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The (False) Frontal Assault Against Louisiana’s Medicaid Recipients

There is no evidence of “widespread fraud” among Medicaid beneficiaries, but there’s now ample proof of a coordinated effort to distort the facts and deceive the public.

Fake News and Dishonest Arithmetic

A week after The Bayou Brief reported that Louisiana State Sen. Sharon Hewitt (R- Slidell) had deceptively edited the video record of state legislative auditor Daryl Purpera’s public testimony to the Senate Finance Committee, removing a critical 12-seconds of footage and sharing the altered recording with her online followers, Hewitt continues to push a fake news story that Medicaid beneficiary fraud is “widespread” in Louisiana and costs the state nearly a half a billion dollars a year.

Yesterday, she repeated her assertions in an article published by Watchdog.org, a well-known propaganda arm of the Franklin Center for Government Integrity, a far-right, anti-science organization funded by the petrochemical industry and loosely affiliated with the Koch brothers’ group Americans for Prosperity and the American Legislative Exchange Council (better known as ALEC).

Hewitt promoted the paid content, which was written by John Haughey, a freelance blogger from Florida and long-time contributor to the publication Outdoor Life, on social media.

And if you were to take the senator at her word, you’d probably think she had just ingeniously uncovered the panacea for all of the state’s budgetary woes.

All we need to do is “actively investigate” 1.6 million people (or nearly 35% of the entire state population) for suspected Medicaid fraud.

“Hewitt said the legislative auditor’s office estimates the state could save about $480 million in removing ineligible people from Medicaid’s rolls,” Haughey writes. “That would, essentially, restore the $431 million in LDH cuts in the proposed budget, which would mean an additional $1.6 billion or more in federal matching dollars.”

It’s complete hogwash.

As anyone with a working knowledge of Medicaid can tell you, Hewitt reveals a fundamental misapprehension of how federal matching dollars operate and interact with state discretionary spending.

This has nothing to do with the fiscal cliff.

Contrary to Sen. Hewitt’s assertions, Gov. John Bel Edward’s decision to avail the state access to federal funding for Medicaid expansion has been a wild success, creating more than 19,000 jobs, generating $178 million in state and local taxes, and resulting in a $3.5 billion economic impact, according to a recent, independent economic analysis conducted by three LSU professors.

The program is also wildly popular, supported by 69% of all citizens. Only among Republicans is the program narrowly unpopular, dropping from 51% approval in 2017 to 47% during the first few months of 2018.

But more importantly, Medicaid expansion has increased access to health care for nearly half a million people and reduced the state’s uninsured rate from 16.6% to 10.3%.

If there was any factual basis to Sen. Hewitt’s claims, it would be a blockbuster story.

Instead, though, it is a prime example of the cynical partisanship and dishonest arithmetic that continues to place the state’s finances on the brink of insolvency.

It should be obvious that any budgetary solution involving criminally investigating more than a third of the state’s citizens is patently absurd and unserious.

Yet this is where Louisiana currently finds itself.

Later in this report, we unpack the precise ways in which Sen. Hewitt and some of her Republican colleagues have manufactured a fake news story about widespread Medicaid beneficiary fraud, but in order to appreciate the larger political context, it’s important to remember a sordid story from the not-so-distant past.

The Curious Case of Bruce Greenstein

In one of his very first actions as attorney general of Louisiana, Jeff Landry dropped the most significant criminal case against a state public official since the the FBI found $90,000 in cold cash in Congressman Bill Jefferson’s freezer.

Bruce Greenstein, the former secretary of Louisiana’s Department of Health and Hospitals, had faced nine counts of criminal perjury for allegedly lying to members of the legislature about his efforts to improperly award a $200 million contract to his former employer, Client Network Services Incorporated (or CNSI).

In 2014, after an exhaustive, eighteen-month-long inquiry, a grand jury decided to indict Greenstein, who was appointed to the position four years prior by then-Gov. Bobby Jindal.

The contract in question, ironically enough, was about identifying Medicaid fraud and had been necessitated by changes enacted under the Affordable Care and Patient Provider Act (also known as Obamacare), which mandated states to suspend payments to “a provider when it determines that there is a credible allegation of fraud.”

To be sure, there is absolutely no evidence nor was there ever any suggestion that CNSI itself engaged in anything illegal, and in fact, the company had subsequently sued the state of Louisiana for breach of contract.  But there were thousands of text messages and hundreds of e-mails that had built a strong case against Greenstein.

And Jeff Landry waited only three months after he took over as attorney general to drop that case.

Today, Bruce Greenstein is serving as the Trump administration’s Chief Technology Officer for the Department of Health and Human Services.

