Introduction to Medicaid Fraud

1. Introduction to Medicaid Fraud Missouri Attorney General’s Office Medicaid Fraud Control Unit Updated March 2013

2. Health Care Fraud - Generally • The FBI has estimated that fraud accounts for 3% to 10% of U.S. healthcare expenditure per year. • By the year 2020, CMS estimates total health care spending to exceed $4.6 TRILLION, representing 19.8 percent of the GDP.

3. Effects of Health Care Reform • An April 2010 report issued by CMS estimates that Medicaid spending will increase by $28 billion over the next 10 years. • The number of recipients will increase by approximately 20 million for a total of 84 million in 2019.

4. Medicaid Need-based health insurance Jointly funded by the state & federal governments Medicare Age-based health insurance (65+) Entirely federally funded Medicaid vs. Medicare

5. What is Medicaid? • The Medicaid program was enacted in 1965 through Title XIX of the federal Social Security Act. • Medicaid is a state-run, jointly funded, federal and state program that provides health care for the state’s economically disadvantaged. • Missouri Medicaid is funded 60/40 • State participation in Medicaid is optional, though all states have participated since 1982. • Missouri’s participation in Medicaid (MO HealthNet) began in 1967.

6. What is Medicaid? • The federal Medicaid statute sets forth the minimum requirements for state Medicaid programs to qualify for federal funding. 42 U.S.C. §1396a. • The federal portion of each state’s Medicaid payments, known as the Federal Medical Assistance Percentage (FMAP) is based on the state’s per capita income compared to the national average. 42 U.S.C. §1396d(b). • Among the states, the federal contribution ranges from 50% to 83%.

7. What is Medicare? • The Medicare program was enacted in 1965 through Title XVIII of the Social Security Act. • Medicare federally funded program that provides health care for: • People age 65+ • People under age 65 with certain disabilities • People of all ages with End Stage Renal Disease (ESRD) • Medicare has various parts: • Part A (Hospital Insurance) – generally no cost • Part B (Medical Insurance) – pay a standard premium each month • Part C (Medicare Advantage) – pay a premium + out of pocket costs • Part D (prescription drug coverage) – costs vary

8. Who is eligible for Medicaid? • MO HealthNet provides health care access to low income individuals that are: • Elderly; • Disabled; • Members of families with dependent children; • Low-income children; • Uninsured children; • Pregnant women; • Refugees; or • Children in state custody.

9. Social Security Number Live in Missouri US Citizen or Eligible Qualified Non-Citizen Elderly (65 and over), Blind or Permanently and Totally Disabled Available resources for elderly & disabled: Individual - less than $1000 Couple - $2000 or less Real & Personal Property for blind: Individual - $2000 or less Couple $4000 or less Net Income limit for Elderly & Disabled 85% of the federal poverty level: Individual - $772, Couple - $1042 • Net Income limit for Blind 100% of the federal poverty level: Individual - $908, Couple - $1,226 MO HealthNet for the Aged, Blind, and Disabled Non-Spend Down Eligibility

10. MO HealthNet for the Aged, Blind and Disabled allows recipients to “spend down” their income if their income exceeds the relevant limits. Each month the recipient must “spend down” by incurring qualified medical expenses or paying in to MO HealthNet Division. MO HealthNet for the Aged, Blind, and Disabled Spend Down Eligibility

11. How does “Spend Down” work? • The income limit for blind recipients is 100% of the Federal Poverty Level • Individuals: $908 per month • Couples: $1226 per month • The income limit for elderly or disabled recipients is 85% of the Federal Poverty Level • Individuals: ~$772 per month • Couples: ~$1042 per month • Any income in excess of this amount must be “spent down” on qualified expenses beforethe individual may receive Medicaid coverage.

12. “Spend Down” Example • Elderly recipient has $1,000 in monthly income • To be eligible for MO HealthNet, he can only have $772 per month (85% of FPL) • Medicaid recipient must spend down $228 of her income every month before becoming Medicaid eligible.

