Accountability of Minn.'s Medicaid is latest dustup in long fight

Midwife Anne Johnson
Midwife Anne Johnson meets with a Medicaid patient at the Catholic Charities' Seton Prenatal Clinic in St. Paul. Johnson takes notes and she asks questions of a patient who has been feeling some recent discomfort after recently giving birth.
MPR photo/Elizabeth Stawicki

Minnesota Human Services Commissioner Lucinda Jesson testifies before a joint congressional hearing Wednesday about accountability in Minnesota's Medicaid program in a controversy that is only the latest in a long line of skirmishes between states and the federal government over Medicaid funding.

Jesson has been dogged by questions about the state's decision to keep a $30 million repayment of Medicaid funds from an HMO. On Monday, Jesson reversed course and agreed to share half the money with the federal government, which pays half the costs of Medicaid.

The Medicaid program is such a labyrinth of rules, regulations and requirements that even a United States Supreme Court justice once called it byzantine. One reason why: The program is huge.

Medicaid is the nation's largest health coverage plan. It costs federal and state governments an estimated $381 billion in total and serves more than 65 million individuals.


The experience of a married mother of five children who recently visited a St. Paul health clinic is emblematic of the Medicaid payment labyrinth. Her husband works full time but his employer offers no health insurance. She has been feeling some recent discomfort after having a baby in the past three weeks and hopes midwife Anne Johnson can help.

While the visit turns out to be medically straightforward, the Medicaid payment for the visit is anything but. Medicaid isn't just a state program or just a federal program — it's both. The state of Minnesota will pay this patient's bill, and then submit those charges to the federal government to pay its share. The federal government will reimburse Minnesota for half. For Minnesota and most states, the matching Medicaid funds are the single largest source of federal revenue.

Congress' financial watchdog, the Government Accountability Office has found states sometimes use questionable schemes to get as much federal money as possible.

But at the same time, the GAO has repeatedly recommended that the feds keep a closer eye on the Medicaid program, saying fiscal oversight is "insufficient."

Katherine Iritani, director of GAO's health division said, "We've been looking at Medicaid oversight for some fact since 2003, Medicaid has been on GAO's list of high-risk programs in part because it's a big program but in part due to concerns that the quality of federal oversight."

The GAO has highlighted several areas including payments to managed care programs, which is one of the issues in the controversy in Minnesota.

The Centers for Medicaid and Medicare did not respond to MPR's questions.

Medicaid expert Vernon K. Smith said states are already under a good deal of federal oversight. Smith runs a consulting firm and has authored studies on Medicaid for the Kaiser foundation. He said there has always been a financial tension between the states and the feds — some refer to it as a dance; others a tug of war.

"It's part of the history of the program that states from time to time have claimed more than the federal government felt was allowable and has disallowed some federal funds that might have been claimed," Smith said. "And I would say if a state finds itself in that situation from time to time it's probably pushing the envelope as much as it should and the federal government is doing what it should as well."

But that history has fostered distrust on both sides and it's time to heal that relationship according to Alan Weil of the non-partisan National Academy for State Health Policy. Weil says the feds distrust the states for pushing the program's limits, and the states suspect the feds don't treat all states the same in deciding which policies are ok and which are not. Weil said part of the problem is Medicaid policy-making can be abrupt, unilateral, and confusing.

"They'll change policies on the basis of a letter they sent out to the states saying we're now going to do this and the states have no input into that, and they're not even sure, it's a letter so there's no way to clarify — but what about this, what about that? And then it sort of evolves over time."

Weil said the federal government could go a long way towards healing the relationship by being more transparent and consistent in what it wants from states.

But if anything, the Congressional hearing tomorrow is likely to fuel tensions between the feds and the states. Committee chairman Rep. Darrell Issa, a California Republican, characterized the $15 million repayment announced Monday as a "refund of waste and abuse in the Medicaid system."