Investigations, teamwork return $26 million misused in Medicaid
By Megan Poinski
Megan@MarylandReporter.com
The state recovered a record $26.5 million in wrongfully spent Medicaid funds in this past fiscal year, attributed to teamwork across several state agencies and close examination of computer records and provider bills.
Only about 20% of this was due to outright fraud, officials said, and the other 80% of that is due to mistaken billing. This is a fraction of the estimated $300 million Medicaid paid out incorrectly last year, based on a national projection that 5% of Medicaid bills are overpaid.
About $16 million of the returned Medicaid funds were a direct result of investigations and prosecution by the Attorney General’s Office, said spokeswoman Raquel Guillory. Roughly half of that money was paid back in civil settlements, while the other half was court-ordered restitution.
Thomas Russell, the Health Department’s inspector general, said that the $26.5 million recovered in FY 2010 is the most in wrongful Medicaid payments that the state has been able to get back to date. Since 2006, the state has concentrated on trying to recover as many Medicaid dollars wrongfully paid out through waste, fraud and abuse.
Lt. Gov. Anthony Brown announced the $26 million paybacks Thursday. In an interview, Brown said that he doesn’t think the increase in recovered spending money is related to increased attempts at overbilling. “I think the state is getting better at finding out about them,” Brown said.
A new law strengthening the state’s ability to recoup these funds – and touted as a tool to deter Medicaid fraud – will take effect Oct. 1. The new law, which allows the state to assess financial penalties for wrongful Medicaid payments, is estimated to recoup an additional $20 million -- about $46.5 million in FY 2011.
Catching mistakes and fraud
Medicaid funding in Maryland is split 50-50 between the state and federal governments -- poorer states, such as in the Deep South, pay a smaller share. About $6 billion is spent on Medicaidin Maryland each year, Russell estimated. That is about a fifth of total state budget.
Throughout the U.S., statistics indicate that about 5% of Medicaid funds are thought to be embezzled or misused, Russell said. If that holds true in Maryland, $300 million of taxpayers’ money is misused in the Medicaid program each year.
Prosecution by the AG
About $16 million of the returned Medicaid funds were a direct result of investigations and prosecution by the Attorney General’s Office, said spokeswoman Raquel Guillory. Roughly half of that money was paid back in civil settlements, while the other half was court-ordered restitution.
“What we deal with varies from big settlements with pharmaceutical companies to individual providers,” Guillory said.
Some fraud cases caught by the Attorney General’s office during FY 2010 include:
* A $321,173 settlement from global pharmaceutical company Aventis, which misreported its lowest prices for three steroid nasal sprays.
* A $862,267 settlement from four large drug companies, which misclassified their drugs to get more money from Medicaid.
* Former mental health counselor Joanne Radulski of Fallston billed the Medicaid program for psychotherapy services she was not licensed to perform. She was sentenced to two years in prison, which were suspended, and four years of supervised probation. As a condition of probation, she must serve six months home detention and pay restitution of $17,000.
* Medical supplier Neil Wayne Goldschmitt of Burtonsville billed the Medicaid and Medicare programs and private insurance companies for wheelchairs that he never provided. He was sentenced to two years in prison, which were suspended, and five years of supervised probation. He must serve six months of home detention, pay restitution of $36,370, and perform 200 hours of community service. He also was barred from being a Medicaid or Medicare provider for five years.
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About 20 percent of the recovered funds are knowingly embezzled from the system, Russell said, while the remaining 80 percent come from mistakes made by providers or people using the program.
The Department of Health and Mental Hygiene and the Attorney General’s Office work together to try to get all of the funds back.
The process starts with sophisticated data mining in the Health Department. A computer analyst writes programs that will look through billing data for suspicious items – like overbilling, a series of procedures that don’t make sense, or a procedure performed more frequently at one institution than others. Many of these things are not obvious to someone looking at the records, but the computer programs can catch them easily.
A committee made up of an investigator, an auditor, a lawyer, and a clinician examines the suspicious records, using their specific expertise to explore medical treatments, the law, and the finances involved.
“All of those components are equally important,” Russell said.
The committee puts together an analysis to determine what happens next. Sometimes, an audit is performed to look more closely into what has gone on. Sometimes, the committee issues an order for the funds to be returned. Sometimes, the case is handed over to the Attorney General’s office for prosecution.
New law increases penalties
The new False Health Claims Act of 2010, proposed by the O’Malley’s administration and signed into law on April 13, adds more incentives to stopping Medicaid fraud – and more of a financial hit to those who steal the money.
“In addition to what we recover, the mere existence that we have a false claims act that has some teeth” will deter people from defrauding Medicaid, Brown said.
Under the law currently in place, Maryland can only recover the exact amount of money taken from Medicaid. Brown and Russell both characterized stolen Medicaid money under this system as an “interest-free loan.”
The new law that goes into effect in October allows the state to assess financial damages to people who have stolen money – or who got it by mistake, but are taking their time to pay it back.
“This will cause providers to tighten up their systems so they don’t make more mistakes,” Brown said.
Under the new law, whistle-blowers who notify the government of wrongdoing will also get a portion of the money that is recovered. Russell said this is “shining a light” on those who come forward and help bring the money back.
Maryland will also join a compact of states that have passed similar false claims acts for defrauding Medicaid. As a part of this group, Maryland’s attorney general will have some say in large national lawsuits involving pharmaceutical companies. Maryland will also be able to initiate these national lawsuits based on Medicaid fraud in the state.
“This is an important tool we have to pursue waste and fraud in Maryland,” Russell said. “When taxpayers are taken for as much as $300 million a year, you have to do everything to stop it.”