DHH Announces New Effort to Combat Medicaid Fraud

BATON ROUGE – The Department of Health (DHH) today announced a first-ever, aggressive fraud initiative designed to identify fraudulent providers of in-home services for people in Medicaid.  This effort is part of a partnership with Louisiana Attorney General Buddy Caldwell. LDH will also work with the appropriate federal authorities.

Last spring, LDH Secretary Alan Levine ordered a sample audit of in-home direct care providers based on data received from the Medicaid Program Integrity Unit, in partnership with the Attorney General.  That audit revealed a nearly 23-percent potential overpayment rate for services from 2007 to 2008.  Medicaid pays for all services billed on a fee-for-service basis.  As bills are received from providers, a payment is processed, usually within a week.  In state fiscal year 2009, the total claims paid for in-home direct care services amounted to $673.5 million, spanning more than 700 agencies.

As a response to these initial findings, thirteen providers were referred to the Attorney General’s office for review, and those potential cases remain under review. 

Today, Secretary Levine is announcing that LDH is launching a full audit of all Medicaid In-Home Direct Care providers.   Up to six audit firms are being engaged to do a several-month sweep throughout the state in order to review billings and report their findings.  Any findings of fraud or abuse will be swiftly handed over to the offices of the Attorney General and the appropriate federal authorities.

"When you steal from Medicaid, you are stealing from the poor, the most vulnerable and our taxpayers," said Secretary Levine.  "We have had a successful partnership with the Attorney General, and we plan to do all we can to keep them busy prosecuting anybody who tries to steal from the taxpayers." 

Levine also criticized the system that enables this fraud to thrive.  "Virtually every single national expert has said that this fee-for-service system not only enables fraud, but encourages it.  It incentivizes more volume and over-utilization.  At the same time, we have become such an efficient payer that it becomes impossible to capture fraud until after it has occurred.  That is why we are taking the aggressive steps we are announcing today.  We cannot simply rely on broad, periodic audits.  By then, it’s too late."

LDH has proposed a transformation of Medicaid that would end the current fee-for-service system and replace it with a model that more resembles insurance, where taxpayers would not be directly at risk for fraud.  Plans are under way to move forward with that initiative, which contains strict provisions for fraud mitigation, detection and reporting, thereby expanding the surveillance in the Medicaid marketplace.

"I’m pleased the Attorney General’s Medicaid Fraud Control Unit and LDH are working together to aggressively combat Medicaid Fraud in Louisiana. Medicaid fraud takes advantage of some of the most vulnerable people in our state, the elderly and the poor. Working together is the only way we can significantly reduce fraud. I am proud of the AG’s Medicaid Fraud Unit and I renew our commitment to work with LDH to fight this problem," said Attorney General Buddy Caldwell.

Under the initiative being announced today, LDH is contracting with up to six audit firms that will place teams of auditors and financial experts on the ground in Louisiana beginning at the discretion of the Secretary in consultation with the Attorney General’s office.  Over several months, the audit teams will review provider records and take other steps to conduct fraud surveillance.  The initiative is funded by using some of the $3 million fund created with dollars recovered from fraudulent providers. This marks the first time LDH has initiated and led such an audit.

The Attorney General’s Medicaid Fraud Control Unit (MFCU) works closely with LDH, other state agencies and federal authorities. Over the last five years, MFCU prosecuted cases have resulted in the collection of $69 million and 401 arrests. 

Medicaid fraud is a major problem facing the nation’s health care systems.  The Government Accountability Office estimates that 10 percent of Medicaid expenses are diverted through fraud.  In Louisiana, this means up to $650 million could have been lost last fiscal year alone.

Several of the Medicaid services that use in-home direct care providers have seen significant cost growth over the last few years. From 2003 to 2009, the New Opportunities Waiver (NOW), for people with developmental disabilities, grew 80 percent, from $203.5 million to $367.6 million. The Elderly and Disabled Adults (EDA) waiver program grew 630 percent, from $8.6 million in 2002 to $63.2 million in 2009. And from 2004 to 2009, Long Term Personal Care Services (LTPCS) grew 620 percent, from $33.5 million to $242.7 million.

Medicaid fraud and abuse control efforts are shared across different agencies at both the state and federal level. DHH’s Medicaid Program Integrity staff act as the internal monitoring arm for Medicaid fraud alongside the Unisys Surveillance Utilization Review Subsection. The Attorney General’s Medicaid Fraud Control Unit investigates Medicaid fraud, makes arrests, and handles prosecutions. Data sharing with State Licensing Boards and State Police and local law enforcement is also critical for fraud complaints.

The Louisiana Department of Health strives to protect and promote health statewide and to ensure access to medical, preventive and rehabilitative services for all state citizens. To learn more about LDH, visit http://www.dhh.louisiana.gov.