Louisiana Department of Health disputes “misappropriated” Medicaid funds despite evidence of fraud

Months after a Louisiana Legislative Auditor’s Office’s (LAO) report revealed $2 billion in unaccounted for or misappropriated Medicaid payments, state legislators are calling for something to be done, while the Louisiana Department of Health is stating there “is no evidence of improper payments to providers, waste or fraud.”

The Senate Health and Welfare Committee held a meeting Tuesday to discuss the LDH’s oversight of the state’s $12 billion Medicaid program, of which losses total a minimum of 17 percent.

“Let’s understand our risks and exposure and what we can do to mitigate it,” Committee Chairman Sen. Fred Mills, R-Parks, said.

But LDH Press Secretary Kelly Zimmerman told Watchdog.org that the report “did not find any evidence of improper payments to providers, waste, or fraud.

“The audit found that our managed care plans were paying providers who were either not enrolled with that plan on the date of service or not on the plan’s registry. The auditor did not recognize there is nothing inherently wrong with this practice because the managed care plans are allowed to pay out-of-network providers, which are providers who are not contracted with the plan.”

In a statement Tuesday, Republican U.S. Sen. John Kennedy said, “talk’s cheap” and pointed to “actual, real-life, specific examples of Medicaid fraud identified by the Legislative Auditor.” He listed 15 examples (out of thousands) of recipients who should not have received Medicaid payments but did.

In his list of examples, Kennedy notes that Recipient 3, whose reported income was $311,069, received $9,375 in Medicaid benefits from July 1, 2016 to March 1, 2018.

Attempts to verify income were thwarted by Senate Democrats who voted against a House-passed bill proposed by Rep. Tony Bacala. The bill would have allowed the LAO to compare state income tax returns to Medicaid recipient’s eligibility to root out error and fraud. Senate Democrats argued it unfairly targeted the poor.

“There are bad actors in every direction, and we should catch them,” he told Chief Auditor Darryl Purpera. “My suggestion to you is we have methods in place.”

Zimmerman added, “LDH has multiple system checks in place to ensure that payments are only made to known providers. Under this administration, we have taken substantial steps to improve our oversight of MCOs, including information related to their provider registries. As we improve our system, we are making changes prospectively and newer claims entered into our system reflect the most up-to-date information.”

Prior to the vote, and the report, the Legislature created the Task Force on Coordination of Medicaid Fraud Detection & Prevention Initiatives during the regular 2017 Legislative Session. Over the past year, the task force produced summaries and reports for Gov. John Bel Edwards and the public.

According to the transcript of testimony from numerous state officials, LDH made improper, misappropriated, and fraudulent Medicaid payments within three key areas.

Medicaid payments were made to unlicensed providers unauthorized to do business in Louisiana and to providers with unverified credentials whose sites were never visited by the Office of Public Health (OPH).

Ronnie Beaver, chief investigator in Attorney General Jeff Landry’s Medicaid Fraud Control Unit (MFCU) Criminal Division,, explained the existing credentialing process followed by the Office of Public Health (OPH). Despite the manual stating that site visits should be performed, they were not. The qualification OPH used was the self-attestation from the “owner that was stealing.”

Within the existing system, unlicensed providers bill and are paid for Medicaid claims. Also in AG Landry’s MFCU, supervising investigator Trevor McCall said one provider without a license billed $6.9 million in 10 months and was paid $2.6 million, and OPH never once visited the site.

“The owner of the agency was also a Medicaid recipient,” McCall said. “… She received mental health services through that facility and that facility also sent clients to her agency via referral for mental health services. The same agencies that were paying her $300,000-$400,000 per month were also paying for her Medicaid benefits.”

Another example was a business that had never had a site visit but had billed more than $1 million. Even though the business was not contracted with MCOs, it was paid $47,000 worth of non-existent MCO bills.

“If the proper credentialing had been done, the provider would not have been allowed to do any services because they were never licensed,” Beaver said.

Another was a data breach resulting in the theft of 14,000 Medicaid recipients’ information, which was sold to a New Orleans company. The owner of the company had been indicted in Georgia for Medicaid fraud just five months prior. By the time MFCU received the case, LDH had already paid $500,000 worth of Medicaid claims to the company.

Beaver pointed out that of the 300 open cases on his desk, the majority of them are of “people providing services who don’t have a license to provide those services.”

Medicaid payments also were made to a provider whose information was incomplete or left blank in the database.

Purpera, whose office filed the report and who led the task force, asked LDH representatives why provider information was missing and why “transactions were paid when requirements call for there to be detail so LDH can verify it is a good transaction, but that data was not in the database.”

Michael Boutte, LDH Medicaid Deputy Director over Health Plan Operations and Compliance, replied, “in most instances it is there but just not mapped in the way that you want to see it. But it is there, so we do have a lot of details.”

Boutte said LDH was updating its system to deny payment if details weren’t in the system.

Medicaid payments also were made to companies whose claims were rejected by LDH and for services that are not covered.

Virginia Brant, chief auditor of AG Landry’s MFCU, explained that even with details in the system, payments were made for services that should not have been covered and represent “overbilling for impossible hours of service.”

Providers billed and were paid for providing behavioral health services to children under age one; one provider had 29 such patients. No such behavioral health services exist for children under age one.

Legislative auditor Chris Magee added that one facility billed Medicaid for behavioral health services for 60 people every day for four years, “then all of a sudden a spike to over 300 in one day.” Because of the limited data provided, it is impossible to determine who actually performed the services, yet LDH still paid for them, she said.

LDH Deputy Secretary Michelle Alletto explained that the staff reviewing this information is “very small and only three employees monitor the network adequacy and the providers that are contracted with the MCOs.” She said LDH “certainly can use more resources to provide better oversight of credentialing and licensing.”

McCall noted the problem wasn’t just licensing. The amount of services being billed per day defies common sense, he said. In one case, two employees would have had to work 60 hours in one 24-hour day in order to be able to provide the services billed. In others, individuals billed for services provided totaling more than 24 hours in one day.

MFCU also interviewed Medicaid recipients, “most of which did not even know that they were receiving mental health services, because no one had been out to even ask their permission to render services to them.”

In October, Alletto said that the information being discussed by the task force would “prevent anything like that from happening in the future and there are going to be bad actors in any type of service that we provide, but the point is to have systems in place that are going to reduce the chance of that happening.”

At Tuesday’s hearing, she said, “We are the first Medicaid program in country to have this level of scrutiny, which offers opportunity to have the best program in the country. It doesn’t mean instances found are necessarily fraud. When there are issues identified, let’s immediately correct course if possible.”

But $2 billion worth of fraudulent or mismanaged payments deserves scrutiny, Sen. Norby Chabert, R-Houma indicated.

“Some of the things that jump out at me are the sheer numbers; the incident rate is truly disturbing,” he said.

This article was first published on Watchdog.org.

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