Providers blamed for most Medicaid fraud

More Medicaid fraud is said to result from provider dishonesty.
Wednesday, March 23, 2005 | 12:00 a.m. CST; updated 1:51 a.m. CDT, Friday, July 11, 2008

When Gov. Matt Blunt announced plans to drastically reduce Medicaid services in Missouri, he set his sights on “well-documented instances of individuals defrauding the Medicaid system and costing taxpayers millions of dollars each year.”

As it turns out, the actual numbers squash the myth of the stereotypical Medicaid queen sucking most of the money from a broken system.

According to state officials, health care providers who commit Medicaid fraud are far more responsible for financial losses than individual defrauders.

Medical providers who defraud the system cost the state at least $17.5 million in the most recent fiscal year, according to Jim Gardner, a spokesman for the state attorney general’s office. Information regarding number of cases and estimated total cost to the state was not available.

By contrast, Medicaid eligibility fraud cost Missouri about

$1 million in the 2004 fiscal year, according to the state Department of Social Services. Medicaid recipients commit eligibility fraud by receiving benefits for which they are ineligible.

The department’s Welfare Investigation Unit investigated 243 cases of recipient fraud in the most recent fiscal year for a total loss of $1,091,061. In fiscal 2003, the unit investigated 306 cases, which accounted for losses of $982,737. The unit recovered less than 20 percent of the money lost each year.

Blunt has made Medicaid reform one of his top priorities. In his proposed state budget, the governor wants to cut Medicaid spending by making at least 40,000 Missourians ineligible to receive benefits, while also eliminating some services. Last week, the state Senate approved a bill containing Blunt’s Medicaid cuts. The measure now moves to the House.

“They (Medicaid costs) are outpacing the program. Without a tax increase, state taxpayers can’t afford the cost,” said Jessica Robinson, Blunt spokeswoman.

Blunt delivered his comments about “well-documented” Medicaid fraud by individual recipients during the annual State of the State address. The governor based his statements on an audit done by State Auditor Claire McCaskill — a Democrat whom he defeated in the November 2004 election — and another audit done by the state House of Representatives.

McCaskill’s audit evaluated the “procedures used by the Department of Social Services to determine Medicaid eligibility” and program costs due to recipients who should have been ineligible to receive benefits. The audit, which was reported in April 2004, evaluated numbers from 2003.

Medicaid fraud falls under two categories: recipient fraud and provider fraud. The attorney general’s office typically deals with provider fraud. The Medicaid Fraud Control Unit, which is part of the attorney general’s office, handles large Medicaid fraud cases referred by the Department of Social Services.

In the most recent fiscal year, the unit won eight criminal convictions and recovered more than $17.5 million, Gardner said. In 2003, the unit had 18 convictions and recovered $5.2 million.

In six of its settlements, Missouri was among a group of states to receive money from lawsuits brought against national drug companies.

Billing fraud can take several forms. One is a “bill-no-fill case,” which is the nickname for a case where a pharmacist bills Medicaid for prescriptions that patients have not ordered, Gardner said.

Other cases involve health care providers who bill Medicaid twice for the same service and over-billing of hours.

Even though health care providers account for the vast majority of the money lost to Medicaid fraud in Missouri, problems with individual defrauders continue to plague the system, the McCaskill audit showed.

The audit revealed that 41 percent of Medicaid recipients had not gone through an eligibility review within the past year. These reviews are required by federal and state regulations.

“Officials said caseworkers could not keep up with their current workload given staffing available under current budget limits,” the audit concluded.

In response to the staffing shortage, Blunt wants to “provide administrative support and appropriate training” to caseworkers, Robinson said. There is no plan to increase the number of caseworkers.

“Eligibility checks may also help to decrease caseworker loads,” Robinson said

The McCaskill audit also found a rash of overpayments to the families of children who continued to receive benefits beyond the cutoff age of 19. The audit found 2,510 recipients who were over the age limit and received a total of nearly $1.3 million.

Another problem was that 1,112 deceased individuals were still receiving benefits that added up to at least $144,000.

On the other side of the spectrum, 111 recipients began receiving benefits before they were born, which cost at least $35,000. This was attributed to a “system edit” that was not “applied to newborns being added to the mother’s case.”

The audit found other common problems: Caseworkers were not getting Social Security numbers from recipients and recipients’ wages were not being verified.

Blunt’s only concrete plan to prevent Medicaid fraud is to make eligibility reviews annual, which is already required by law, if not enforced.

“The driving force for the changes was providing Missourians the best value for their dollars,” Robinson said.

The actual cost of Medicaid fraud in Missouri is likely higher, officials said, because of the cases that are not found.

DSS officials hope that Blunt’s stated emphasis on eligibility reviews will help reduce Medicaid fraud.

“It is difficult to perform all tasks with a limited number of staff. Certainly, we do everything to combat fraud everywhere we find it,” said Deb Hendricks, a DSS spokeswoman. “With the current budget limitations, we will be doing all we can with the budget we have.”

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