State Agencies Report Progress Fighting Entitlement Fraud, More Efforts To Come

Legislators learn of efforts to fight fraud in public benefits such as Medicaid, Food Stamps, Unemployment Insurance, and other programs

MacIver News Service | February 18, 2015

[Madison, Wisc] Fraud and abuse prevention was the theme on Tuesday as officials from Wisconsin’s Department of Children and Families (DCF), Department of Health Services (DHS) and Department. of Workforce Development (DWD) testified in front of the Assembly Committee on Public Benefit Reform.

Agency officials briefed legislators on past, current, and future efforts to fight fraud in state entitlements such as Wisconsin Works (W-2), Food Stamps (FoodShare), Medicaid and Unemployment Insurance.

Committee Democrats were eager to talk about drug testing requirements introduced in Gov. Walker’s 2015-17 budget. The Governor wants to apply for a federal waiver to implement drug screenings for certain Medicaid and FoodShare participants. His budget proposal would also include drug testing for Unemployment Insurance and other smaller job training programs. However, Committee Chair Mark Born (R-Beaver Dam) instructed legislators that there would be no discussion on the new budget and that questions regarding new proposals could wait until the Joint Finance Committee budget hearings.

DCF officials described how the W-2 work program has been transformed and made more efficient through performance-based measures. W-2 helps parents of minor children whose income is below 115% of the federal poverty level find and keep employment.

In 2014, over a third of the 34,529 W-2 participants were successfully placed in a job and the overall caseload has dropped by 19 percent since a peak in October 2013. Wisconsin Works is also in the middle of a pay-for-performance transition in which all contracted agencies will be completely funded on their outcomes by 2018.

Wisconsin Shares is another DCF program undergoing dramatic changes. The program helps pay for childcare when the state’s low-income parents are at work. By 2017, subsidy payments will be shifted to the parents in the form of an Electronic Benefits Transfer (EBT) card instead of payments going directly to the child care providers.

“It will give parents a more active roll in the services provided for their children,” described one DCF official. “We’ll be able stop the most common form of fraud, over reporting by providers. This shifts responsibility to the parent, where it should lie.”

Representatives from DHS spoke on Medicaid, Food Stamps, and WIC, a special nutrition program for women and children. There are now 1.2 million people receiving Medicaid benefits in Wisconsin, or 21 percent of the entire population. DHS Inspector General Allen White told the committee that his staff of 110 people recovers $18 for every dollar spent on Medicaid fraud prevention.

Over 400,000 households, or 823,000 individuals are on food stamps in Wisconsin. White claimed that most of the 200 calls they receive on their fraud hotline have to do with food stamp benefit sharing and selling. He also said that improved data analytics could help the department weed out fraud more effectively and that internal improvements are already underway.

Officials from DWD testified on their efforts to end fraud in the Unemployment Insurance (UI) program. The UI trust fund, payed for by taxes on state employers, has just moved back into the black after a January 2011 deficit of $1.4 billion. DWD officials attributed the return to solvency to economic growth and simple reforms bringing more integrity to the program.

A 2011 MacIver Institute story found that UI fraud had skyrocketed between 2008 and 2010, with overpayments jumping by $51 million and an increased caseload of 130 percent. A DWD report had also identified 37,000 cases of unemployment fraud in 2011 alone.

At Tuesday’s meeting, Representative Michael Schraa (R-Oshkosh) pressed officials on the details of a December audit showing the DWD had given out UI overpayments of $168 million between 2012 and 2014.

“In the corporate world, heads would have rolled and people would have been fired,” explained Schraa.

Schraa indicated that a meager 4 part-time employees had been tasked with UI fraud prevention up to 2014.

The audit also revealed that in fiscal year 2014 over 1.7 million calls to the department’s call centers were dropped because of full queues, representing 60 percent of all calls in the year. DWD representatives assured legislators that the problem had since been fixed and claimed that not a single call had been dropped since May 2014.

Tuesday’s committee meeting was informational only and no official action was taken.