MANKATO, Minn. – Congressional candidate Allen Quist was in town toting a budget balancing proposal he hopes will set him apart in this fall’s primary election.

Quist stopped by the Mankato Happy Chef this afternoon with policy expert David Feinwachs to talk about his plan for balancing the budget, namely eliminating $100 million in Medicaid fraud.

Quist says, “The centerpiece of my campaign is that we have to balance the budget. To move that way in 6 years or less we have to cut $200 billion from the budget. In Medicaid fraud, we’re talking about half of that.”

David Feinwachs, formerly with the Minnesota Hospital Association says, “Minnesota has never had an audit done on their programs. Despite the fact the HMOs say there have been audits, there’s never been a real independent, third-party audit that actually looks at underlying source documents. It’s never happened in 20 years and that’s incredible.”

Quist is competing with State Senator Mike Parry for the Republican nomination in the first Congressional District.

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1st District Republican congressional candidate Allen Quist is calling on DFL Gov. Mark Dayton to order an immediate audit of the state’s Medicaid program. Quist cited a recent U.S. House Committee on Oversight and Government Reform report that that blasts Minnesota’s oversight of its Medicaid program.

“If this report is accurate, then widespread Medicaid fraud is occurring in Minnesota and it may be in the neighborhood of $1 billion a year that is being wasted,” he said.

Joining Quist at a Capitol press conference was David Feinwachs, former counsel for the Minnesota Hospital Association who said he lost his job because he raised questions about how Minnesota was using federal Medicaid dollars. He testified at a congressional hearing last month about Medicaid fraud. He accused the state of using an accounting trick to bring in more federal Medicaid dollars and then using those dollars for other programs.

“This is completely unacceptible and as taxpayers we should be outraged,” he said.

Iowa Republican Sen. Chuck Grassley has launched a federal investigation into Medicaid fraud in Minnesota and across the country. Minnesota’s program came to Grassley’s attention after the state announced UCare was donating $30 million to the state. The federal government argued it was a reimbursements for Medicaid overpayments and that it should get half of the money. The state ended up agreeing to send half the money to the federal government. Minnesota Department of Human Services Commissioner Lucinda Jesson has said the problems with the state’s Medicaid program stem from contracts with HMOs that were signed during Republican Gov. Tim Pawlenty’s administration. The department issued the following statement in response to Quist’s criticism:

“The Minnesota Department of Human Services welcomes examination of its managed care contracting. DHS supported the recently passed HMO audit legislation as well as the financial audits of the plans currently underway that were ordered by Governor Dayton last year.”

Quist said the recent legislation that delays an audit of the state’s Medicaid program for two and a half years is simply unacceptable. The St. Peter Republican is running against Sen. Mike Parry, R-Waseca, in the August primary for the chance to take on DFL 1st District Rep. Tim Walz. Quist said there are estimates that addressing Medicaid fraud nationwide could save $100 billion. He said that would go a long way towards trying to solve the nation’s ballooning budget deficit.

Click here to  Download Medicaid fraud report

Government plays an important role in protecting its citizens from fraud. But what happens if government itself appears to be involved in fraud? Then the citizens themselves must ask that corrective measures be taken.

On April 25, 2012, two subcommittees under the U. S. Committee on Oversight and Government Reform held a joint hearing on waste, fraud and abuse in the Medicaid program. The joint hearing focused on the broader issue of Medicaid fraud, but singled out Minnesota, New York, and Texas for the most scrutiny.

In preparation for this hearing, the research staff of the U. S. House of Representatives Committee on Oversight and Government Reform issued a report, a report that is public information and is available here.

This Staff Report includes substantial evidence that large scale welfare fraud has been occurring in Minnesota. Specifically, the Staff Report, if accurate, indicates that a number of state employees and four Minnesota HMOs have been participating in large scale Medicaid fraud.

This Staff Report states:

Minnesota provides a stunning example of how states are failing to properly ensure the appropriate use of taxpayer dollars spent on Medicaid managed care. The state was intentionally lowering the rates paid to the managed care companies for plans outside the Medicaid program and increasing the rates within the Medicaid managed care program. Minnesota was using this accounting trick in order to leverage the federal reimbursement of state Medicaid spending. [Staff Report p. 3]

If the above statement is accurate, widespread Medicaid fraud has been occurring in Minnesota. And, the Staff Report states:

“Historically, DHS [Department of Human Services] rates set for General Assistance Medical Care resulted in health plan losses which were offset by higher Medical Assistance [Medicaid] payments. When GAMC moved out of managed care in mid-year 2010, Medical Assistance [Medicaid] rates were not lowered to reflect this overpayment.” [Letter from Nancy Feldman, President and CEO, UCare, to Minnesota State Senator David Hann (March 16, 2011), quoted in the Staff Report, p. 10]

If the above statement is accurate, widespread Medicaid fraud has been occurring in Minnesota. And, the Staff Report states:

Several months ago, US Senator Charles Grassley began an investigation of the managed care companies in Minnesota. Information obtained through his investigation shows that the four HMOs in Minnesota were offsetting significant losses in state-only health plans with earnings derived through the Medicaid program. Moreover, Minnesota was overpaying the HMOs for their Medicaid portfolio to such a large extent that Medicaid overpayments in Minnesota may even have offset commercial losses these companies endured. At the end of 2010, Minnesota’s four non-profit HMOs had a total surplus of $1.6 billion. [Pioneer Press, “Dayton HMOs Agrees to Profit Cap” (April 6, 2011).]  Since these companies were operating as non-profits, they essentially took their profits by increasing their reserves and paying their employees large bonuses. [Entire quotation from the Staff Report, p.11]

If the above statement is accurate, widespread Medicaid fraud has been occurring in Minnesota. And, while speaking of Medicaid waste, fraud and abuse nationwide, the Staff Report said:

No one knows how much of Medicaid’s budget consists of waste, fraud, and abuse, but it may exceed $100 billion a year. [Staff Report, p. 3]

If the above statement is accurate, then resolving Medicaid waste, fraud and abuse is a major factor in getting the burdensome federal debt under control.

