Medicaid anti-fraud effort launched

Washington -- Armed with millions of dollars in this year's budget and scores of new staff members, the federal government is preparing a war on Medicaid fraud, projected to rob federal coffers of up to $39 billion by 2016.

The Centers for Medicare & Medicaid Services told AMNews it was too soon to say whether the effort would lead to more audits for physicians. But the push is clearly on for the agency to reduce the billions of dollars believed to be lost each year through fraud and abuse.

This year's budget includes $5 million, which will increase to $75 million by 2009, for a CMS program to tackle abuse in a systematic way.

The law instructed the agency to hire 100 people to combat fraud. The Government Accountability Office found there were eight such workers in 2005. The GAO noted that those staff numbers were grossly out of balance with the government's share of Medicaid benefit payments, which stood at $168 billion in fiscal 2004.

The Medicaid Integrity Program, in its embryonic stage, is supposed to force CMS to report annually to Congress and make an effort to work with states to save money. As incentive, states are to be rewarded with matching funds for money they save by enacting false-claims acts in their states.

A key focus of the federal effort will be on creating a truly national campaign to compare claims filed in Medicaid and Medicare. This identifies patterns of potentially fraudulent behavior that would go unnoticed alone. For example, the government says it can find "time bandits" by looking at Medicaid and Medicare bills side by side. It cited a case in which an individual billed both programs for 16 hours of work in the same 24-hour period.

Dept. of Health and Human Services Inspector General Daniel Levinson said in a hearing on Capitol Hill last month that his office's priorities would be to work more closely with states on this effort. It also plans to initiate more projects that cross state lines to find medical professionals "who abuse this vulnerable population," he said.

Levinson identified priority areas as nursing home quality of care and pharmaceutical manufacturer fraud, including firms' overstatements of the cost of buying drugs, underpayments of rebates and kickbacks for promoting drugs.

Levinson also mentioned "drug diversion," in which pain medications such as Oxycontin are unnecessarily prescribed in exchange for kickbacks or in cases where doctors themselves sell or use the drugs.

Recalling campaigns that required doctors to re-enroll in Medicaid or trawled through years of claims for erroneous billing, physicians are hoping the new initiative will not target them unfairly.

"Medicaid is really a very complicated program, and it is growing increasingly complex," said Susan Strate, MD, chair of the Texas Medical Assn. council on socioeconomics.

Her state has an aggressive anti-fraud program held up as a good example and is seen as "sound" by most physicians. "One of the key issues is differentiating what actually is fraud," she said. "Given the complexities of Medicaid, there is a potential for simple human error."

Dr. Strate said there is a need for everyone, including policy-makers, to take a step back. "If we focused on simplifying the system, then there would be less potential for unintentional human errors occurring in the billing and processing. You would eliminate much of the human error side of it, and then it would be easier to identify what truly is fraud."

She had encountered many difficulties with Medicaid, notably because its billing and claims processing procedures are different from those of other programs.

Although the law defines "fraud" as an "intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person," physicians are generally wary.

"I am fully supportive of combating fraud, but in the past it has been made very burdensome for physicians," said Elizabeth McNeil, director of federal issues at the California Medical Assn. "In California, Medicaid has one of the lowest reimbursement rates in the country, and access is already a problem. We have real trouble getting physicians to sign on."

McNeil added: "We want to get the right balance between ferreting out the people committing fraud without hassling the good physicians."

She recalled in particular a re-enrollment campaign in her state a decade ago that held up reimbursement for many doctors and turned them off to Medicaid. Although it is too early to say if this campaign would lead to more "bounty hunters" -- contractors who sift through billing data to find potential fraud on a commission basis -- she said the practice has been used in the past.

Big money

The government has grounds to chase after overbilling, fraudulent or otherwise. A 3% error rate would translate into a $5 billion hole in federal funds in 2004, and experts say the real percentage is likely closer to 10%.

Leslie Aronovitz, director of health care at the GAO, said funding for the most promising anti-fraud programs had declined in recent years. For example, the project that matches claims on Medicaid and Medicare received only $3.6 million in 2005 -- less than half the 2004 amount, he testified at a Senate Homeland Security and Governmental Affairs subcommittee meeting March 28. The new campaign will turn around this slump in funding. The program's budget is set to rise steeply, to $12 million this year and $60 million by 2010.

Patrick Burns, director of communications at Taxpayers Against Fraud, said physicians should not worry. "It's much more the pharmacies and the middlemen," he said. The so-called bounty hunters -- data-miners, he calls them -- look for fraud only in excess of $1 million. Innocent mistakes by doctors would scarcely fall into this category, because they would be balanced out by accidental underbilling, he said.

"This is not a situation where they're the gazelle and everyone else is the lion waiting for them to trip and we'll be at their throats," he added.

Tom Coburn, MD (R, Okla.), who chairs the panel that held the hearing, told AMNews the initiative would put more Medicaid dollars where they should be -- serving the program's recipients. And that, he said, would mean more reimbursement for doctors.