The war against fraud should be a war for tech modernization

In her March 18 article (“Trump’s anti-fraud task force poised to scrutinize benefits programs”), Nextgov/FCW Senior Correspondent Natalie Alms reported on a new executive order formally establishing a task force to combat fraud in America’s public benefits programs. 

The task force will focus on ensuring states — and, in 12 states, including California and New York, county governments — have adequate anti-fraud controls in place. If controls are deemed inadequate, the Trump administration may withhold funds for submitted and prospective claims, as recently demonstrated in Minnesota and New York. In addition, as Alms points out, the task force has been directed to address longstanding challenges associated with limited data sharing between state and federal governments. 

To be sure, fraud is a real issue in public benefits programs. But while there certainly are cases of individual malfeasance, the data clearly show that the vast preponderance of improper payments (in Medicaid alone, the number could be as high as $30 billion or more) result not from individual cheaters, but from arcane systems and processes that are simply not suited to the size and scope of our current benefits infrastructure. 

Simply put, as the executive order suggests but doesn’t highlight, the biggest issues affecting the integrity of our benefits programs are not “fraud" per se; rather, they lie in a lack of data sharing, inadequate and outdated tools and an overly complex web of programs, restrictive administrative requirements and processes. 

Think of it this way: a war on fraud is certainly welcome, but we would do better to think of it as a war for tech modernization — overcoming the limitations of legacy systems and orthodoxies that drive improper payments and in many ways enable actual fraud. 

Moreover, real, impactful change will not happen by fiat; it’s not enough to simply say a state “must” implement systems to track and validate (or not) beneficiary eligibility or payments. Doing so requires funding, expertise, collaboration between all levels of government, a willingness to tackle organizational disconnects and the flexibility for states to utilize tools and providers best suited to their unique situations. 

Take Minnesota, for example. It is one of a dozen states where benefits are administered at the county level, and it has 87 counties. What it doesn’t have, however, is an effective system to track beneficiaries when they move. So, when someone moves from county A to county B — which happens all the time — there is no system in place to notify Medicaid. As a result, Medicaid will start paying two different counties for coverage of the same person. In a state the size of Minnesota, that amounts to significant taxpayer money; aggregated nationwide, the cost easily goes into the billions.

The point is this: improper payments, including individual fraud, are mostly a problem of aged technology coupled with outdated administrative rules and organizational constructs that hamstring governments at all levels. 

Even in Minnesota, where we witnessed massive COVID relief fraud, the perpetrators were not individual beneficiaries but organized criminal entities which were able to exploit the state’s lack of modern technology — which otherwise would likely have detected their actions far sooner. 

To add to the challenges, federal financial support to states for administering key benefits programs — such as SNAP nutrition assistance — is being reduced by roughly 50%, even as the (rightful) demands to root out fraud and waste grow.

With that in mind, the new anti-fraud task force must be a vehicle for two critical initiatives: First, a broad rethinking of administrative policies — including giving states and, where relevant, counties greater flexibility in how they administer the programs, deal with endemic workforce shortages and more. 

This must include serious proposals to break down longstanding departmental, organizational and data silos, create integrated eligibility and administrative processes that can help harmonize and simplify the vast array of related programs, many of which serve the same families and rely on the same data to determine eligibility. 

At the same time, the task force should be a vehicle for a concerted national effort to modernize the technologies that undergird the array of programs. A successful effort will require significant investments of tax dollars at the federal, state and local levels. As daunting as some of those investments might seem, when compared to the amount of money wasted today, it will be pennies.

Combating fraud is a noble exercise, but combating longstanding systemic barriers to innovation and performance is, in many ways, harder. Yet, its returns will be exponentially greater, improvements in program integrity will be more significant and the resulting restoration of trust in programs that serve those most in need will serve us all.

Stan Soloway is chairman of the National Academy of Public Administration and chair of the Center for Accountability, Modernization and Innovation, which advocates for innovations in public services delivery.