GAO: States not doing enough to fight fraud
GAO: States not doing enough to fight fraud
House Energy and Commerce Committee Chairman Billy Tauzin (R-LA) released a General Accounting Office (GAO) report last week that contends that most states are not doing nearly enough to control improper Medicaid payments. Worse yet, the GAO says there are not even any reliable estimates of the extent of improper payments across the $221.6 billion spent by state Medicaid programs.
"Hopefully, this report is a wake-up call to many states," Tauzin said July 11 in releasing the report "Medicaid: State Efforts to Control Improper Payments Vary." Committee staffer Vicki Riley says the next likely step will be congressional hearings. However, no date has yet been set, and it is not at all clear what steps Congress may consider to remedy the problems.
The full scope of Medicaid fraud is impossible to gauge because few states measure the overall accuracy of their payments, according to the GAO. State efforts to identify billing mistakes and fraud are hard enough to begin with. But the GAO says that "lax administration" in many states, including California, open the door to rampant fraud.
Despite the crackdown in fraud involving federal health care programs, the GAO found that efforts by state Medicaid agencies are modest and unevenly funded. The audit also uncovered that half of all state Medicaid agencies reported spending far less than 1% of expenditures on program protection efforts. "Half of the states spend no more than one-tenth of 1% of program expenditures on activities to safeguard program payments," says the GAO.
States also differ in their use of tools to help prevent improper payment, such as computerized checking of claims before payment is made and site visits to providers where fraud is suspected. Despite the increased coordination of various state and federal agencies in this area, that varies considerably across states as well, says the GAO.
That may be changing. Forty-seven states and the District of Columbia now have Medicaid Fraud Control Units, which are responsible for investigating and prosecuting Medicaid provider fraud, patient abuse, and financial fraud.
Some states, such as New York, are aggressively targeting Medicaid fraud. "In most of our criminal cases, we bring about restitution," says Kevin Ryan of the New York office of Attorney General Eliot Spitzer. He notes that just last month, the Attorney General announced that the owner of a Williamsburg drugstore was arrested for stealing more than $1 million from the Medicaid program by fraudulently billing for thousands of expensive drugs that were never dispensed to patients and sometimes not even kept in stock.
The illegal billings took place between January 1998 and August 2000. Among the 36 different medications improperly billed for were Prozac, Zantac, Diflucan, Buspar, Zoloft, Retrovir, and Paxil.
Other recent actions in New York state include the following:
- On June 26, Spitzer announced that the owner of a New York transportation company and his dispatcher admitted to stealing more than $500,000 from Medicaid by fraudulently billing for hundreds of rides that never took place.
- On March 15, a substance abuse treatment center in Suffolk County agreed to make full repayment of the more than $2.3 million it overbilled taxpayers. An investigation revealed that the center substantially overstated its true operating costs by including personal expenses such as golf outings as "salaries" for its owner’s wife and daughters.
- On March 15, Spitzer announced that an alcohol treatment facility in Kerhonkson agreed to repay taxpayers $670,000 for improperly billing for inpatient alcoholism services. Between January 1995 and September 1997, the facility received Medicaid reimbursement for inpatient and residential rehabilitation services where there was not adequate medical supervision of the physician’s assistant administering the care.
While the magnitude of improper payments is unknown, the GAO says that at least three states-Illinois, Texas, and Kansas — have conducted studies to try to determine the payment accuracy rates and pinpoint vulnerabilities.
In 1998, Illinois reported an accuracy rate of 95%, with nearly one-third of nonemergency transportation services found to be in error. The same year, Texas estimated an accuracy rate of only 89.5%. That rate now is on par with Illinois since Texas expanded its use of computerized fraud detection tools. In January, Texas reported an accuracy rate of 92.8% for its acute care fee-for-service payments.
Many states may not be faring that well, however. Last year, Kansas estimated an accuracy rate of only 76%. Among the leading causes were missing or insufficient documentation supporting claims, upcoding, and payments for services that were not medically necessary.
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