One of the biggest problems with American healthcare is that so much of the payments are driven by a government bureaucracy that is impervious to costs and other market forces.
Minnesota’s Department of Human Services (DHS) is in trouble for over-paying two Indian Tribes to the tune of $29 million. Senate Republicans held a hearing on this, which highlighted a recurring trend of DHS incompetency.
Legislative Auditor James Nobles explained how DHS “told the tribes” that they should be getting paid monies for patients who were “self-administering” medication. In other words, DHS was authorizing Medicaid payments—which is mostly federally funded, meaning Minnesota’s DHS thought it was using free money from the feds—in order for people to simply take their pills each day, at home, outside of a doctor’s office.
Nobles said that each day a patient took pills on their own, DHS paid $455 for that. Yet even if someone is in a doctor’s office, $455 to take pills in front of a healthcare worker is eye-watering, which again highlights the lack of market forces at work.
To their credit, the two tribes in question even asked DHS if the billing was right, and DHS said that it was.
But even once the error was discovered by higher-ups at DHS, they continued to make the payments to the two tribes and never told them that the billing was incorrect. Then, all of a sudden, DHS turned around and said that the tribes owed DHS millions of dollars—because, due to the improper use of federal funds—Minnesota’s DHS is now on the hook to the federal government for those millions of dollars (the federal government pays for most of Medicaid, but the states “administer,” or run, the program).
Dysfunction
The overpayment to the two tribes is just one problem DHS faces. DHS lost another $48 million of federal monies wrongly paying chemical dependency providers. And former DHS commissioner Tony Lourey resigned after only a few months on the job early this year, and other top DHS officials also resigned. Democrat Governor Tim Walz still won’t say why Lourey or these other DHS officials resigned.
DHS runs a total budget of almost $18 billion, which is about a third of Minnesota’s total budget of just under $50 billion. Part of the problem may be that the organization is being asked to do too much, especially after Obamacare’s Medicaid expansion to able-bodied childless adults. Another problem is that DHS is too big to manage.
Republicans have even proposed breaking DHS up into smaller more manageable pieces. But Democrats are eager to try to argue that the problems at DHS aren’t that bad, and don’t require fundamental reform.
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Willis Krumholz
Willis L. Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas, and works in the financial services industry. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.
