Plug The Leaks In Your Cash Flow

Welfare Payment Errors Over $90 Million

The July 3, 2006 Rocky Mountain News has an article on page 4 about improper welfare payments--overpayment, underpayment and fraud--adding up to $90 million handled incorrectly. And it's not the first time. The auditing department found that there have always been problems.

• Medicaid $48 million (3% of payments-3 sigma)
• Food Stamps $36 million (14% of payments-2 sigma). $15.7 million overpaid; $7.5 million underpaid. USDA estimates that Colorado could have saved $8.2 million and served 80,135 new clients.
• Temporary aid $8 million (12% of payments-2 sigma)

Of course, all three welfare agencies questions the audit's findings.
Four years after Congress required states to track improper payments, neither the medicaid or needy family program had set up methods to track payments.

This is the sort of problem that can be easily tackled by Six Sigma's defect reduction efforts.

While automated tracking of these errors will take time to develop, a simple checksheet of errors could easily collect and analyze the types and causes of overpayments, underpayments and fraud for each of these three welfare programs. Then, root cause teams of welfare workers could identify the root causes and solutions to the most common kinds of problems (usually procedural) and reduce the error rates. And I can assure you that it wouldn't cost $8 million to find and fix most of these errors.

Jay Arthur, the KnowWareâ Man, works with companies that want to plug the leaks in their cash flow. Jay specializes in Lean Six Sigma for Health Care and Information Systems applications: ordering, billing, purchasing, and payments. He is the author of Six Sigma Simplified and the QI Macros SPC Software for Excel.

mailto:knowwareman@mindspring.com
http://www.qimacros.com
2253 S. Oneida St, Ste D
Denver, CO 80224

303-756-9144     (888) 468-1537

posted by Jay Arthur @ 6:28 AM