Ohio Medicaid audit has huge potential for savings

It's not often anyone gets a chance to realize a 1,000-to-1 return on investment. But that's what Ohio Auditor Betty Montgomery is suggesting as a return on the performance audit her office is launching on the state's Medicaid system.
Medicaid, the system that provides health care for the poor and, to a large extent, the medical patients in the state's nursing home, is an important program. No one wants to see poor people, children and the elderly suffer for want of proper care.
But Medicaid takes and enormous bite out of the state's general fund budget -- about 40 percent of that budget -- and it has been growing at a ferocious rate. Medicaid spending in Ohio increased 73.3 percent since 2000.
Action needed
With the state's population aging and with medical and pharmaceutical costs increasing at rates well above inflation, Medicaid costs will only continue to take a larger share of the general fund budget unless something is done.
The first something was the General Assembly's authorization of the auditor's office to have access to the information it needs to conduct a comprehensive performance audit.
This week, Montgomery announced that the audit is underway and outlined her plans. It will cost about $1 million, which is an amount not to be sneezed at. But the potential payoff is huge.
Similar audits have been conducted in other states, including California, Florida, Idaho, Illinois, Michigan, Missouri, New York and Texas. In 2004, Idaho issued a follow-up report to its 2000 performance report and found that most of the recommendations had been fully implemented and cost savings of 12 percent had been realized.
Similar success in Ohio would represent a savings of more than $1 billion a year.
Given that Ohio ranks sixth nationally in eligible beneficiaries and fifth in payments and claims, it would seem that Ohio has the potential to save an even higher percentage than Idaho.
A performance audit identifies efficiencies and cost savings, determines if programs are meeting their goals and uncovers waste.
The timetable
Montgomery expects to issue a final report in the fall of 2006. An interim report will be made to the governor's administration and the Medicaid Transition Commission of the General Assembly as they complete the task of creating the new Department of Medicaid as adopted by the General Assembly in House Bill 66, the state budget bill.
Ohio's $9.5 billion health care program serves 1.7 million poor, blind and disabled people. It is managed now by the Department of Job and Family Services, but Medicaid money is distributed to six state departments, hundreds of school districts and 88 counties
The General Assembly is working on a new Medicaid department and the information Montgomery produces will be vital to that effort.
Equally vital to that effort will be the General Assembly's ability to focus on the need to cut waste while maintaining services to those 1.7 million people. In the past, some efforts to trim Medicaid costs have been sidelined by special interest lobbying, especially from the nursing home industry.
Armed with Montgomery's performance audit, the state's legislators should be better able to ignore outside influences and stick to the facts in making decisions that will affect all Ohioans.