Shell Companies, Opioid-Related Crime & Unscrupulous Providers: How Medicaid Technology Can Mitigate Fraud & Abuse Risks

Topics: Financial Crime, Fraud, Government Fraud, Government Regulation, Medicare Fraud, Regulatory Intelligence, Risk Management, Thomson Reuters Regulatory Intelligence

medicaid

While states continue exploring ways to expand Medicaid coverage to eligible individuals and provide important new benefits such as addiction treatment, it’s crucial to remember that Medicaid fraud can deplete the state and federal resources necessary to fund these critical programs.

Although Medicare fraud often gets more media attention, states can play a vital role in preventing both beneficiary and provider Medicaid fraud and abuse. Indeed, Medicaid provides more access to health services than any other federal healthcare program.

In its recent Semiannual Report to Congress, the Office of Inspector General (OIG) for the Department of Health and Human Services, reported that approximately 73 million people receive healthcare through Medicaid or the state Children’s Health Insurance Programs (CHIP) each year at a cost to governments of $560 billion.


You can learn more on this topic at the Medicaid Innovations Forum, February 5-7, in Orlando, Fla.


Unfortunately, with that many beneficiaries, hundreds of thousands of healthcare providers, and billions of dollars in the system, there are plenty of opportunities for fraud and abuse.

Medicaid Program Vulnerabilities Identified

The OIG identified several areas of where the Medicaid program is vulnerable. Whether the fraud is done by beneficiaries receiving services they are not eligible for or by providers exploiting enrollment vulnerabilities, many of these opportunities for fraud could be mitigated with better use of available technology.

With deaths from drug overdoses estimated at nearly 69,000 last year and almost 70% overdose deaths caused by opioids, the federal government has focused its efforts on identifying patients and providers who were diverting prescription opioids and contributing to the ongoing crisis. However, the OIG noted that although the Centers for Medicare & Medicaid Services (CMS) has “made progress in building a single, nation-wide Medicaid dataset,” that dataset cannot be used to identify opioid use and prescribing patterns in Medicaid.

In order to assist in the identification of at-risk beneficiaries and providers who may be overprescribing, the OIG recommended that CMS: i) work to ensure individual beneficiaries can be uniquely identified at the national level using the Transformed Medicaid Statistical Information System (T-MSIS); ii) ensure the correct submission of pharmacy and prescriber National Provider Identifiers (NPIs); and iii) clarify diagnosis code requirements.

Lack of Effective Medicaid Provider Enrollment Screening

Another area of concern the OIG identified was the lack of effective Medicaid provider enrollment screening.

Although the states are required to conduct “risk-based screening activities” when enrolling providers in Medicaid, not all states are following federal screening requirements. The OIG recommended that states fully implement fingerprint-based criminal background checks for high-risk Medicaid providers and that CMS amend its guidance so states can only forgo criminal background checks on high-risk providers enrolled in Medicare who are then applying for enrollment in Medicaid if Medicare already conducted the background check.

Additionally, the OIG recommended that states compare high-risk Medicaid providers’ self-reported ownership information to Medicare provider ownership information in order to identify discrepancies.

Identifying discrepancies in ownership information can help prevent provider healthcare fraud by highlighting straw or shell companies that facilitate provider self-referrals or allow excluded providers to hide behind family or friends to continue billing for fraudulent Medicaid services.

Verification of Medicaid Beneficiary Eligibility

Another area of concern is the verification of Medicaid beneficiary eligibility. The OIG discussed its review of eligibility determinations that showed how one state that did not consider “all available, relevant information” or the state failed to comply with its own verification requirements. Additionally, the state “did not always query all electronic data sources” to ensure beneficiaries were reporting all countable income.

Based on its sample, the OIG estimated the reviewed state made Medicaid payments of $520.3 million on behalf of nearly 384,000 ineligible beneficiaries and an additional $1.3 billion on behalf of more than 600,000 potentially ineligible beneficiaries during the six-month audit period.

One recommendation the OIG made was that state consider all available, relevant information and data sources when making eligibility determinations.

Access to more complete and more accurate data sources can be key for states when verifying Medicaid beneficiary eligibility and in preventing Medicaid provider fraud and abuse. With billions of dollars spent each year, using accurate data sources can prevent significant losses to individual states and to the federal government from unscrupulous providers and ineligible beneficiaries.