By M.D. Kittle | Wisconsin Reporter
MADISON — Gov. Scott Walker last week laid out an ambitious six-point plan to target fraud in Wisconsin’s public assistance programs.
The strengthened fraud prevention campaign follows an investigation that found regulators aren’t always thorough in screening applicant income in approving eligibility for foods stamps and other taxpayer-funded benefits.
But could a federal system of financial rewards for bolstering enrollments be encouraging fraud, benefiting states that increase public benefits?
The Badger State is a perennial federal bonus payment collector. Wisconsin’s Department of Health Services during the past few years has racked up tens of millions of dollars in reward points, if you will, for meeting key program goals and increasing beneficiary participation.
The federal Supplemental Nutrition Assistance Program, known as FoodShare in Wisconsin, has paid out nearly $4 million in performance bonuses to the state during the past two years. Wisconsin earned $1.84 million in fiscal year 2012, and $2.1 million in 2011. DHS posted some of the lowest error rates in the land, at 2.02 percent in 2011, and 1.97 percent the previous year.
The SNAP office in June reported $24 million in bonus payments to “reward states” with the lowest and most improved combined payment error rates.
While overpayments for FoodShare hit 1.39 percent in fiscal year 2012, Wisconsin finished well ahead of most states in over- and underpayments.
But the bonuses don’t simply follow program accuracy. They’re also tied to timeliness of benefits release and program participation.
“At a later date, we will announce $18 million in bonus payments to reward states for their performance in application timeliness and the program access index,” the federal agency wrote in an email in response to Wisconsin Reporter’s questions.
The access index is just as it sounds — a measure of program entries, tied to average SNAP participants and the number of people earning below 125 percent of the poverty line in each state. In other words, the agencies are rewarded for recruiting food stamp recipients.
Same goes for Medicaid.
The Children’s Health Insurance Program Reauthorization Act of 2009, or CHIPRA, established “Performance Bonuses” for states to support the enrollment and retention of eligible children in Medicaid.
“The Performance Bonuses provide additional federal funding for qualifying States that have taken specific steps to simplify Medicaid and CHIP enrollment and renewal procedures and have also increased Medicaid enrollment of children above a baseline level,” according to a summary of the program.
“The amount of the award correlates with the percentage increase in enrollment above the baseline — the more children States enroll, the higher the bonus, and States that achieve more than a 10 percent increase in enrollment receive an even larger (“Tier 2”) bonus.”
Wisconsin picked up $23.43 million in CHIPRA bonuses in fiscal year 2010, and $33.26 million in FY 2011, according to the Kaiser Family Foundation.
The bonus awards nearly doubled nationally, from $167.22 million in fiscal year 2010 to $303.45 million in FY 2011. That’s a significant increase from the $37 million-plus handed out in fiscal year 2009.
CHIPRA requires states operate five of eight specified practices, including not requiring an in-person interview for eligibility and “streamlining the renewal process and using automated data sources to verify eligibility information without having to ask for it again.”
Walker’s fraud prevention plan follows recent Milwaukee Journal investigations that found some regulators have failed to verify income when applicants claim to be self-employed or without income. The newspaper reported cases in which public assistance recipients own or have interest in multiple rental properties but fail to note the income.
“Regulators don’t ask questions and instead rely largely on a one-page form filled out by applicants and consider that ‘the proof’ of their incomes,” the Journal Sentinel reported.
Another investigation by the newspaper found federal bonuses to bolster enrollment in public assistance programs have put pressure on front-line social services employees to issue benefits even when there is a question about eligibility.
“Supervisors eager to hit target numbers are instructing workers to process benefits for people already receiving aid in other states and people in jail — essentially anybody with an ID card,” a recent article states.
FoodShare recipients are required to report, within 10 days, any changes to their address and shelter cost, income or employment status, and household — whether someone moves in or out of the dwelling, if anyone gets married, becomes pregnant or gives birth.
Critics have said there are untold cases of recipients failing to meet the reporting requirements, but numbers are difficult to track.
Meanwhile, the food stamp caseload has grown significantly in recent years from an average of 388,000 recipients per month in 2007 to more than 840,000 in 2012.
The recession and the economy’s anemic recovery are a big reason for the spike in food assistance beneficiaries, but the federal government’s push to expand the SNAP rolls has something to do with the significant upward tick. As of last year, about 13.6 percent of U.S. households received SNAP benefits, up from 8.6 percent in 2008, according to recently released Census Bureau data.
At a cost of nearly $80 billion per year, the price tag for food assistance continues to rise, although a U.S. House of Representatives measure passed last week would cut about $40 billion out of the program during the next decade, still leaving a food assistance program budget in the $700 billion range during the period.
The U.S. Department of Agriculture has pitched outreach grants of up to $75,000 to attract more eligible SNAP recipients to the food stamp program. The purpose, USDA says, is to “implement and learn more about effective strategies to inform and educate potentially eligible low income people, who are not currently participating in … (SNAP), about the nutrition benefits of the program, eligibility rules, and how to apply.”
“… SNAP is severely underutilized,” according to the USDA news release. “Nationwide, 33 percent of people who are eligible for the SNAP do not participate.”
Under CHIPRA, an infusion in federal cash wasn’t merely dedicated to outreach and enrollment efforts, the law authorized several new policy options – like “Express Lane Eligibility,” coverage of pregnant women in the Children’s Health Insurance Program, deeming all newborns whose mothers are covered by Medicaid or CHIP to be eligible for coverage without need for an applications and removing the five-year waiting period for illegal immigrant children and pregnant women to enroll in Medicaid CHICP, according to a government report.
“States have taken advantage of the new tools and added federal support, notwithstanding the economic downturn and recovery that has taken place over the last several years,” the report states.
But while health care coverage for children in need may be a laudable goal, what kind of filters for fraud are in place to keep ineligible households from abusing such taxpayer-supported programs? The push to increase accessibility and expand eligibility could lead to fraudulent expenditures of taxpayer dollars – a crime Walker says his administration will target and take down.
And states have benefited by the federal push to increase benefits.
The state’s Fraud Prevention and Investigation Program in 2012 completed 4,837 investigations and found $6 million in overpayments. The agency reports $8.5 million in cost avoidance, or future savings through its fraud-fighting efforts.
Walker says there is much left to be done in the fraud fight.
“Our public assistance programs are a safety net for individuals and families in need, and in order to keep these programs viable and sustainable over the long-term, the integrity of these programs must be maintained,” he said in a statement.
The governor’s six-point strategy includes:
- A front-end verification project at Milwaukee Enrollment Services to review all applications in which an applicant indicates a household member is self-employed to determine if any additional proof is needed before the case is fully processed.
- Require all BadgerCare Plus and FoodShare members and applicants, who indicate they have self-employment income, submit their tax returns for income verification and give DHS permission to request a transcript of the individual or family’s tax return to verify the income the individual or family reported to the IRS.
- Requiring an asset test — property, assets that can be turned into cash, and vehicles — for FoodShare applicants and members. The Department will not be able to require the asset test for BadgerCare Plus members because, under federal rules related to the Affordable Care Act, states cannot test the assets of non-elderly, non-disabled Medicaid members.
The governor also calls for the creation of a Recipient Fraud and Abuse Prevention Task Force. It would be similar to the Health Care Fraud Task Force convened by the U.S. Attorneys and the Nursing Home Fraud and Abuse Task Force.
“Our job in tracking and preventing fraud in Wisconsin’s public assistance programs is never done,” Walker said.
Contact M.D. Kittle at email@example.com