The Medicaid Fraud Epidemic - Can We Still Save the Patient?

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There are times when I harken back to the classic television show M.A.S.H.  For those of you too young to remember, the story centered around a mobile Army surgical hospital in the midst of the conflict in the Korean peninsula.  While they weren't the first people to see the patient, the unit served as the front line for stabilization and surgery.  Often, conflict flooded them with patients, and triage - quickly determining who could be saved and who couldn't be, along with the order of treatment, became critical.

We're facing the same triage decision with the Medicaid and Medicare programs here in the United States.  Collectively, Medicaid and Medicare fraud, waste and improper payments are epidemic. While a Health and Human Services study on improper payments last year reflects a drop to 5.8% improper or fraudulent Medicaid payments for a total of $14.4 billion, there are still many cases hitting the news where a single fraudulent network is responsible for $100-200 million or more in fraud.  Meanwhile, Medicaid expansion is moving ahead in most states, and while the feds are pushing for better payment integrity, and providing grant funding, so much of the underlying staffing and structure is weak. The task is huge for most states.

Let's start with some good news.  Some states are using the changes afoot to ensure a focus on payment accuracy and fraud prevention.  Kentucky, for example, used the implementation of a state health exchange to layer on analytics as a proactive defense across multiple benefits programs, including Medicaid, SNAP (food stamps) and TANF (welfare to work).  At least six states have put out a public request for information (RFI) to gather data from vendors on payment integrity and fraud prevention solutions in the last eight months.  An RFI is often a precursor to acquiring funding or submitting a grant application to engage in a project.  Multiple states are  modernizing core billing and payment processing systems and ancillary functions to improve payment integrity, and they are looking at solutions that can intervene pre-payment. This would change the traditional "pay and chase" game that comes up in normal audit and fraud processes.  In addition, many states are updating and upgrading core claims processing systems for the first time in years, and every one of those has included analytics for analysis of cost drivers, outliers and fraud.

Now let's look at the flip side - even the absolute basics aren't working at times.  For example, there is a Medicaid Interstate Match program, which simply matches recipients across multiple states to ensure they aren't receiving Medicaid benefits in multiple locations.  The feds set this up, and they also mandated participation, yet 14 states didn't submit any data last year, according to the Office of the Inspector General (OIG) of Health and Human Services.  Even worse, a match between Medicaid and Medicare, known as Medi-Medi, had only 19 states participate, according to the same OIG report.

While I started off saying this is a case of triage, at the end, we realize that this patient needs to be saved.  They may need changes, but bringing systems up to date, implementing modern analytics and staffing appropriately to handle caseloads can stem the bleeding and get them back in action.

What are your thoughts? Positive trends that you are seeing in these programs? Please give your feedback, and in the meantime, follow me on Twitter @CarlHammersburg

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About Author

Carl Hammersburg

Manager, Government and Healthcare Risk and Fraud

Carl Hammersburg manages the SAS Government and Healthcare Risk and Fraud team, and has been with SAS since 2012. Prior to that, he spent 20 years in anti-fraud activities for Washington State’s exclusive workers’ comp insurer, the Department of Labor and Industries. In 2004, Carl formed that agency’s comprehensive fraud program, covering tax and premium audit, claim investigation, provider fraud and collections. Data sharing and investigative partnerships with other State and Federal agencies, as well as driving public availability of information and awareness served as cornerstones to the anti-fraud activities of the program. During his stewardship, audit and investigative activities doubled and outcomes tripled, based on a focus on data mining and predictive analytics that improved efficiency and case selection. Program success under Carl’s leadership resulted in awards from two successive Governors of Washington State.

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