Medicaid Spending and the Open Source Solution

1. Medicaid Spending and the Open Source SolutionAlliance for Health ReformRussell Senate Office BuildingFeb 15, 2008 Jim Frogue State Project Director The Center for Health Transformation www.healthtransformation.net 202-375-2001

2. 21st Century Intelligent Health System Health Transformation Where we are currently going Reforms within the current framework Where we should be going Current Healthcare System To avoid change, most bureaucracies prefer the comfortable routine of explaining failure.

3. The Trend toward Transparency Our government is more transparent every day • Coburn-Obama legislation on earmarks • Campaign finance laws that require disclosure • Even your salaries on Legistorm • FloridaHealthFinder.gov • 93 percent of people believe they have the “right to know” cost and quality information about their health care providers

4. The Medicaid Federal Match • Federal government provides an open-ended match for state Medicaid programs between 50-76 percent • Incentives for states: • $1 of extra Medicaid spending = $1-$3 of “free” federal money • To save $1 in a state budget means leaving $1-$3 federal dollars on the table • States’ spending on Medicaid as a proportion of their budgets has climbed steadily for 40 years. Will continue. In most states, now greater than K-12 education spending. • Medicaid spending is crowding out education, law enforcement, highways, environmental protection, etc

5. Medicaid Fraud in New York • New York has by far the highest absolute and per capita Medicaid spend of any state. 13 percent of federal funds for 6 percent of US population • New York Times series in July, 2005 • Brooklyn dentist billed for 991 procedures in one day (Sept, 2003) • James Mehmet, former Inspector General, “40 percent of all claims are questionable” • 2006 private study was buried in New York’s Health Department. It found: • “One quarter of that program cannot be explained.” • Medicaid Commission 2005-2006 tasked with finding $10 billion in federal savings over 5 years • They could have found all of that in New York in 2 years in fraud alone. Instead they recommended various broad cuts to honest providers.

6. The Open Source SolutionAs a condition of accepting bailout money, states must post provider bills on-line for public access

7. How to do Open Source? • Work with states and provider groups to create low-cost, administratively simple way for provider billing records to go on-line in real-time for viewing by the general public • To get started, could limit to 10 or 20 high-volume services or procedures that are susceptible to fraud. Could limit to fee-for-service Medicaid. • Could guarantee providers real-time reimbursement in exchange for real-time public disclosure of bills. • Maintain/Reiterate rigorous patient privacy safeguards.

8. Why Would This Work? • More sunlight is always better • In-state, in-house fraud monitoring can never be as good as the collective wisdom of interested academics, researchers, other clinicians and providers from all over the country • Taxpayers have a right-to-know how their dollars are being spent • Google “Goldcorp Challenge”

9. Who Should Support This Concept? • Every honest provider of Medicaid services • Every Medicaid patient advocacy group • Every taxpayer • Every elected official who has an interest in eliminating waste, fraud, and abuse

10. “One cannot solve a problem with the same thinking that created it.” - Albert Einstein