Targeting Medicaid fraud

It’s not in the news every day, but wherever you have vast amounts of government money, you’re going to see waste, fraud and abuse. Medicaid, the state’s program of health care for the poor, sees considerable waste and abuse – estimates suggest as much $4 billion per year. That hurts both taxpayers and the poor.

The senate initiated a comprehensive Medicaid fraud plan that was developed after statewide public hearings held by the Senate Medicaid Reform Task Force. At the hearings, the task force received opinions and suggestions from the health care industry and the law enforcement community on what could be done to strengthen the state’s efforts to detect and prevent Medicaid fraud.

The task force proposed a state cap on local Medicaid expenses and the state takeover of the local share of the Family Health Plus program, ideas that became law and that have saved local property taxpayers billions of dollars.

The senate passed the toughest, most comprehensive plan to combat Medicaid fraud in the United States this year (S. 8450) . The legislation would fight fraud and abuse at every step of the process, from billing and pre-payment review to investigation, civil recovery and criminal prosecution of Medicaid thieves. The measure was approved by both houses of the legislature and sent to the governor.

The senate anti-Medicaid fraud bill includes:

• Office of Medicaid Inspector General – The legislation consolidates the governor’s Medicaid program integrity responsibilities and over 600 staff from each of six state agencies into a new Office of Medicaid Inspector General within the Department of Health. While the office must remain within the Department of Health to receive federal matching funds and maintain access to the necessary claims information, its operations will be completely independent;

• Improved technology – The senate bill authorizes and directs the Department of Health to contract with vendors for upgraded information technology necessary to detect Medicaid fraud, conduct utilization review and coordinate third-party benefits (health plans). Improved technology would improve accountability in Medicaid expenditures throughout the process and coordinate benefits with health plans to ensure Medicaid is the payor of last resort.

• New Medicaid fraud offenses and penalties – The senate bill creates new health care fraud offenses to facilitate the criminal prosecution of Medicaid fraud;

• Local share for certain Medicaid recoveries – The bill would enable local social services districts (i.e., counties and the City of New York) to receive up to 15 percent of the gross amount collected from a fraud investigation if the district participates in the identification, investigation or development of a Medicaid fraud case. A local social services district could also receive up to 15 percent of the gross amount collected for participating in criminal fraud cases referred to the attorney general.

• Health insurance fraud report – The senate bill requires the State Insurance Department to annually submit a report detailing its investigation of health insurance fraud cases submitted by health plans. Currently, the department is investigating 2.9 percent of all such cases—far below levels for other types of suspected insurance fraud.

• Corporate compliance program – As a prerequisite for Medicaid eligibility, the senate bill requires larger Medicaid providers to enact corporate compliance and internal controls programs designed to prevent improper and inaccurate billings and fraud. The senate bill also creates an advisory opinion process to encourage proper billing.

The legislation builds on senate Medicaid fraud initiatives that were included in the 2006-07 state budget including:

• A $500,000 budget appropriation for the New York Prosecutors Training Institute (NYPTI) to conduct an educational program relating to Medicaid fraud for local district attorneys and to prepare form materials and perform research.

Medicaid fraud wastes tax dollars and drives up local taxes. Now we can get a handle on it and end it so that we can reduce pressure on taxes.

Senator Seward’s office web site is

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