Welcome to the Pondera FraudCast, a weekly blog where we post information on fraud trends, lessons learned from client engagements, and observations from our investigators in the field. We hope you’ll check back often to stay current with our efforts to combat fraud, waste, and abuse in large government programs.
As a company, Pondera is closely following the comments coming from the incoming administration about how they are approaching government efficiency and entitlement reform. Paul Ryan, in particular, has made several statements about the Affordable Care Act (Obamacare), Medicare, and Medicaid. This post provides some of our thoughts around how these changes may affect fraud, waste, and abuse.
While changes are clearly coming to Obamacare, this week Speaker Ryan also hinted at potential changes to Medicare and Medicaid. In Medicaid, where Pondera works with multiple states to detect fraud, Ryan hinted that the administration would consider offering tax credits in place of expanding the number of Medicaid recipients. This is necessary because Medicaid expansion, a byproduct of Obamacare, shares its fate with Obamacare.
While the tax credit idea is interesting, it is certainly not without its own problems. Tax credits, which unlike tax deductions offer dollar-for-dollar savings off bottom line taxes owed, are an attractive target for fraudsters. In fact, the Earned Income Tax Credit (EITC), which offers tax breaks to low income Americans, suffers from a 23.8% improper payment rate in 2016. This is one of the highest rates for any government program translating to $15.6 billion in waste.
On the surface, it seems the administration’s idea may shift much or all of the fraud problems in Medicaid expansion from health departments to state tax collection agencies. Here is one thing we can be sure of though: as long as there are large amounts of money in these programs, there will be bad actors who will attempt to defraud the system. And experience shows us that they will create innovative and technologically-advanced methods to support their efforts.
It’s only been a few hours since the election of Donald Trump, and we are already fielding questions about what this all means to Pondera. And while I must confess, like most Americans the election result was a bit of a surprise to me, we have been preparing for change no matter who won the election. This is because any change in administration leads to changes in priorities.
If I think back only a decade or so, active government program initiatives included Real ID laws for driver licenses, modernizing voter systems, and prison offender management systems. The Obama administration shifted a lot of focus and funding to Medicaid systems, insurance exchanges, and other health and human services programs.
What will the Trump administration mean to a fraud detection company like Pondera? While it’s still too early to tell, President-elect Trump has certainly provided some clues. For example, in one campaign speech he proposed funding his childcare initiatives by targeting fraud in state Unemployment Insurance Programs. And anyone who has been paying attention to the news recently could reasonably expect that voter fraud and the Affordable Care Act will receive some attention over the coming months.
Here is one thing that I know for certain. Come January, fraud will continue to be perpetrated against government programs no matter what party or which candidate is in charge. To fraudsters, large government programs are considered a target-rich environment too large to ignore.