Given Landry’s newly-found interest in pursuing Medicaid fraud and the coordinated, hair-brained, propaganda campaign by his Republican colleagues in the state legislature to “actively investigate” 1.6 million Medicaid recipients for potential fraud, it’s worth remembering how easily and how quickly these same elected and appointed public officials had been willing to overlook and overturn a grand jury’s decision to criminally indict a man accused of repeatedly lying about how he facilitated a $200 million state Medicaid contract with his former colleagues.

There’s another reason it’s important to remember the rise and fall and then the fall and rise of Bruce Greenstein: We are often willing to overlook abuses of corporate welfare but more than happy to stigmatize those most in need and most deserving of public support.

Medicaid fraud is almost exclusively committed by providers. Medicaid beneficiary fraud, therefore, is more accurately defined as eligibility error.

Unlike other government entitlements and earned benefits, Medicaid recipients do not receive a fungible product.

Your Medicaid card cannot be used like a credit card or bartered away to someone else.

“The Medicaid program makes zero payments directly to recipients. Zero,” Jen Steele, Louisiana’s Medicaid director, recently explained in a letter to The Advocate.

Given the misinformation about beneficiary fraud being peddled by Republican state legislators, it’s a simple, incontrovertible fact about the program that is worth underlining in black ink: Providers are the only people who actually make money from Medicaid.

Last year, Gov. Edwards created the Task Force on Coordination of Medicaid Fraud Detection and Prevention Initiatives, and charged members with five simple priorities, as outlined in the 2017 Regular Session (see Appendix A for Act 420 of the 2017 Legislative Session):

1)  To study and evaluate on an ongoing basis the laws, rules, policies, and processes by which the state implements Medicaid fraud detection and prevention efforts.

2)  To identify and recommend opportunities for improving coordination of Medicaid fraud detection and prevention initiatives across state agencies and branches of state government.

3)  To identify any systemic or system wide issues of concern within the Medicaid program with respect to fraud, waste, and abuse.

4)  To develop recommendations for policies and procedures by which to facilitate and implement all of the following:

a. Random sampling of Medicaid cases to be selected for verification of enrollee eligibility.

b. Improvements in the Medicaid program integrity function of the Louisiana Department of Health (LDH).

c. Optimization of data mining among state-owned data sets for purposes of Medicaid fraud detection and prevention.

5) To make reports to the governor and legislature

The state’s Task Force was chaired by state legislative auditor Daryl Purpera and included ten other members: Sen. Fred Mills (R- Breaux Bridge), of the Louisiana State Senate; Rep. Tony Bacala (R- Prarieville) of the Louisiana House of Representatives; Matthew Block, the Executive Counsel for Office of the Gov. John Bel Edwards; Ellison Travis, the Director of the Medicaid Fraud Control Unit (MFCU) for the Office of Louisiana Attorney General Jeff Landry; Michael Boutte, the Medicaid Deputy Director over Health Plan Operations and Compliance for the Louisiana Department of Health; Tracy Richard, a Criminal Investigator for the Office of the Inspector General; Jarrod Coniglio, Program Integrity Section Chief for the Louisiana Department of Health; Luke Morris, Assistant Secretary of the Office of Legal Affairs, Louisiana Department of Revenue (LDR); Jen Steele, Medicaid Director for the Louisiana Department of Health, and Dr. Robert E. Barsley, Oral Health Resources, Community and Hospital Dentistry at the Louisiana State University School of Dentistry.

Beginning in August 2017, the Task Force met once a month for five consecutive months. It was like the movie Groundhog’s Day, according to more than a couple of people who attended the meetings, a characterization that is corroborated by the written draft memos and the minutes of Task Force meetings, which were subsequently assembled and shared publicly by the state legislative auditor’s office.

A Solution in Search of a Problem

From the very beginning, a handful of members of the Task Force, including Daryl Purpera, the legislative auditor, both Republican legislators, and the delegate from Attorney General Jeff Landry’s office made it well-known they were primarily interested in addressing a single directive, 4(a), which charged them with studying a random sampling of recipients that could be used to better understand the total number of people who may not meet eligibility criteria.

There was very little discussion on the best ways to eliminate fraud among health care providers, like pediatric dentistry and behavioral sciences, niche specializations with a well-known record of attracting fly-by-night clinics that briefly open shop, collect a substantial sum in Medicaid reimbursement payments, and then quickly disappear.

Instead of substantively addressing the best ways to confront and eliminate provider fraud, the Task Force, led by Daryl Purpera, became singularly obsessed with proving the theory that tens of thousands of Medicaid recipients had fraudulently been deemed eligible for a health insurance program by under-reporting their income.

Their methods were swiftly and strongly criticized by those most familiar with the complexities and variances the program had been designed to accommodate.

