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By Sean Gorman March 23, 2014

Jimmie Massie says 30 percent of Virginia's Medicaid spending is lost to fraud and waste

Del. Jimmie Massie says expanding Medicaid basically amounts to throwing good money after bad.

In Virginia’s Medicaid program, "approximately 30 percent, or $2.7 billion a year, is lost to waste, fraud and inefficiencies," the Henrico County Republican wrote in a March 12 post on his Facebook page.

Massie has made the same claim repeatedly this year in maintaining that Virginia should not rush to accept federal funds available under Obamacare to extend eligibility in the state’s Medicaid program to 400,000 low-income and disabled people.

The General Assembly is starting a special session Monday to decide whether to expand Medicaid -- a partisan debate that is blocking passage of a two-year state budget. Massie and his GOP colleagues in the House refuse to broaden Medicaid before the state program has undergone a two-year audit.

We wondered whether Massie’s claim of 30 percent waste, fraud and inefficiency in Virginia’s $8 billion a year Medicaid program is accurate.

The delegate pointed us to a presentation in a December 2013 meeting before the Medicaid Innovation and Reform Commission, a panel seeking to streamline the state program. Massie sits on the commission.

In the presentation, Virginia Secretary of Health Bill Hazel noted that a 2012 report by the Institute of Medicine estimated that out of the $2.5 trillion in total U.S. health care spending, about $765 billion was lost to waste. That comes to 30 percent.

Hazel’s presentation included a pie chart showing that the national waste estimate, when applied to Virginia, equates to about $15 billion of the state’s $49 billion in annual, total health care spending.

Hazel did not break down the figure any further, but Massie did. The delegate extended it to the state Medicaid program and concluded that about one third of its funds, or $2.7 billion a year, is being wasted.

"I would be willing to bet the public sector is less efficient than the private sector, therefore the waste, fraud and inefficiencies in the public system is somewhat greater than 30 percent," Massie told us.

We contacted Hazel for his take on Massie’s comments. Hazel, who supports Medicaid expansion, said his waste chart has been taken out of context. "The folks who say that reflects Medicaid, I believe are misusing the information because I don’t think it directly applies to Medicaid," Hazel said.

We couldn’t find any figures on the amount of wasteful spending in Virginia’s Medicaid program and Hazel said a definitive estimate doesn’t exist.

Now, let’s return to the original source of the 30 percent estimate -- the national study by the Institute of Medicine. The 416-page report does not offer waste estimates for individual states, let alone the Medicaid program in a state.

Dr. Mark Smith, the chair of the committee that authored the IOM report, cautioned against taking the findings too far.

"My comment on the face of is that 30 percent of overall spending being wasteful does not necessarily translate into 30 percent of Medicaid being wasteful, let alone Medicaid in a particular state," Smith told us in an email.

We did find a study that offer broad insight into the amount of national fraud and waste major government health programs. In April 2012, a report in the Journal of the American Medical Association said that somewhere between $200 billion and $400 billion of the $1 trillion spent nationally a year on Medicaid and Medicare is wasted. That comes down between 20 and 40 percent.

The author of that report, Don Berwick, was President Barack Obama’s head of the Centers for Medicaid and Medicare Services and is now running as a Democrat for governor of Massachusetts. He told us he did not have additional figures specifically looking a Medicaid.

We should finally note that Virginia is an outlier state in many statistics measuring the scope of its Medicaid system. As noted in a 2012 report by the Joint legislative Audit Review Commission, the General Assembly’s watchdog agency, Virginia has one of the most restrictive Medicaid programs in the nation, both in terms of eligibility requirements and the services it provides.

Our ruling

Massie said that 30 percent of the Virginia’s Medicaid program is lost to waste, fraud and inefficiencies. He gets the figure by extrapolating an estimated amount of waste in all U.S. health care spending and applying it to the Medicaid program in Virginia.

The problem is that no study has ever quantified the amount of Medicaid waste in Virginia, so nobody knows. We don’t completely dismiss Massie’s number, because a variety of studies say 30 percent is a reasonable national gauge of the waste in the health system and in overall government health programs.

But Massie takes liberty in applying that rule to Virginia’s Medicaid system, one of the most restrictive programs in the nation. The burden falls on Massie to prove his statement and he offers nothing more than a hypothesis that he’s right.

So we rate his claim Mostly False.

Our Sources

Del. Jimmie Massie’s Facebook page, March 12, 2014.

Interviews with Del. Jimmie Massie, March 17-18, 2014.

Interviews with Bill Hazel, Virginia’s Secretary of Health, March 18 and March 20, 2014.

E-mail from Dr. Mark Smith, founding president and former CEO of the California HealthCare Foundation," March 18, 2014.

E-mail from Elizabeth Robinson, interim study director at the Institute of Medicine’s Committee on Core Metrics for Better Health at Lower Cost, March 19, 2014.

Bill Hazel’s presentation to the Medicaid Innovation and Reform Commission, Dec. 13, 2013.

The Institute of Medicine, "Transformation of health system needed to improve care and reduce costs," Sept. 6, 2012.

National Academies Press, "Best care at lower cost: The path to continuously learning healthcare in America," 2013.

Journal of the American Medical Association, "Eliminating Waste in U.S. Health Care," April 11, 2012.

Health Affairs, "Reducing waste in health care," Dec. 13, 2012.

Health Affairs, "Eliminating Fraud and Abuse," July 31, 2012.

Richmond Times-Dispatch, "House GOP leaders want audit to look for Medicaid waste," Jan. 27, 2014.

Centers for Medicare and Medicaid Services, "Historical NHE, including sponsor analysis," 2011.

Department of Medical Assistance Services, "Program Integrity in Virginia Medicaid," Dec. 17 2013.


Office of the Attorney General Medicaid Fraud Control Unit, "Health care fraud and elder abuse section," Dec. 17, 2014.


Interview with Don Berwick, former administrator of the Centers for Medicare and Medicaid Services, March 19, 2014.


E-mail from Rachel Thomas, spokeswoman for Gov. Terry McAuliffe, March 14, 2014.


Kaiser Family Foundation, "Five key questions about Medicaid and its role in state/federal budgets and health reform," May 1, 2012.


Congressional Research Service, "Medicaid financing and expenditures," July 30, 2012.


House Committee on Oversight and Reform, "Uncovering waste, fraud and abuse in the Medicaid program," April 25, 2012.


Joint Legislative Audit Review Commission, "Mitigating the risk of improper payments in the Virginia Medicaid program," January 2012.


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