NEWT GINGRICH: Want to reform Medicaid? Accountability is the way forward
Thirty years ago this summer, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act. Welfare reform succeeded because it recognized a simple but powerful truth: public programs work best when they reward responsibility, accountability and innovation.
States make better decisions when they have both authority and responsibility for the results. By giving governors greater flexibility while also making them more accountable for the outcomes, we encouraged states to rethink old assumptions, experiment with new approaches and become better stewards of taxpayer dollars. Good intentions alone do not produce good government. Incentives matter.
That lesson is just as relevant today.
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Since returning to office, President Donald Trump has made rooting out waste, fraud and abuse a hallmark of his administration. Early in that effort, Elon Musk remarked that the Centers for Medicare and Medicaid Services (CMS) was "where the big money fraud is happening." He was right. Few areas deserve more scrutiny than Medicaid, which involves hundreds of billions of taxpayer dollars and the nation’s largest federal-state partnership.
CMS Administrator Dr. Mehmet Oz has made strengthening Medicaid program integrity a national priority, launching a 50-state initiative to improve provider oversight while expanding efforts to combat waste, fraud and abuse across a range of healthcare services.
Those investigations deserve praise. But they also reveal something much larger than misconduct by a handful of providers.
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The real challenge is not simply fraud. It is that Medicaid's current financing structure often creates incentives that make waste, fraud and abuse more likely while making sustained, effective oversight more difficult.
Human nature is predictable. Whenever government creates a system involving hundreds of billions of dollars, services that are difficult to measure, and payment models that reward volume, some people will exploit it. But the larger problem is program design. Unlike welfare after the 1996 reforms, Medicaid remains a joint federal-state program in which Washington pays a substantial share of additional dollars states spend. States therefore do not bear the full fiscal consequences of program growth, even while facing intense political pressure from provider organizations, advocacy groups and local employers whenever stronger oversight is proposed.
The result is a predictable imbalance. Everyone supports eliminating fraud in theory. The political incentives to aggressively pursue it are often much weaker in practice.
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Applied Behavior Analysis (ABA) therapy illustrates how this plays out in practice.
Federal law required Medicaid coverage of ABA beginning in 2014, and spending has grown dramatically across the country. Most providers are dedicated professionals who help children with autism develop critical skills and lead more independent lives. Families deserve access to these services.
But the combination of rapidly growing spending, payment based on billable hours, and inconsistent oversight has also made ABA vulnerable to waste, fraud and abuse. Federal investigators have uncovered improper billing. Whistleblowers have described business practices that rewarded maximizing billable services rather than improving patient outcomes. In some cases, investigators have even uncovered disturbing allegations of abuse against vulnerable children.
This does not mean ABA is the problem. It means incentives matter.
The goal is not to spend less on children with autism. It is to make sure every dollar intended to help those children reaches them.
The same incentive problems have surfaced in other parts of Medicaid as well, including hospice care, home health services and medical equipment. These are different providers, different services, but the same underlying lesson: When accountability fails to keep pace with spending, bad actors eventually find ways to exploit the system.
Georgia illustrates another dimension of the challenge. The Department of Community Health and the state’s Medicaid-managed care organizations have moved to strengthen oversight of ABA services. Yet, those efforts have faced significant political resistance from legislators and provider groups concerned about funding and access. Protecting access and protecting accountability, however, are not competing goals. Families deserve both.
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State legislatures should support — not undermine — the efforts of Medicaid agencies, managed care organizations and the Trump administration to strengthen program integrity. Honest providers should welcome stronger oversight because it protects both vulnerable families and the reputation of those delivering high-quality care.
Thirty years ago, welfare reform demonstrated that lasting public policy improvements begin by aligning incentives with the public interest. Medicaid needs the same lesson today.
Government works best when its rules reward responsibility rather than dependency, accountability rather than complacency and results rather than spending for its own sake. Thirty years after welfare reform, this lesson remains every bit as important as it was in 1996. If we want to reduce Medicaid waste, fraud and abuse, we must build a system with incentives that make integrity the easiest path — not the hardest.
Gingrich 360 consults with various organizations in the healthcare industry which would be impacted by the policy reforms described in this column.