State Medicaid Fraud Control Units are continuing a five-year trend of increasing convictions, civil settlements and exclusions for fraud and abuse. A report, released by the U.S. Department of Health and Human Services Office of the Inspector General, shows that the Units continued to be active and very effective in identifying Medicaid fraud and abuse in FY 2016.

Trends in Medicaid Criminal Convictions and Civil Cases

Units saw a gradual increase in criminal convictions over the past five years from 1,349 in FY 2012 to 1,564 in FY 2016. About three-quarters of the 2016 convictions were for fraud, in which providers billed for services that they did not actually deliver. The rest were convictions for abuse or neglect of a patient. Units reported that a small but growing percentage of the fraud convictions were for drug diversion, when a provider bills Medicaid for drugs not given to the patient.

FY 2016 also saw the highest number of civil cases in the past five years, at 998. This was a marked increase from the 731 cases in FY 2015 and a modest increase from the previous three fiscal years, which averaged about 860 cases per year.

A total of almost $1.9 billion was recovered as a result of Medicaid Fraud Control Unit referrals in FY 2016. Over $1.5 billion of this total was recovered in civil convictions and settlements.

Provider Types Involved in Fraud and Abuse Convictions

Personal care service providers were the largest group of providers implicated in Medicaid fraud and abuse convictions in 2016. Just over one-third of convictions involved personal care services attendants. The majority of these cases involve fraud, like the case of a personal care attendant who billed for services when the patient was in the hospital and not under the attendant’s care.

Other involved providers include LPNs, RNs and other clinicians, as well as home health agencies and residential facility owners. In one case of neglect, the owner of an unlicensed residential care facility did not staff the facility at night. The provider was sentenced to 5 years in state prison and had to pay a fine of $21,000.

Provider Exclusions that Result from Fraud and Abuse

Providers convicted of Medicaid fraud and abuse charges can be excluded from participating in any federal healthcare program. Anyone who hires an individual or entity on the OIG exclusion list may be subject to fines – and the knowledge that they put their own patients at risk. Healthcare organizations should have a foolproof way to check the OIG Exclusion list when they are hiring or contracting with providers.

In FY 2016, cases referred by MFCU made up 35 percent of all OIG exclusions. The number of exclusions resulting from these referrals has held relatively steady for the past three years, dropping on slightly this year from about 1,337 exclusions in FY 2014 and 1,306 in 2015 to 1,284 in FY 2016.

However, in FY 2016 there were still 25 percent more exclusions than in FY 2013 (1,022) and 72 percent more exclusions than in FY 2012 (746) clearly demonstrating that the MFCU’s investigative resources are being much more effective than they were just a few short years ago.

State Programs for Identifying Fraud and Taking Action

State Medicaid Fraud Control Units are improving their abilities to detect and refer more fraud and abuse cases. Highlights of state strategies in the OIG report include:

• California: Hired a field representative to educate and train state staff in other agencies across the state to identify and report fraud and abuse.
• New Hampshire: Sent a letter to inform assisted living and nursing facilities that drug diversion is a form of patient abuse or neglect, increasing referrals for drug diversions.
• New Mexico: Worked closely with the state Medicaid agency to streamline the fraud referral process and strengthen program integrity.
• Texas: Had investigators and auditors make 12 outreach contacts per year to ensure that the public knows their role in reporting fraud and abuse.
• Utah: Streamlined workloads for investigators, and worked with the state Medicaid agency to require the MCOs to refer potential fraud and abuse to the Unit.
• West Virginia: Supported staff professional development to improve investigator credentials.

This year’s OIG report reveals that state Units are being extremely proactive to refine their abilities to detect fraud and abuse, and exclude both individuals and entities from federal health programs.

To learn more about State Medicaid compliance, visit our MEDICAID PROVIDER EXCLUSION LIST page.