13. Prescribed drugs Prescribed dental care Services of an optometrist, chiropractor, podiatrist Physicians, hospital, emergency ambulance, independent laboratory and x-ray, and other medical services covered by Medicaid Durable Medical equipment Certain health care or personal care services provided in the home . Prosthetic devices, hearing aids, eyeglasses MO HealthNet for the Aged, Blind, and Disabled Qualified “Spend Down” Expenses

14. Child under 19 years old; Applies for a social security number; Lives in Missouri and intends to remain; Who is a U.S. citizen or eligible qualified non-citizen Countable familyincome meets the income guidelines Income guidelines vary depending on family size & child’s age they are uninsured for 6 months; have family assets with a net worth of less than $250,000; family must pay a monthly premium based on family size and income MO HealthNet for Kids (SCHIP) Eligibility

15. This program is intended to provide MO HealthNet benefits to low-income pregnant women. A woman whose family income does not exceed 185% of poverty may qualify. MO HealthNet for Pregnant Women (MPW) Eligibility

16. How Much is Spent on Medicaid? • Total Medicaid Budget for FY 2008 • $356.3 Billion • Projected to reach $577.6 Billion by 2014 • During Federal Fiscal Year 2009, Missouri’s Medicaid FFS expenditures totaled approximately $7.5 billion.

17. MO HealthNet Spending

18. Although most people enrolled in MO HealthNet are families and children, the majority of expenditures pay for services to aged, blind, and disabled Missourians. Where does all the money go?

19. Average Annual Cost Per Recipient • The average annual cost for an elderly enrollee is $16,296. • The average annual cost for a disabled enrollee is $18,492. • The average annual cost for a child enrollee is $3,096. • The average annual cost for a non-disabled adult (under 65) enrollee is $5,304. • The average annual cost for a Missouri Medicaid enrollee is: $7,351.

20. MO HealthNet Spending

21. What does Medicaid pay for in Missouri? • Covers1out of every7Missourians • Covers37%of Missouri’s children • Pays for48%of all births in the state • Covers1out of every11seniors age 65+ • Pays for61%of all nursing home care in the state • Currently provides medical coverage to over 900,000 residents ** Statistics as of SFY 2010

22. MO HealthNet Enrollment

23. Percent of Specified Population Enrolled in MO HealthNet by County ** As of 2009 Census Report

24. Enrollment in MO HealthNet by Region

25. Number of Medicaid Recipients & Providers (Jan. 2010) • Number of Recipients • In Jan. 2010, the Missouri Medicaid program served 883,277 beneficiaries. • 463,290 enrolled in fee-for-service (FFS) • 419,987 enrolled in six (6) managed care organizations (MCO) • Number of Providers • ~42,459 FFS participating providers • ~ 67,077 MCO providers

26. FFS vs. Managed Care Enrollment

27. How many Claims Are Submitted to Medicaid? • The average number claims submitted by Medicaid FFS providers is:

28. Who Implements Medicaid? • The Department of Social Services, (DSS), MO HealthNet Division is responsible for administering the Medicaid program. • The Department of Health and Human Services (HSS) Centers for Medicare and Medicaid Services (CMS), monitors state Medicaid programs and establishes requirements for service delivery and quality, funding, and eligibility standards.

29. What Does Medicaid Cover? • Mandatory Services • Inpatient & Outpatient Hospital • Early Periodic Screening Diagnostic & Treatment (EPSDT) for children • Nursing Facility Services • Home Health Services • Physician Services • Rural Health Clinics • Federally Qualified Health Center Services • Laboratory and X-Ray Services • Family Planning Services & Supplies • Nurse Midwife Services • Pediatric & Family Nurse Practitioner Services • Transportation to Medical Care • Tobacco Cessation Counseling for Pregnant Women

30. What Does Medicaid Cover? • Optional Services • Prescribed Drugs & Prosthetic Devices • Rehabilitation & Physical Therapy • Occupational Therapy • Respiratory Care Services • Podiatry Services • Optometry & Eyeglasses • Dental Services • Chiropractic Services • Private Duty Nursing Services • Hospice • Home & Community-Based Care to Certain Persons with Chronic Impairments

31. Payer of Last Resort • Medicaid beneficiaries may also be receiving Medicare (“Dual Eligibility”) • However, Medicaid is always the “payer of last resort” • For enrollees in both programs, covered services are paid for by Medicare first before any payments by Medicaid are made.

32. Medicaid Relies on Honesty & Integrity of Providers • Due to the high number of providers (approximately 55,000) and submitted claims, MO Medicaid is set up as a post-payment review system • Only a sample of claims are reviewed after payment has been made to the provider to: • verify the accuracy of the claims reviewed, • safeguard & test program compliance. • Post-payment review is NOT intended to replace the expectation of provider honesty and integrity. • MFCU possesses and employs strong legal tools to help ensure program compliance in a “pay and chase” system.

33. History of Medicaid Fraud Control Unit (MFCU) Program • MFCUs were created in 1977 by the Medicare-Medicaid Anti-Fraud Amendment (P.L. 95-142). • Missouri’s MFCU was created in 1994. • The Omnibus Reconciliation Act of 1980 (P.L. 96-499) made federal grant funds permanent for MFCUs • 90% for a units first 3 years and 75% thereafter • 49 States and D.C. have MFCUs • North Dakota is the only state that does not have a MFCU.

