A Republican effort to root out waste from one of the state budget’s costliest programs -- through a first-ever, comprehensive audit of Medicaid -- was stopped short in a Senate committee Thursday on a party-line vote.

Sen. Shawn Mitchell’s Senate Bill 116 was voted down 4-3 in the Senate Health and Human Services Committee. The audit would have taken a top-to-bottom look at the $3.3 billion-a-year health care program for the poor to ensure its funding is going where it should.

Mitchell, R-Broomfield, said the audit is vital not only because of the size of the Medicaid budget but also because its cost has been soaring for years. The senator says he was disappointed at the committee vote because now, more than ever, it is important to uncover any of Medicaid’s shortcomings before the state moves forward with any other health care coverage reforms – including and especially policy shifts that could involve Medicaid in some way.

Committee member Dave Schultheis, R-Colorado Springs, who voted with the minority in favor Mitchell's audit, said the measure also could have helped sift out any Medicaid fraud by recipients who are in this country illegally.

"I have strong concerns that there still may be people illegally in Colorado who are receiving Medicaid to which they are not entitled," Schultheis said after the vote.

During the debate, the committee's chair, Sen. Bob Hagedorn, D-Aurora, objected that Medicaid already has been undergoing annual audits, but Mitchell pointed out those audits have been focused on specific features of the program. Mitchell's audit would be an annual review of every aspect of the program.

A U.S. General Accounting Office report found that the federal government's efforts to stem fraud and abuse in state Medicaid programs are insufficient, opening the door for states to do more.

“We need a clear picture of what we are spending so we can know if we are getting our money’s worth,” Mitchell said. “That’s important because there are some who would have us embark on major expansions of Medicaid coverage, as in some other states, without assuring that the program is sound right now. I want a thorough review to shed light on any inadequacies.”

Among the audit’s aims were to ensure:

• No Medicaid recipients are receiving benefits for which they are ineligible.
• Medical services rendered under Medicaid are in fact eligible for reimbursement.
• Legally required fees are collected from recipients.
• Claims for Medicaid reimbursements are legitimate and substantiated.
• Providers are meeting program requirements.
• The program’s internal controls and supporting documentation are able to prevent fraud and other abuses.
• The state is improving accountability over the entire program.

“Without this kind of a big-picture overview, we cannot know how or if Medicaid eligibility can be responsibly expanded, as some advocate,” Mitchell said. “Particularly for those who see Medicaid as the basis for other health care coverage reforms, this audit is the first step.”

Linda Gorman, who directs health care policy for the Golden-based Independence Institute, agrees that talk of expanding upon Medicaid is premature if the soundness of the program at present isn’t assured. She also said the state owes it to the public to do a thorough audit.

“Taxpayers deserve to know if their Medicaid dollars are being spent as they should be,” Gorman said, noting that there has been fraud in other states.

“Every Medicaid dollar spent on someone who shouldn’t be getting coverage is shortchanging someone who really is eligible,” she said. “This is a zero-sum game.”