27 February Buried Pentagon Report Leads to Questions for Other Government Agencies February 27, 2017By Jon Coss - Blog Manager General Energy, Commerce, Energy, Environmental Protection Agency, Health and Human Services 0 Earlier this year, four government agencies – Commerce, Health and Human Services, Energy, and the Environmental Protection Agency—received letters from congress directing them to provide documents and comments detailing their efforts to “identify waste and… to achieve budget savings in the next five years.” The letter referenced a report from the Pentagon that identified a “clear path” to saving over $125 billion over five years, which was subsequently suppressed because of the dramatic findings.The Washington Post, which was mentioned in the letter from Congress, exposed the Pentagon’s internal study in December 2016. The Post explained the reason the Pentagon buried the study was that they feared Congress would cut their budget if they knew of the waste. Incredibly, the “clear path” to savings did not even require layoffs. Rather it would use attrition, early retirements, reductions in expensive contractors, and modern technology to streamline operations.To put the size of the problem in perspective, the study showed that the defense department paid over 1 million back-office staff to support 1.3 million active duty troops (the smallest number of troops since 1940). Thanks to these large numbers, the savings from streamlining could have led to reallocating up to $125 billion for troops and weapons and rebuilding the nation’s aging nuclear arsenal. But apparently, some Pentagon officials decided that protecting against budget cuts was more important.The four agencies who received the letter from Congress have until March 10th to respond. Their response must provide a copy of their internal reports similar to the Pentagon report, lessons learned for their department if they do not have a similar report, and any efforts the department has made to combat waste. Given that these four agency budgets total over $1 trillion, twice that of the Department of Defense, there should be ample opportunities for savings. Related Posts Disturbing Reports of Nursing Home Abuse Last month CNN published a horrifying report on sexual abuse in America’s nursing homes and assisted living facilities. The report provided details on dozens of assaults, rapes, and other incidents that, quite frankly, were extremely difficult to read. In my opinion, however, this level of detail is probably necessary to shock people into taking action against what CNN rightly labelled “an unchecked epidemic”.The numbers themselves are devastating. Approximately one million senior citizens are currently residing in 15,000 government-regulated long term care facilities. Since 2000, it appears that over 16,000 cases of sexual abuse have been reported, but the number is probably higher because of complex reporting systems and processes. And it’s impossible to determine the number of unreported cases.Between 2013 – 2016, CNN found that 1,000 government-regulated facilities had been cited for mishandling or failing to prevent sexual assaults. 100 of the facilities had been cited numerous times. And despite this, only 226 facilities were fined just $9 million. Only 16 of the facilities were cut off from Medicaid and Medicare!What is equally disturbing to the actual cases of abuse is the blatant disregard of safeguards and even the intentional impeding of investigations. Consider a case here in California where the employer allowed a nurse to continue working for weeks after reports of him kissing and fondling a female resident. This crime, by the way, resulted in only a $27,000 fine.At Pondera, we often say that fraud and abuse is most prevalent at the intersection of large amounts of money and vulnerable populations. This makes nursing homes “ground zero” for abuse because it is here that the escalating costs of long term care combine with dementia and other health issues that can make senior citizens problematic witnesses.Among several recommendations made by CNN was a call for improved reporting systems. We agree that this is an important piece of the solution. It will provide greater transparency and help regulators identify trends and clusters of abuse. But clearly, stricter oversite and enforcement are needed. So too is the type of no-nonsense reporting that CNN did for this report. New Data on Problematic Government Programs One of my favorite websites, paymentaccuracy.gov, has received a number of updates which may provide some insight into the current administration’s priorities. If you haven’t done so already, I encourage you to visit the site as it provides improper payment information on the government’s high-priority programs: those that report over $750 million of improper payments in a year or have not established or reported on their error rates.The current version of the site includes many of the usual suspects including Medicaid ($36.3 billion in errors), Medicare fee-for-service ($41.1 billion), and the Earned Income Tax Credit ($16.8 billion with a whopping 24% error rate). SNAP continues to be listed but still does not provide relative numbers because of inaccurate state reporting—something we have discussed in previous posts.Other items of note are the inclusion of three Veterans Affairs programs for Disability Compensation, Community Care, and Purchased Long Term Services and Support. While the .59% error rate on the $64 billion Disability Compensation plan appears surprisingly low, the 75.86% error rate for the $4.7 billion Community Care program is likely the result of new reporting requirements… at least I genuinely hope so.Other high error-rate programs include school nutrition services (both breakfast and lunch), student loan programs, and Unemployment Insurance which ticked up to 11.65% this year.Regardless of political leanings, I think we can all agree that we want our tax dollars going to those who need them the most. And the transparency provided by paymentaccuracy.gov is a great step toward this goal. My hope is that the government will continue to provide easy access to