Hospital Presumptive Eligibility Was Busting Budgets Long Before the Pandemic

By Jonathan Bain | October 26, 2020 | 12:54pm EDT

An American recovery is well underway. Over the last few months, millions of small businesses have opened, millions of people have left dependency on unemployment benefits, and layoffs are continuing to decrease. Still, states are trying to bounce back from busted budgets and the woes that came along with the pandemic. But while lawmakers will point the finger at COVID-19 for all of their problems, state budgets have been under immense pressure for years. 

Medicaid spending nationwide was roughly $630 billion in 2019 alone. Two decades ago, Medicaid accounted for nearly one in five dollars states spent. Today, that number has jumped to nearly one in three. While the pandemic certainly didn’t help matters, Medicaid has been draining state resources for years, leaving states vulnerable and exposed. 

One reason Medicaid carries such a large price tag are all of the questionable ways in which someone can enroll. Out of all the gimmicks and loopholes, hospital presumptive eligibility (HPE) is among the worst.  

Under HPE, hospitals can deem someone eligible for Medicaid by simply asking them what their income is. Without any form of verification, if someone’s reported income meets eligibility requirements, they are immediately eligible for temporary Medicaid.

Presumptive eligibility has existed in some form for decades, and originally allowed states to provide temporary Medicaid coverage to pregnant women while their applications were still pending. Over the years, this was expanded to include children and women undergoing breast or cervical cancer treatment. Still, few states chose to utilize this option due to the program integrity problems it poses. But under Obamacare, presumptive eligibility was expanded to include able-bodied adults, and hospitals were forced to implement it. States that feared presumptive eligibility posed too many program integrity problems were right. HPE under ObamaCare has opened the door for waste, fraud, and abuse.  

In a new paper by my group, the Foundation for Government Accountability, data from state Medicaid agencies shows just how rampant this problem is. In 2018, only 30 percent of people who were deemed presumptively eligible by hospitals were verified and enrolled. Meaning seven in 10 people classified as presumptively eligible were either ineligible or didn’t even submit an application. 

Making matters worse, states are not required to implement any type of performance standards for hospitals making these determinations. The only requirement is that if states implement performance standards, they must enforce them. Unfortunately, with federal rules handcuffing states, even those with performance standards have difficulties meeting them. Another issue is that states cannot recoup lost dollars spent on ineligible enrollees, meaning taxpayers have to foot the bill. 

The pandemic seems to be winding down, but the need for states to be prepared for disaster remains at an all-time high. The first step down a long path is to stamp out obvious cases of waste and fraud—meaning it’s time for HPE to go. HPE has long been fraud by design under Obamacare and has been draining resources from the truly needy for years. It’s time for states to be responsible, take action, and protect their limited resources for those who truly need help. 

Jonathan Bain is a research fellow at the Foundation for Government Accountability.

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