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Medicaid Fraud Explained in Detail

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Medicaid is a program whereby quality health care is provided to those citizens who cannot pay for such care themselves. Typically, Medicaid providers may be a health care facility, or a group of persons, or even an individual physician. Given the fact that this is an essential service, many beneficiaries have little choice but to accept the treatment offered by their Medicaid provider, even if they are aware of discrepancies in such treatment. Apart from inconsistencies in the quality of treatment, active monetary fraud also takes places with Medicaid to a significant degree.

Unscrupulous Medicaid providers may perpetrate fraud in many ways with this essential health care system. Such acts may not only result in a loss for the government, and ultimately the taxpayer, but also jeopardize the health and safety of the beneficiaries who are subjected to avoidable procedures and unnecessary medications. In order to ensure that beneficiaries enjoy quality health care of the right kind and in the right manner, the Attorney General’s office encourages whistleblowers to bring to its notice any suspicion of malpractice/ fraud. A Medicaid whistleblower helps ensure that the billions of dollars earmarked for these services are used to make legitimate health care available to deserving beneficiaries.

The unfortunate fact is that Medicaid fraud is also often perpetrated by the beneficiaries themselves. In such cases, the beneficiary takes away a higher share of the earmarked funds than he is entitled to or he deserves, effectively preventing access to proper care for another beneficiary who has a real need. Such frauds may also be brought to the attention of the authorities by a Medicaid whistleblower.

Common types of Medicaid Fraud

Medicaid fraud can be described as the act of deliberately misrepresenting the truth to get unauthorized benefit. Such frauds can be grouped under three categories:

Fraud perpetrated by the patient:

  • Filing claims for services/ items not received
  • Altering receipts with fraudulent intent
  • Selling medications/ medical equipment obtained from Medicaid back in the market
  • Presenting false information to avail of services
  • Getting and claiming benefits for the same treatment/ condition using multiple doctor prescriptions
  • Making use of another beneficiary’s coverage to avail of services that one is not entitled to

Fraud perpetrated by the provider:

  • Billing multiple times for a service that has been provided once
  • Raising bills for services not provided
  • False diagnosis
  • Taking kickbacks on referrals
  • Padding the bill
  • Claiming that a more costly service than the actual one has been performed
  • Misrepresenting non- covered services as covered services
  • Prescribing medications or tests or procedures that are unnecessary, inappropriate or excessive
  • Prescribing medication or tests for a patient with the knowledge that they are for another person

Fraud perpetrated by the insurer:

  • Denying a claim that is valid
  • Undervaluation of amount owed to Medicaid provider
  • Misrepresenting the health plan benefits to beneficiaries
  • Padding insurer cost in claims

Several programs are in force at the state and federal level to detect such fraud and prevent it. However, given the massive number of beneficiaries making use of Medicaid and the magnitude of providers involved in offering these healthcare services, it is virtually impossible for the government to uncover every instance of fraud. This is where whistleblowers play a key role in helping the government curb misuse and misappropriation in this critical area.

Typically, Medicaid payments are first disbursed and subsequently the mechanism to recover improper payment comes into play. As is evident, this means that Medicaid fraud and abuse goes undetected or unchecked in several instances. In recent times, the government’s focus is shifting to prevention of fraud rather than rectification.

What is Medicaid abuse?

Whistleblower law also applies to the exposure of Medicaid abuse. Abuse encompasses practices that are not in line with acceptable medical, business or financial practices, and that result in unnecessary increase in costs. Abuse can also mean physical ill- treatment of the Medicaid beneficiary.  A startling number of Medicaid patients, especially disabled or elderly persons, are subject to abuse by their designated healthcare providers. These victims may be completely dependent on the provider and as a result of this dependence they may hesitate to report the abuse.

Under the law, Medicaid abuse includes physical abuse, sexual abuse, criminal neglect and drug diversion. In many cases, the victim shows signs of physical abuse such as inexplicable cuts, black eyes, bruises, burns etc. These patients may be afraid of being alone with the healthcare provider.

Drug diversion occurs when the physician or a staff member of the healthcare facility sells the patient’s medication instead of giving it to him/ her. Medicaid whistleblowers have also exposed cases where the doctor sells prescriptions for essential medications or nurses order medication in the patient’s name without the doctor’s knowledge and intercept it for their own use.

Those with knowledge of such abuse should report it immediately or take legitimate action to expose the malpractice. In many states (e.g.: Texas) failure to report suspected neglect or abuse is a misdemeanor.

Who investigates Medicaid fraud and abuse?

The government has set up Medicaid Fraud Control Units to investigate all claims of fraud with the Medicaid healthcare system.  These MFCUs are operational in 49 States, as well as the District of Columbia. A majority of these units are part of the State Attorney General office, the rest being in various other State agencies. The Office of the Inspector General of the U.S. Department of Health and Human Services periodically reviews the performance of the MFCUs.  These units investigate Medicaid provider fraud, misuse/ misappropriation of beneficiary funds, patient abuse and neglect in facilities offering boarding and care for beneficiaries.

Each MFCU receives an annual federal grant, as well as a state grant, and it is required to conform to certain regulations and restrictions. Each unit deploys its own Medicaid fraud investigator(s), attorney(s) and auditor(s) who work full time to investigate Medicaid fraud. The Medicaid fraud investigator is typically a professional who has substantial experience with financial and commercial investigations. In total, MFCUs across the country employ almost 2000 personnel.

The Attorney General Office and the MFCUs do not have the authority to investigate Medicaid fraud committed by participants. For example, if an individual is concealing income in order to claim Medicaid, this is investigated by the Department of Social Services and not the AGO.

How whistleblower law tackles Medicaid fraud and abuse

In many cases, it is the employees of the institution or individual providing Medicaid services who come to know of the fraud. Fear of retaliation by the employer may force these individuals to remain silent about the fraud or abuse. To encourage these persons to report fraud, the government offers rewards, as well as protection under the whistleblower laws. Both federal and state laws have provisions that prevent the employer from retaliating by dismissing the whistleblower, reducing his/ her pay, threatening or any such actions.

To report fraud, the Medicaid whistleblower files a quit tam lawsuit against the perpetrator of the fraud. Qui Tam cases fall within the purview of the False Claims Act which is a key whistleblower law enabling citizens to sue on behalf of the taxpayers and the government, as well as themselves. The government investigates the allegations and decides whether its intervention in the case is warranted. If the government chooses to intervene, the case is sealed until investigation is complete.

The whistleblower can also choose to pursue the case on his/ her own if the government chooses not to participate, in which case his/ her reward may be higher. In most whistleblower cases, the accused is encouraged to pay penalties and reimburse the defrauded amount through an out- of- court monetary settlement.  The whistleblower gets a percentage of this recovered amount. If the case goes to trial, then he/ she is entitled to a percentage of all damages that the court orders the accused to pay.

Exposing Medicaid fraud and abuse is the duty of every American citizen. The government has taken pains to not only make it easy for citizens to do so but also be rewarded for such exposures. If you become aware of any such incidents, keep in mind that you are assured of protection, as well as monetary reward under the whistleblower law, for paving the way to recover misappropriated funds.

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