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Medicaid Fraud Control Units Recovered $1.8 Billion in 2016

The use of fraud investigators allowed OIG to combat billions in Medicaid fraud, but with varying state-by-state results.

Fraud investigators combated millions in Medicaid fraud

Source: Thinkstock

By Thomas Beaton

Data released from the Office of Inspector General (OIG) showcases the investigations, convictions, settlements, and billion-dollar recoveries of Medicaid fraud by Medicaid Fraud Control Units (MFCUs) across the county.

MFCUs coordinated over 18,000 investigations for Medicaid fraud and neglect, where fraud made up 15,509 of that total. The results of the investigations led to a total recovery of $1.8 billion, but only $368 million of that were criminal recoveries from fraud practices.

Medicaid is at risk for significant fraud, ranging in the billions because of the rise of home health services. Potential criminals have demonstrated the ease with which they exploit the system. The Centers for Medicaid & Medicare Services (CMS) brought forward several initiatives to combat Medicaid fraud, but require other government bodies such as OIG to assist in large-scale anti-fraud effort.

“Well, while we hear a lot about Medicare fraud, involving the program for the elderly and the disabled, total taxpayer costs are actually higher in Medicaid, than in Medicare, with total yearly expenditures for Medicaid of over $500 billion dollars,” said Richard Stern, OIG Director of Program Oversight for Medicaid Fraud Units in a recent podcast.

“And fighting fraud in Medicaid can be especially challenging. Each state runs its own program, so the rules vary from state to state. And we don't have good data at the national level. As we often hear, once you've seen one Medicaid program, you've seen one Medicaid program.”

READ MORE: How Medicare, Medicaid, and CHIP Guide the Health Payer Industry

The results of the 2016 data reveal that on a state-by-state basis, there were many inconsistencies in MFCU resources spent versus the actual criminal fraud recoveries.

The state with the most investigations, Indiana (1,745), did not crack the top five for convictions, settlements, or criminal recoveries. However, California had the second most investigations for fraud at 1,735 and the most convictions with 173 throughout 2016. The next three states with the most investigations were Ohio (1,460), Texas (1,367), and New York (707).

Investigations for fraud did not always correlate to the number of convictions. Pennsylvania, a state that did not have many investigations, ranked fourth in the country with 81 convictions for Medicaid fraud. Arizona and Louisiana both tied for fifth with 75 convictions.

The same happened within states with higher civil settlements and judgments. Colorado ranked much lower in total investigations but had the highest amount of civil settlements in 2016 with 97. There were not many civil settlements and judgments for Medicaid fraud nationwide, as Utah had the fifth highest with 39. No state had over a hundred suits for fraud.

However, states that generally with the highest totals for investigations and convictions found themselves in the top five for either fraud recovery totals or MFCU expenditures.

READ MORE: GAO: Erroneous Medicaid Claims Data Pose Fraud Risk at CMS

Texas (53,618,692), California ($27,240,288), and Ohio ($23,031,251) respectively ranked 3rd, 4th, and 5th in the greatest number of criminal recoveries. These states also ranked in the top five for investigations in Medicaid fraud.

A significant outlier for recovery amounts was Florida, where the MFCUs recovered $101,059,813 in Medicaid fraud, the highest by far of any state in the country.

“We work with the Florida MFCU quite a bit. And there are several cases that come immediately to mind. First, working with the Florida MFCU, we charged 10 owners of a Miami-Dade county Assisted Living Facility with health care fraud and receiving illegal cash kickbacks in return for referring residents to a specific pharmacy,” said Shimon Richmond, Special Agent in Charge in Miami.

“The pharmacy owner was sentenced not long ago, to federal prison and ordered to pay back more than a million dollars to the Florida Medicaid program. This ring was exposed by joint efforts between OIG agents and MFCU agents working in undercover capacity.”

The MFCUs spent the most combating fraud in New York, with expenditure amounts of $47,018,833. California, Texas, and Florida were next in line for spending amounts for MCFU efforts, respectively.

READ MORE: Are Skilled Nursing Facilities Fraudulently Billing Medicare?

The data shows that even though MFCUs brought in sizeable returns on their spending in some cases: Using $17.3 million to recover over $101 million in Florida, they sometimes spent more than they saved in fraud costs. A good example were the efforts in New York, a state that experienced numerous investigations but only managed to recover $157,846 in criminal fraud. The MFCU New York efforts, instead, experienced major civil recoveries of over $200 million.

These state-by-state discrepancies in fraud prevention and investigation reveal that each Medicaid program in states may need more universal protocols to enable MFCUs and anti-fraud organizations to be even more effective.

“Many of the MFCUs really need additional resources to fight the fraud in their jurisdiction. And currently there are no MFCUs in Puerto Rico or North Dakota. Also, the Medicaid Fraud Control Units need the legal authority to investigate and prosecute patient abuse or neglect in home- or community-based settings in addition to institutions,” said Richmond.

“The current rules made some sense when Medicaid services were primarily provided in institution in times past, but as those services are increasingly provided in the home and the community, things really have changed.”


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