Apples to Oranges

At the same time, a comprehensive audit conducted by the Centers for Medicare and Medicaid Services (CMS) revealed that Louisiana is “both compliant with all federal fraud reporting requirements and has the proper procedures in place to detect and report fraud,” state Medicaid Director Steele subsequently explained in The Advocate. “The federal audit sets a high bar for its anti-fraud efforts, making it notable that Louisiana was one of only four states to pass this audit since 2014.”

Steele was not exaggerating. The full report is available for download here.

“In truth,” she wrote in March of 2018, “Louisiana is a national leader in Medicaid fraud prevention.”

Yet a small contingency of lawmakers were determined to castigate tens of thousands of health care recipients as nothing more than criminals who had defrauded the government, even if those lawmakers had to rely on a flawed methodology to make their case.

Luke Morris, the legal analyst for the Louisiana Department of Revenue, detailed his criticisms in a memorandum to the Task Force on Oct. 4th, 2017.

“(The) LDR (Louisiana Department of Revenue), LDH (Louisiana Department of Health), and LLA (Louisiana Legislative Auditor) all agreed that the comparison of gross income and federal AGI (Adjusted Gross Income) would likely produce very few matches,” he reported. “This exercise is a quintessential apples to oranges approach for several reasons.” (emphasis added).

Morris explained the significant differences between what applicants disclose on their Medicaid eligibility forms and the ways in which a person’s federal adjusted gross income is calculated and how deductions for things like “educator expenses, moving expenses, student loan deductions, and tuition and fees deductions” may be accounted for in a person’s federal AGI but are specifically “not accounted for in the reported gross income on the Medicaid application.”

There are other significant discrepancies. “(T)he comparison of household size and exemptions would likely produce few matches,” Morris explains. “Household size includes all individuals living in one household. Exemptions include taxpayer, spouse, and dependents. An individual may live in the same household as another but may not be claimed on another’s tax return as a dependent based on the Internal Revenue Code.”

Fuzzy Math and Alternative Facts

State legislative auditor Purpera had been repeatedly advised by subject-matter experts in health care policy on the Task Force that the way in which he decided to calculate the potential rate of fraud among Medicaid beneficiaries was itself fraudulent and riddled with false assumptions and fuzzy math.

Purpera publicly released his preliminary analysis on Oct. 25th, 2017:


Six months later, these are the numbers State Sen. Sharon Hewitt is peddling as incontrovertible evidence of widespread Medicaid beneficiary fraud and the central justification for her call to “actively investigate” the tax returns of more than 1.6 million citizens.

Luke Morris had been prepared for Purpera’s fundings. “(He) said the results were in line with expectations,” according to the minutes of the meeting that day. “(Morris) did some further digging to look at major differences between gross income and federal AGI to reconcile why such large variances. There were a number of reasons and none were indicative of fraud.” (emphasis added).

There are also a number of different ways one can become eligible for Medicaid, and Purpera admittedly only looked at aggregate data, not individual-level information.

More than Zero

To be abundantly clear, although the number is certainly nowhere near 83,000, no one is suggesting that there are zero incidents of Medicaid beneficiary fraud in Louisiana; there are certainly a handful of people in any given state who would be willing to intentionally lie about their income in order to access health insurance.

Even if Sen. Hewitt was completely accurate- for the sake of argument, let’s say it’s true 83,000 Louisiana citizens intentionally lied about their income- it speaks volumes about the true character of any leader who only sees dollar signs and jail time instead of a government led by people who would rather prosecute those among us too productive to qualify as poor enough for publicly-subsidized health care, not nearly wealthy enough to afford what the private sector is selling, but desperate enough to commit a crime just so they or their child can seek quality medical treatment.

The same exact legislators who are now urging the IRS to provide the state government access to the individual tax returns of 1.6 million of their fellow citizens so that they can prosecute the crime of fibbing a few numbers in order to qualify for health insurance are also vigorously opposing any effort to force a small group of wealthy individuals and businesses to publicly disclose how much they benefit from taxpayer-funded corporate welfare.

There’s a reason Sharon Hewitt decided to frame this particular issue as a zero sum game between nursing home residents and 1.6 million Medicaid recipients, and it has very little to do with a commitment to “grandma.”

Unlike almost everyone else enrolled in the state’s Medicaid program, those nursing home beds make a handful of people an astronomical amount of money from the government.

“Louisiana Nursing Home Association Executive Director Mark Berger said, when including the loss of federal matching Medicaid funds, the budget cuts nearly $1 billion for nursing homes,” John Haughey writes in the Watchdog article promoted by Sen. Hewitt.

Louisiana currently leads the nation in the disproportionate amount of Medicaid spending for nursing homes.

“The only way around the stipulation is for nursing homes to close,” Haughey claims.

“That is the business side of the scenario,” Berger tells him.

To some lawmakers, it’s the only side of the story that really matters.

Berger, to his great credit, understands the real stakes.

“The human side is thousands of residents and their families will go through grief and stress,” he says.

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