The Numbers Don’t Back Federal Allegations of Widespread Fraud

Prepare to be appalled – although if you listened to Fredrikson & Byron’s free monthly webinar last week, which happened to discuss avoiding traps associated with enrollment in Medicare and Medicaid, you can probably skip this article. 

The federal government is accusing states, primarily blue states, of tolerating fraud. As a result, they are threatening to suspend (or, in some cases, already have suspended) payment to the states until they crack down on alleged enrollment violations.  

I want to provide you with a summary of what has happened in Minnesota, because it is stunning. The state required all “high-risk organizations” to revalidate. Now, you might think of “high-risk” as some trait based on billing statistics or other organization-specific data, but in this case, you would be very wrong. “Risk” was determined solely by the types of services the organization provides.

Organizations providing adult daycare, early intensive developmental and behavioral intervention, integrated community supports, and 10 other services needed to revalidate. A total of 5,583 organizations had to revalidate, and this was to be done by the end of May.

As of early June, 2,061 had successfully revalidated. That is about 40 percent. A whopping 3,411 were notified they would be disenrolled. That is about 60 percent.  

One might assume that indicates that a sizable chunk of the organizations were frauds. But that isn’t at all what the data shows. About 2,500 of those disenrolled were because of submission of incomplete paperwork and documentation.

A total of 916 failed site visits, and four had improper background studies. So, how many were referred to the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for follow-up? Just 59.

I want to repeat the number referred to the OIG: 59. Of the organizations that were disenrolled, there is a belief that 1.7 percent merit further investigation, but 98 percent of the organizations that were disenrolled were not suspicious enough to merit further digging.

What on earth is going on here? I will posit that we have lost our collective minds.  

So, what are the errors that are resulting in disenrollment? The simple omission of the most recently elected board member will be enough to get you disenrolled. Disagreement over whether someone with the title “manager” has sufficient control over the entire organization will do it.

Having someone on the enrollment forms who recently died, and you didn’t immediately notify the state, is cause. Minor paperwork snafus are responsible for nearly all the disenrollments: the sorts of typos routinely found in government documents are now grounds for disenrollment. 

The good news is that most of the organizations that failed revalidation will ultimately get back in the program, and it sounds like it is possible that there might be retroactive pay. But for some organizations, that retroactive pay will be too late for their survival. While the large health systems can easily handle a disruption of payment that affects one of their very small units that lasts a few weeks, for many of these social services organizations, nearly the entire client roster is Medicaid recipients. And they can’t just not pay their staff or rent and continue to exist. 

I don’t want fraud in the system. But I hope we all agree that whatever forgetting to update a filing with a new board member is, it sure ain’t fraud.