this information. I am still disappointed each time I visit the expectmore.gov website (which reports on program performance, not just fraud, waste, and abuse) where I see the following message:“Expect More.gov was an initiative of the George W. Bush administration. This website has been archived and is posted here as an historical resource. It has not been updated since the end of 2008 and links to many external websites and some internal pages will not work.” A Reminder of Government’s Important Role in Helping Americans Regular readers of this blog know that we often focus our comments on the fraud and abuses in government subsidy programs. Our intent is almost always to point out solutions that can make these programs more effective, rather than to question the existence of the programs altogether. In fact, most Pondera employees worked for government agencies in the past and recognize the good that many programs deliver.The recent fires in California provide an example of government programs helping Americans in need. The fires, which tore through California’s wine country, including Napa and Sonoma, claimed over 40 lives and 7,000 structures, and displaced nearly 100,000 people. Entire neighborhoods were destroyed leaving families scrambling for shelter and food.A number of government agencies sprang into action to help those affected by the disaster. While most Americans are somewhat familiar with, for example, how FEMA responds to disasters, other efforts are less obvious but very important.For example, I took note of the combined efforts of the United States Department of Agriculture (USDA) and the California Department of Social Services (CDSS) to provide emergency food assistance to local residents. Using the Disaster Supplemental Nutrition Assistance Program (D-SNAP), CDSS offered a month of food benefits to those who qualify. This is in addition to other waivers such as allowing existing SNAP beneficiaries to purchase hot foods (many lost their homes and by extension their ability to prepare foods).Events like the fires in California, while heartbreaking, also provide us with a reminder of the important work done by federal and state government agencies. This is also a time to remember the important work that agencies do throughout the year to support Americans who truly need our assistance. We believe our job at Pondera is to help governments deliver better services by driving fraud, waste, and abuse out of their programs. Changes to Government Healthcare 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. How Startups Benefit Government What a delight it was to read a commentary in Government Technology magazine by Rebecca Woodbury, a Senior Management Analyst with the city of San Rafael, California. In the article, Rebecca recounts her experiences working with technology startups and the benefits to the city of moving beyond a small set of traditional providers.Rebecca argues that startups offer “simple and intuitive interfaces, don’t require costly implementation fees or long-term contracts, embody the spirit of continuous improvement, and have their eyes keenly on the future.” She goes on to state that these benefits are far more important than “the number of years a company has existed or the number of clients they have.” And she even provides ways to mitigate the risks associated with startups such as avoiding long term contracts.Right on Rebecca! While Pondera is no longer considered a startup and we can meet the stringent financial and customer qualification requirements in public sector bids, we work hard to hold on to the EXACT list of benefits Rebecca articulated. And when Pondera was a startup, we counted on people recognizing those benefits. That’s why we would get so frustrated when we would read RFPs that asked for “innovative solutions” but required that they be implemented for at least five years! In the age of cloud computing and Agile development, the gap between business needs and archaic procurement policies has grown into a gaping canyon.So, at the risk of inviting competitors into our market, I applaud Rebecca’s efforts and those of similar public servants who recognize that nimble, innovative startups offer compelling alternatives to large, established IT companies. I also know that competition makes all companies better. In the end, isn’t that what government wants in its partners? Disturbing Reports of Dentists Committing Medicaid Fraud A recent spate of high profile arrests of dentists is drawing attention to an often-overlooked segment of Medicaid fraud. Some unscrupulous dentists are exploiting gaps between what private insurers reimburse versus what Medicaid will pay for. Others are just brazenly breaking the law to rip off state Medicaid programs.Consider these recent charges brought against dentists:An Anchorage, AK dentist was charged with 10 felonies. His “care” included performing a tooth extraction while videotaping himself on a hoverboard. Naturally, he had to text the video to friends. He is also accused of giving expensive, and unnecessary, IV sedations to Medicaid patients and then performing unneeded procedures on his passed-out patients. Since private insurance rarely pays for IV sedation, he only performed this fraud scheme on his Medicaid patients.A Fairfield, CT dentist who saw mostly elderly and indigent patients is accused of ripping off more than $900,000 from Medicaid by billing for services that he never performed. One hint that he may have not been acting honestly: he billed for both a cavity filling and denture procedure on the same tooth!An Atlanta dentist was sentenced to 18 months in prison earlier this year for defrauding nearly $1,000,000 from Medicaid. Her unique talent included the ability to perform dental procedures in Atlanta while she was traveling out of the country.Unfortunately, these cases simply support our premise that fraud will exist anywhere substantial amounts of money are exchanged in complex billing and regulatory environments. These, and other similar cases, serve as a warning that we must monitor literally every medical specialty reimbursed by Medicaid. Comment (0) Comments are closed.