In 2007, Western Pennsylvania Child Care (WPCC) spent taxpayer dollars meant to house and counsel juvenile delinquents on limo rides to an NCAA basketball tournament game and the King of Prussia mall. WPCC executives also enjoyed a chartered fishing trip and a custom-made suit. Together these welfare abuses totaled $84,000.
We aren’t just seeing naked fraud in our welfare system—we’re also enabling waste and inefficiency. In another case involving the provider Lynch Homes, taxpayers paid twice for mortgages on the same homes, and then paid rent for them, totaling more than $1 million in duplicated payments.
Taxpayers reimbursed Lynch Homes for mortgage payments on group homes for the intellectually and developmentally disabled. On top of that, taxpayers were on the hook for a rent-like usage fee of 8 percent and the cost of routine maintenance. In 2011, Lynch Homes sold the homes to provider Kencrest, and though the properties were fully paid up, the Department of Public Welfare’s (DPW) labyrinthine system allowed Kencrest to take out brand new mortgages and get reimbursed for them.
How could this happen? Providers in the welfare system work under a host of fragmented and unclear payment policies filled with loopholes and a generous amount of wiggle room. The Commonwealth Foundation’s recent analysis of provider audits highlights six cases of reverse Robin Hoods who game the system to the detriment of the truly needy—effectively getting rich off the poor.
New rules promulgated by DPW last week seek to prevent future abuses by setting clear reimbursement rates for intermediate care providers and home and community-based service providers.
Instead of reimbursing a provider on whatever costs they report, the new rules set a standard payment for services. Providers can apply for a waiver to receive additional funds, but only under limited circumstances. The new rules also mandate that income from the sale of assets paid for by taxpayers be reinvested back into programs. Providers can no longer make a profit by selling taxpayer-funded homes.
The new rules for home and community-based providers are expected to save taxpayers about $8 million in 2011-12 and prevent the abuses of those seeking to get rich off the poor.