Rendell touts new report, Wagner said $436 million could be saved

This story has been updated from its original form. Comments from Auditor General Jack Wagner have been added.

A new report from the federal Department of Health and Human Services (DHHS) contradicts a state-level audit which reported a 15 percent error rate in Pennsylvania’s Medical Assistance Program.

The new federal report found Pennsylvania to have a 4.07 percent Medicaid error rate, compared to a national average of 8.98 percent. The report found an eligibility error rate of only 1.97, well below the federal eligibility error rate of 7.6. Errors can range from clerical mistakes in how services are billed to improper payments and unnecessary enrollments of ineligible individuals.

The federal study examined a random sampling of 500 Medicaid cases in Pennsylvania.

Michael Narrone, acting Secretary of Public Welfare, answers reporters' questions Monday.

The report seems to fly in the face of a similar report released in January by Auditor General Jack Wagner claiming nearly $1 billion could be saved if the state cleaned up DPW and cut down on errors.

State auditors found errors in 14.7 percent of more than 13,000 randomly selected Medicaid cases last year. Cutting the rate down to 10 percent would save the state $436 million annually, Mr. Wagner estimated.

Monday, Gov. Ed Rendell said the new federal data showed Mr. Wagner’s report to be “out of line and out of whack.”

“We take great care to make sure that we don’t give benefits to people that aren’t eligible for them,” said Mr. Rendell.

Mr. Wagner said Monday he stands by the conclusions in his report and questioned the legitamacy of the federal numbers.

“I firmly stand by our audited error rate of at least 10 percent, which, if corrected, would save Pennsylvania taxpayers at least $436 million a year,” Mr. Wagner said in a statement. “The federal report is based on information provided to the U.S. government by those claiming a lower rate. We have serious concerns about the methodology used in issuing this report.

The new federal report could also create problems for governor-elect Tom Corbett and the new Republican majority in the state House of Representatives. Mr. Corbett and Republican legislative leaders have pointed to the auditor general’s report on multiple occasions as an example of how to cut government costs without having to reduce programs.

Pennsylvania is facing a $63 million deficit in the current fiscal year and a $4 billion deficit next year because of the disappearance of federal stimulus funds and higher public pension costs.

Gov. Ed Rendell said Monday the federal report meant there was “not a chance” Republicans would be able to save significant money by reducing waste in the Medicaid program.

“The rhetoric that goes on in this building doesn’t match the facts,” said Mr. Rendell. “Nobody in this building when it comes to DPW cares about the facts or the truth.”

House Republicans did not return calls for comment Monday.

Translating an error rate into the state Medicaid budget is difficult because not all errors have financial impact, said Michael Nardone, acting secretary of DPW.

“About one in six Pennsylvanians relies on Medicaid to sustain or improve their quality of life,” said Mr. Nardone. We owe it to those consumers – and to all Pennsylvanians – to maintain accountability and fiscal responsibility in the Medicaid program.”

Mr. Rendell said Republicans frequently use DPW as a “whipping boy” and demonize the programs which the department administers without having basis in fact.

State Sen. Jake Corman (R-Centre), chair of the Senate Appropriations Committee, has been critical of the Rendell Administration’s handling of the state DPW in the past.

Monday, Mr. Corman said all the reports and audits will be meaningless until the new administration begins making changes to the way DPW operates.

“The legislature can hold hearings and the auditor general can have audits, but until the new administration gets out there in the field and starts handling it, you won’t really know what kinds of savings are there,” said Mr. Corman. He said any potential savings are unlikely to be realized in next year’s budget because it will take the Corbett Administration some time to assess the situation.

If that is true, any potential waste in Medicaid will be unavailable to close the expected deficit this year.

More than 2 million Pennsylvanians currently receive Medicare benefits. Of those, about 35 percent are elderly and disabled and consume about two-thirds of the state’s Medicare budget.