A new state program being considered in the Montana Senate would require more verification checks for state and federal assistance programs like Medicaid and the CHIP program used for children.
Senate Bill 100 would create a new division of more than a dozen staff members who would be necessary to check on the eligibility of more than 100,000 Montanans enrolled in several social services programs. The bill’s sponsor, Sen. Cary Smith, R-Billings, said he’s carried similar measures previously, and said it’s imperative to make sure the state stretches its social services dollars as far as possible while ensuring that only residents who meet the qualifications are enrolled in the program.
Opponents of the measure say it grows government bureaucracy, seeks to boot already vulnerable kids, families and seniors from safety-net programs, and would not be cost effective.
A fiscal note attached to the bill describes the mechanics of the program which would require every participant in several large social services program to be checked for eligibility once every six months. The bill also mandates a vendor, like Lexis-Nexis or Equifax to provide verification checks on things like income and assets.
“We are all concerned about the high costs of healthcare and other benefits,” Smith said. “We want to make sure we can stretch them as far as we can. We want to make sure the money gets to the people who are most deserving of the benefit and we don’t have money for people who don’t qualify.”
The program would require 13 new full-time positions, including those who would handle the increased verification and those who would review any possible discrepancies from what applicants submit and what the verification process discovers.
“These programs will flag concerns, but these checks won’t kick people off the system,” Smith said, countering opposition that is concerned the legislation is a tool to boot people from these social service programs.
If a verification flagged something inconsistent or questionable, that would be turned over to a Department of Public Health and Human Services staff member. The program would also hire at least two fraud investigators working for the Department of Justice. The fiscal note estimates that 50 cases per year would likely be identified from the more than 100,000 people enrolled in the programs.
Fellow Billings Sen. Jen Gross, a Democrat, wondered why so much money and a new office was needed, and if it was cost effective.
Smith told the Daily Montanan that program will actually put money back into state coffers, and the fiscal projections bear that out. For example, in 2022, the first year of the program’s existence, the fiscal note estimates a net impact of $1.4 million to the general fund.
“SB 100 creates an expensive government program that adds red tape and threatens to kick thousands of eligible kids and low income Montanans off their health care. I have concerns that the fiscal note is underestimated — we’ve seen similar policies implemented in other states that ended up costing states more money,” Gross said.
Smith called opponents’ concerns about targeting lower-income residents “nasty accusations.”
Smith explained that because eligibility for these programs is continuous, but life circumstances change rapidly, he suspects many of the people on the programs may no longer qualify. For example, he said that sometimes recipients of food benefits, called Supplemental Nutrition Assistance Program, may move out of state. When situations like that happen, residents who move should no longer be using the Montana program, rather they should qualify for programs in those other states.
He said that eligibility requirements from these state-and-federal programs constantly change, and even those enrolled in the programs may not know about the changes.
“They just don’t know that they may no longer qualify,” he said. “We’re not saying that most people are trying to commit fraud.”
That wouldn’t be classified as fraud, but it would result in a savings because the state would not spend the money.
The estimate of $1.4 million going back to the general fund – which would later increase to more than $2.3 million – would be funded by the savings gained from a stricter, more regular enforcement of the programs’ requirements.
He also said that if the verification program isn’t realizing the cost savings, Smith said he’d be willing to revisit the idea of shutting it down.
“Sure, if that analysis proved that it wasn’t saving, that’s what would happen,” he said.
The programs that would be subject to these comprehensive verification include. Medicaid for adults, SNAP, Children’s Health Insurance Program, and Temporary Assistance for Needy Families.
Setting up the program and the technology to get the various programs communicating with each other will take more than $1 million and roll out during the course of 24 months, according to the fiscal note.
The state would also contract with a third-party vendor to provide information, like income verification. Smith said that no additional paperwork will be created, and it’s only when discrepancies are found will more information be needed. He said that a problem could be as minor as a name misspelled in a database which may make it appear that there are two different people. However, using that same scenario, he said that changing a name could be a way to get more benefits so that either way a state employee needs to verify and fix the situation.
DPHHS estimates that the staff would be verifying more than 110,000 cases at least twice a year. Furthermore, it estimated that 20 percent of those will be flagged for review because of a discrepancy. The fiscal note also pointed out the new program would create significant churn in the Medicaid and CHIP programs. Churning means a resident who exits but re-enters the program within four months, meaning the verification process must be started anew.
The fiscal analysis said that churn rate would create nearly 7,000 new applications yearly and take three full-time positions to process.
“Montana already has an approved process to check eligibility,” Gross said. “The fiscal note makes clear this program would cost millions of dollars while acknowledging the program would find only 50 new suspected cases of fraud each year,” Gross said.
Opponents of the bill have also raised concerns that the company which stands to profit the most from this legislation also had a hand in drafting the legislation.
Email correspondence between lobbyists and lawmakers show that Equifax was involved in reviewing and drafting the legislation. Several emails reference the company reviewing the drafts of the bill.
If passed into law, the state would be required to use a competitive bidding process for the verification system, but because of the limited number of vendors who could process this type of work, only a handful are likely qualified, including Equifax.
Smith defended the participation of the company because he said the state doesn’t have its own software for verification that would be needed on this scale. Therefore, it was necessary to seek out a vendor that had experience for reasonable estimates and to warn of any potential pitfalls.
“We don’t want to grow government. We want to save,” Smith said. “We wanted to bring them into the discussion to implement the bill because they are already doing this work.”
Further concerns were raised because Gov. Greg Gianforte, who would presumably sign the bill that appears to have Republican support, has more than $50,000 of stock in the parent company which owns Lexis-Nexis, according to personal finance disclosures. Lexis-Nexis, along with Equifax, is one of only a handful of companies that would likely vie for the state contract.
In a statement to the Daily Montanan, Gianforte’s spokesperson Brooke Stroyke responded to these concerns.
“Governor Gianforte’s blind investment agreement, which he entered into before being sworn in as Montana’s congressman in June 2017, remains in effect. As such, he continues to honor his promise that he would have no conflict of interest as he serves Montana. The governor has no control over investments. His blind investment agreement takes management away from the governor, puts an investment manager in charge of the governor’s investments, and bars communication between the investment manager and the governor,” she said.
The bill has been referred again to the Senate Finance and Claims Committee after passing two readings in the Senate. That was before a revised fiscal note was released.