34. MFCU Funding • Each unit prepares an annual report and grant application. • The annual report details MFCU accomplishments in the last year. • The grant application requests federal funding for the year. • HHS/OIG reviews the annual report and grant application and re-certifies the MFCU. • Conduct on-site reviews and re-certifications.

35. MFCU Jurisdiction • FRAUD • Investigating and prosecuting fraud in the administration of the Medicaid program, the provision of medical assistance, or the activities of providers of medical assistance under the State Medicaid program. 42 C.F.R. §1007.11(a) • MFCUs also are authorized to investigate and prosecute fraud involving other federally funded healthcare programs where there is a Medicaid nexus. Ticket to Work and Work Incentive Improvement Act (1999) P.L. 106-170 • ABUSE & NEGLECT • The unit will also review complaints alleging abuse or neglectof patients in health care facilities receiving payments under the State Medicaid plan and may review complaints of the misappropriation of patient’s private funds in such facilities. 42 C.F.R. §1007.11(b) • MFCUs also have the option to investigate complaints of abuse or neglect of patients residing in board and care facilities (regardless of source of payment).State Fraud Policy Transmittal No. 2000-1, DHSS, (Sept. 20, 2000).

36. Outside MFCU Jurisdiction • Recipient fraud • Unless there is a suspected conspiracy with a provider

37. How Does MFCU Get Cases? • Referrals from Medicaid • The Medicaid program must refer all cases of suspected fraud to MFCU. 42 C.F.R. §455.21 • Referrals from licensing boards • Referrals from other state agencies • Hotline Tips • Patients • Employee whistleblowers • Self-Generated Referrals

38. The Medicaid Program MUST… • REFER all cases of suspected fraud to MFCU. • Provide MFCU with ACCESS to: • Agency records; • Computerized data; • Info kept by providers which is accessible by the agency. • Initiate any available action to RECOVER improper payments upon referral from MFCU.

39. Investigative Checklist

45. MFCU Prosecutorial Options • Criminal • Joint Prosecution with County Prosecutors • Direct MFCU Prosecution • Refer for Local Prosecution • Federal Prosecution • Civil • Direct MFCU Prosecution • Federal Prosecution • Parallel Proceedings

46. MFCU Jurisdiction • To obtain jurisdiction in a particular case, the attorney general delivers a REPORT OF VIOLATIONS to the appropriate prosecuting attorney. • Prosecuting attorney can: • Commence a prosecution independently • Commence a prosecution jointly with the attorney general • Declineto file a case. • A written statement must be filed with the attorney general explaining why criminal charges should not be brought. • If the prosecuting attorney takes no action, the attorney general can proceed independently.

47. Deciding How to File • MFCU looks at various factors in determining whether to file a case civilly, criminally, or to pursue parallel proceedings. • While determinations are made on a case-by-case basis, MFCU generally looks to: • Quality of care • Egregiousness of behavior (E.g., frequency, loss) • Provider’s previous education / knowledge of acts

48. Federal Health Care Fraud

49. Federal False Claims Act • Federal FCA: • “Any person who knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval . . . is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000 . . .” • The False Claims Act civil penalties were adjusted to $5,500 to $11,000 for violations occurring on or after September 29, 1999. • FCA Qui Tam (whistleblower), provisions. • Qui tam allows citizens to sue on behalf of the government in order to recover the stolen government funds. • The citizen whistleblower ("relator“) may be awarded a portion of the funds recovered, typically between15 and 30 percent.  • A qui tam suit initially remains under seal for at least 60 days during which the DOJ can investigate and decide whether to join the action • 27 states plus District of Columbia have qui tam statutes. • CA, CT, CO, DE, FL, GA, HI, IA, IL, IN, LA, MA, MD, MI, MN, NC, NV, NH, NJ, NM, NY, OK, RI, TN, TX, VA, WI

50. Deficit Reduction Act of 2005 (DRA) • Provides a financial incentive for States to enact false claims acts that establish liability to the State for the submission of false or fraudulent claims to the State’s Medicaid program. • If a State false claims act comports with specific requirements, the State is entitled to a 10% increase of amounts recovered under a State action brought pursuant to such a law. • To date, only 14 states have enacted false claims acts that are DRA compliant • Missouri does NOT have a DRA compliant false claims act and is currently not enjoying the 10% financial incentive.