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Glut of improper payments has states searching for new ways to weed out Medicaid fraud, abuse

by Kate Tormey ~ September 2013 ~ Stateline Midwest »
In fiscal year 2010, 9 percent of state Medicaid payments — totaling $11 billion — were considered “improper” by federal standards.
Many of these payments were due to clerical mistakes or flagged because of insufficient documentation, and were not necessarily payments that shouldn’t have been made. But the category of “improper” payments also includes spending attributed to fraud and abuse — the focus of a recent Pew Charitable Trusts report.
Matt McKillop, a health policy expert at Pew, notes that abuse and fraud are different.
Fraud is intentional deception or misrepresentation on the part of the patient or provider — such as a beneficiary providing false information on an application or a provider billing for services not performed.
A patient or provider that commits abuse is using practices that are “inconsistent with sound fiscal, business or medical practices” and that result in an unnecessary cost. An example would be seeking reimbursement for services that aren’t medically necessary.
Fraud and abuse can be committed by both providers and patients, but most state anti-fraud strategies are focused on providers. States can get the most results out of closely monitoring how doctors, hospitals and other providers are paid, McKillop says.
One way to do this is to more thoroughly vet providers and exclude those who have a history of questionable practices. Some states conduct random audits, criminal background checks and visits to providers.
Michigan prevents providers from billing Medicaid if they have not renewed their license. The program links a provider enrollment system with the state’s medical licensing bureau; this keeps providers who have lost their licenses (or have retired or moved) from receiving Medicaid dollars.
McKillop says that states must strike a balance between eliminating improper payments and avoiding burdens that discourage honest providers from accepting Medicaid patients, which could potentially decrease access to care.
Another option is to strengthen review of claims before they are paid.
According to the U.S. Centers for Medicare and Medicaid Services, vendors of medical equipment (such as wheelchairs), home health agencies, transportation providers and personal care services are more likely to commit Medicaid fraud. States can run these types of claims through additional checks to catch inconsistencies.
In the area of prepayment review, Kansas requires claims for transportation services to be verified by the physician providing the care. Other ideas include requesting patient records to verify medical necessity and having patients swipe a benefit card at each visit to prove they had an appointment.
Also, states can comb through past claims to detect improper payments and then recover funds, a practice sometimes called “pay and chase.” And Illinois has a predictive tool that can detect problem providers early on, Pew reports. That state also has hired a firm to examine its list of Medicaid beneficiaries and determine which ones no longer meet eligibility requirements and therefore should be taken off the rolls.
Addressing fraud and abuse can be a delicate “balancing act”: preventing unnecessary spending while not overburdening honest providers. The rewards, however, can be great; in fiscal year 2009, Pew says, states spent $390 million on “program integrity” measures and recovered nearly six times as much — $2.31 billion.
Pew’s database of promising anti-fraud practices is available online.


Article written by Kate Tormey, staff liaison for the Midwestern Legislative Conference Health & Human Services Committee. The committee's co-chairs are Iowa Rep. Joel Fry and Minnesota Rep. Kathy Sheran.