(It should be recognized that if the federal government has been overcharged for Medicaid expenses, this has occurred at a time when those providing the Medicaid services—our hospitals, clinics, doctors, nurses and other staff—have been dealing with Medicaid reimbursement rates that are far below the cost of providing the services.)

(It should also be recognized that if the federal government has been overcharged for Medicaid services, then it is possible that the state treasury has also been overcharged.)

(Congresswoman Michele Bachmann is currently working on federal legislation intended to provide far greater federal oversight into the administration of federal Medicaid dollars in the future.)

Because of the seriousness of the above information and statements contained in the U. S. House Staff Report, it is essential that an independent, third party, financial audit of Minnesota’s Medicaid services be done as soon as possible.

Regarding this needed audit, on April 30, 2012, Governor Mark Dayton signed into law HF2294, a bill that calls for an audit of Medicaid services in Minnesota. The bill, however, delays such an audit until 2015 and stipulates that the audit will cover only transactions or policies in effect after January 1, 2014.

An audit beginning two and one-half years from now, covering nothing prior to 2014, that at best will occur after two more elections, fails to meet the concerns raised about Medicaid waste, fraud and abuse in Minnesota.

This audit is like a homeowner calling 911 to report an ongoing burglary and being told the police are coming—three years in the future!

And, if Medicaid fraud involving the state has not been occurring in Minnesota, as some claim, then why is the state unwilling to conduct a timely, independent third party audit?

We now must ask that a timely, third party, independent, financial audit be conducted so that transparency and accountability can be restored to Minnesota State Government. This audit is also required so that corrective measures, if needed, can be put in place and so that any money belonging to the state and federal treasuries, and ultimately to the taxpayers, will be returned.

And, one reason this audit needs to take place is to make it abundantly clear—that in Minnesota, no one is above the law.

About Allen Quist:

• Allen is a Republican candidate for congress in Minnesota’s First Congressional District.
• He served in the Minnesota House of Representative from 1983 to 1988.
• He was Chair of the Human Services Subcommittee in the Minnesota House from 1985 to 1986.
• He was Vice-chair of the Health and Human Services Committee in the House from 1985 to 1986.
• He was chief House author of the bill in 1985 that discontinued the Minnesota Department of Economic Security and created the Minnesota Department of Jobs and Training.
• In 2009 he discovered and made an issue of the huge marriage penalty in the new federal health care law.

About David Feinwachs:

• David was, for nearly 30 years, the general counsel for the Minnesota Hospital Association.
• He was the 2011 Recipient of the Minnesota Nurses Association Paul and Sheila Wellstone Social Justice Award.
• He was named one of Minnesota’s leading health care lawyers by Minnesota Physician Magazine in August 2005.
• He was the Director of the Center for Long Term Care Administration, 1994 — 2002, University of Minnesota Carlson School of Management.

With those words, Al Quist announced his intention to file for the First Congressional District primary election to be held August 14th.

“I was ahead on the last nine ballots, but I didn’t make it to 60%,” said Quist. “The May 12th follow-up convention, which I strongly supported and which the delegates approved, ran into insurmountable scheduling difficulties. Going to the primary is now the only reasonable course of action, since June 2nd is the earliest a new convention can be scheduled, if one is scheduled at all.” He clarified that waiting until June 2nd to begin his campaign with the general public is not an option.

Quist said he is optimistic that both primary and general election voters will respond favorably to his message of balancing the budget in six years or less without raising taxes. “Our national debt has almost doubled since Tim Walz was elected to Congress,” Quist said, “and since Mr. Walz has been unwilling to tackle the debt crisis, it is time for him to step aside and make way for someone who will get our nation back on track.”

Quist emphasized that, “The debt crisis threatens our ability to maintain a strong national defense. In addition,” said Quist, “the out of control debt, if not brought under control, will soon make it impossible to meet our commitments to Social Security, Medicare and Veteran’s Benefits.”

Al Quist pointed out that he is the only candidate running for first District Congress who has made a commitment to balance the budget in six years or less.

In a letter sent to First District delegates and alternates several days ago, Bachmann said: “I am writing to encourage you to support Allen Quist for First District Congress.”

Congresswoman Bachmann also said, “You should support Allen because he is someone you can trust.” And, “I don’t have to tell you that trust is a rare commodity in today’s political world.”

Bachmann additionally stated: “Because we are so close to financial default, we need to elect members of Congress we can trust to do whatever is necessary to balance our budget.” She emphasized that Allen Quist could be counted on to make the hard votes necessary to accomplish that goal.

Pointing to her working relationship with Allen Quist when both were working closely with EdWatch, the grassroots organization which successfully organized to repeal Minnesota’s Profile of Learning, Bachmann said, “The reason our organization did so much good was largely because of Allen’s intellectual firepower and courage. Many thousands of Minnesota students owe a huge debt of gratitude to Allen for his highly successful work with EdWatch.”

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