptroller knows better. (Hopefully the quotes don't reflect her true attitude, but that of whatever overzealous staffer wrote the press release.)

I worked for a couple of years at the Texas State Medicaid Office back when it was run by Dr. Mike McKinney. In my experience you may find some fraud among Medicaid recipients, but the vast majority of waste, 98+%, will be found investigating more traditional healthcare providers. After all, they receive the $15+ billion annually in payments from Medicaid -- all the recipients get are services.

The few bits of fraud found among prescriptions for foster kids will generate a good newspaper story, but will mean nothing in terms of the massive Texas Medicaid budget. She should be auditing Medicaid billing by the big hospitals like Seton and Columbia HCA, as well as nursing homes, medical transportation services and other types of Medicaid providers, for the really big bucks.

So from a budget perspective, Strayhorn's proposal is all sizzle and no steak. By contrast, here's where Attorney General Greg Abbott thinks we should focus on Medicaid fraud:

"Medicaid Fraud comes in many forms. In some cases, a doctor files claims for reimbursement for tests he or she did not perform (billing for services not rendered). Other cases may involve a hospital submitting a claim to Medicaid for a complicated, more serious illness than the patient actually had (upcoding). Or perhaps a physical therapist submits claims to Medicaid for services which were not medically necessary or which were not validly prescribed. It could also be a company billing for an expensive motorized wheelchair but delivering only a scooter to someone who qualifies for neither one."

Here's the key point when thinking about Medicaid fraud: The most a patient can get from Medicaid is free healthcare, which they'd often otherwise get in the emergency room at four times the cost. That's not hurting the state as much as docs and hospitals pocketing cash they don't deserve, and it isn't nearly as widespread.

Targeting foster parents might play well in a Republican primary, where you get to say you got tough on those beggarly welfare frauds, but if you want to maximize state savings from anti-fraud efforts it makes little sense. It's odd and troublesome for the state to go after poor people first, while white collar fraud in the system is rampant, and almost assumed by those involved.