By all accounts, Florida is a hotbed of Medicaid fraud. The state spends $25 million and has 300 people to detect and investigate it but is lousy at catching Medicaid crooks.
A flawed system
In part, Medicaid fraud is difficult to detect and investigate because the barriers to entry for crooks are low. A criminal needs little more than a Medicaid provider number and Medicaid billing software to file claims and a bank account to receive payments. Medicaid patient recipient numbers can also be obtained easily. Because of the government’s “pay first, investigate later” system, fraud can go undetected for years after it was committed — and long after the criminal has moved on.
In addition, the fraud-fighting effort in Florida is disjointed and rife with bureaucratic politics, beginning with the relationship between the Attorney General’s Office and the state Agency for Health Care Administration. AHCA’s primary focus is to reimburse Medicaid health care providers as quickly as possible. However, because it writes the checks, AHCA — through its Medicaid Program Integrity Office — also shares frontline responsibility with the fraud control unit for detecting fraud.
But while AHCA is supposed to find fraud, federal law stipulates that AHCA can only stop payments of suspected fraud and must refer investigations to the fraud control unit. The AG’s fraud unit, meanwhile, can investigate a case but relies heavily on AHCA and its own fraud hot line system for referrals. So as AHCA receives tips from hot line callers, Medicaid recipients and its own data queries, it passes them along to the AG’s fraud unit, which then decides whether fraud has been committed. Despite mandatory biweekly meetings between officials from AHCA and the AG’s office, complaints about poor communication between the two agencies persist.
Meanwhile, there are other structural issues, including the lack of prosecutors on the fraud unit’s investigative teams. David Moyé, a Tallahassee attorney and a former assistant attorney general in charge of the Medicaid fraud unit, says California does a better job at fighting fraud because investigators work closely with prosecutors from the moment an investigation begins — eliminating the learning curve that occurs when an investigator passes along boxes of materials to a prosecutor who then has to start from scratch to understand the case.
Another weakness in the system involves the skills and priorities of the fraud unit’s investigative personnel. Florida investigators may lack the sophistication to recognize and pursue financial fraud, preferring instead to focus on another area of responsibility, cases of physical abuse and neglect, Moyé says. Nearly a third of arrests in 2010-11, for example, involved cases of physical abuse and neglect.
Simply hiring more skilled investigators isn’t easy. Experienced white-collar crime investigators typically find better pay and benefits with federal agencies. “It’s difficult to hire qualified investigators in south Florida who do this type of work,” Varnado says.
In addition, the reports required by both the federal and state governments focus on the raw numbers of arrests and convictions, leading to an emphasis of quantity over quality. Last year, for example, an employee of a Brevard County home health provider was arrested for allegedly lying about the hours she worked. Total amount allegedly stolen from Medicaid: $1,327.
What might make a bigger dent in Medicaid fraud?
Giving the fraud unit more training and investigative resources might help. The fraud unit has struggled to aggressively mine Medicaid data, largely abandonding these efforts during most of Attorney General Bill McCollum’s tenure, Moyé says. In 2010, the program got special permission to launch a data-mining project, digging into Medicaid claims to look for suspicious activity. So far, that experiment hasn’t led to a single arrest. “We can do better there, no question,” Varnado says.
Moyé is among those who think that the personnel changes need to go deeper than the top managers.
Opinions differ on whether a shift by the state to a managed care system for Medicaid would help cut fraud. Proponents say the private insurance companies would have an incentive to eliminate fraud in order to maximize their own profits. Opponents say it creates opportunities for more sophisticated fraud because of the added complexity, and the fraud control unit will now have to keep an eye on the managed care companies themselves.
Bondi is looking to use the Office of Statewide Prosecution, part of her office, as a resource in pursuing Medicaid fraud cases. Medicaid was scarcely mentioned in the Office of Statewide Prosecution’s most recent annual report, but Varnado hopes the statewide prosecutors can help.
Bondi says it will “take time” for her changes — so far, she’s hired seven more investigators — to yield results. Meanwhile, the thievery continues: In August, Bondi announced the arrest of an Okaloosa County resident accused of billing more than $270,000 since 2007 for services never provided. So far this year, AHCA has received some 6,800 fraud complaints online or through its hot line system.