Deeper Than the Headlines: Inside the OIG’s Latest Report on Medicaid

Everyone has to report to someone, even the OIG, and one way the OIG reports is via testimony before Congress. The latest of such testimony was given on April 12, 2018, by Megan H. Tinker, Senior Advisor for Legal Review. She testified before the United States House of Representatives, Committee on Oversight and Government Reform: Subcommittee on Government Operations Subcommittee on Intergovernmental Affairs. She focused her remarks on Improper Payments in State‐Administered Programs, i.e. Medicaid.

In a single year, Medicaid serves more than 69 million enrollees at a cost of $574 billion and it represents one‐sixth of the national health care economy.

Ms. Tinker testified that “although not all improper payments are fraud–or even overpayments–all improper payments pose a risk to the financial security of these programs. In FY 2016, estimated improper Medicaid payments totaled more than $36 billion.”

Her testimony focused on three general principles:

  • Prevent – Know Who You Are Doing Business With
  • Detect – Identify Fraud, Waste, and Abuse in a Timely Manner
  • Enforce – Take Appropriate Action to Correct Problems, and Prevent Future Harm

Prevention

States face challenges in meeting requirements to screen high‐risk providers, including conducting fingerprint‐based criminal background checks and site visits. Previous OIG work found that many States had yet to complete fingerprint‐based criminal background checks and site visits. OIG made recommendations to CMS to assist States with completing these activities. CMS concurred with the OIG’s recommendations and has provided assistance to States. However, CMS continues to extend the deadline for completion of fingerprint‐based criminal background checks, indicating that States are still working on provider enrollment. OIG has ongoing work to provide a status update on implementation of fingerprint‐based criminal background checks. It is important that CMS ensure that States timely and fully implement these critical safeguards, as even a single bad actor could defraud Medicaid of millions of dollars and endanger beneficiaries.

For example, in Virginia, two individuals conspired to defraud a special caregiver program covered under Medicaid by submitting timesheets for payment for services that were never rendered. This scheme took place while one of the individuals was incarcerated. A State criminal background check could have revealed that one of the individuals had been convicted and might have helped prevent this fraud scheme.

In another example, in North Carolina, a mental health facility operator submitted fraudulent claims to Medicaid seeking reimbursement for services that were never provided to beneficiaries with developmental disabilities. The operator submitted at least $2.5 million in fraudulent claims using stolen beneficiary information from a defunct company that he previously co‐owned, and received more than $2 million in reimbursements from Medicaid.

State site visits could have revealed that the beneficiaries whose identities had been stolen from the defunct company were not actually receiving services. These cases exemplify why OIG recommends that CMS should improve provider screening by working with States to implement fingerprint‐based criminal background checks and site visits for high-risk providers.

Detection

Proper oversight includes the capacity to detect problems in real time. This can help prevent improper payments, protect patients, and reduce time‐consuming and expensive “pay and chase” activities. Detecting problems is a shared responsibility for all actors in the Medicaid program: CMS, States, managed care contractors, and providers. The lack of national Medicaid data hampers the ability to quickly detect improper payments, fraud, waste, or quality concerns, both within States and across the nation. Unscrupulous providers committing fraud or engaging in patient harm do not respect State boundaries.

CMS must ensure the completeness and reliability of data in the Transformed Medicaid Statistical Information System. Through the Balanced Budget Act of 1997, Congress mandated that States submit data to provide for a national Medicaid dataset. The Transformed Medicaid Statistical Information System (T‐MSIS) is a joint effort by CMS and the States to address previously identified problems with national Medicaid claims and eligibility data. CMS’s goals for T‐MSIS are to improve the completeness, accuracy, and timeliness of Medicaid and CHIP data.

As CMS and States continue to work toward full implementation, the completeness and reliability of T‐MSIS data must be a top priority. A quality national Medicaid dataset is essential to States’ and the Federal Government’s ability to effectively and collaboratively administer and ensure the integrity of Medicaid. Fraud schemes affecting multiple States are very difficult to detect without comprehensive national data. Localized schemes can also be harder to detect without national data. Utilization or spending patterns may not appear problematic until compared to another State ’s experience or national averages. Recognizing such schemes in one State can alert other States to indicators of fraudulent or abusive practices that may be occurring in their jurisdiction. This information can lead to referrals to State law enforcement agencies like the State Medicaid Fraud Control Units or joint investigations across State lines. For example, it is important for CMS to ensure that the same data elements are being consistently reported across States, are uniformly interpreted across all States, and that those actually being reported will best inform program management and oversight.

Enforcement

National Medicaid data holds the promise of supporting and amplifying enforcement efforts. We have seen this potential realized in Medicare. For example, in July 2017, OIG and its law enforcement partners conducted the largest National Health Care Fraud Takedown in history. Sophisticated data analytics were critical. The end result: Charges against more than 400 defendants across 41 Federal districts for their alleged participation in healthcare fraud schemes involving about $1.3 billion in false billings—protected the programs and sent a strong signal that theft of taxpayer funds will not be tolerated. Notably, 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics, and 295 providers were served with exclusion notices for conduct related to opioid diversion and abuse. A concurrent data brief underscored the magnitude of the problem by identifying concerns about the extreme use and questionable prescribing of opioids in Medicare Part D. That is the power of data leveraged by skilled auditors, investigators, and analysts–to protect the program and bring bad actors to justice.

OIG cannot replicate this type of analysis and enforcement action in Medicaid. Despite CMS’s progress in implementing T‐MSIS, as they presently lack national Medicaid data that are complete and comparable across States. Decreased improper payments and savings achieved through improved program integrity could provide funding for increased services and assessments of the value of these services to a larger number of beneficiaries.

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