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Medicaid paid more than $50 million to health providers fired for bad conduct

The improper payments uncovered by the HHS Inspector General report potentially put patients' safety at risk, the watchdog says.

Golden Horseshoe
Golden Horseshoe
(Just the News)
Updated: April 5, 2020 - 7:52am

The Facts Inside Our Reporter’s Notebook


The Golden Horseshoe is a weekly designation from Just the News intended to highlight egregious examples of wasteful taxpayer spending by the government. The award is named for the horseshoe-shaped toilet seats for military airplanes that cost the Pentagon a whopping $640 each back in the 1980s. 

This week, our award is being given to the Centers for Medicare & Medicaid Services (CMS), a division of the Department of Health and Human Services, for unwittingly paying upwards of $50 million to nearly 1,000 health care providers who had been fired from state Medicaid programs.

During a global pandemic it would be reassuring to know that government subsidized medical providers who were in good standing and up to the task of caring for our nation’s sick. Alas, the HHS inspector general released a report this week detailing how few states monitor whether terminated healthcare providers remain on their payrolls.

"These providers had been terminated for reasons such as criminal convictions, licensure issues, and provider misconduct and thus potentially posed a risk to beneficiaries’ safety and quality of care," the IG report warned.

The 21st Century Cures Act includes a provision mandating that states do not spend Medicaid funds on items and services associated with terminated providers. That includes terminated doctors, but it also includes capitation contracts with Managed Care Organizations (MCO) that do not uphold the integrity requirements of the Cures Act.

The OIG report found that the Centers for Medicare and Medicaid Services paid at least $62.3 billion in capitation payments to physicians, clinics, and hospitals that did not uphold the terms of the Cures Act.

Additionally, the report found that only eight states had MCO contracts that upheld the integrity provisions of the Cures Act.

The report issued six recommendations. Notably that CMS should recover from the culpable 42 states the federal share of inappropriate Medicaid payments associated with terminated providers. The CMS should also follow up states to ensure that they have removed terminated providers in general, but specifically the ones identified by the IG, from enrollment in Medicaid programs.