Is Medicaid Doing All It Can to Stop Fraud?


You won’t find anyone working in a state Medicaid agency who supports fraud, but are they doing enough to prevent it from happening? Judging by a recent Health and Human Services Office of the Inspector General report, the answer is no. The report said 41 out of 56 Medicaid agencies imposed 10 or fewer payment suspension in fiscal year 2014, allowing money to continue flowing to providers under investigation for potentially defrauding the Medicaid program.

Payment suspensions can be very effective in stopping fraudulent Medicaid providers, but should be used with caution to avoid bankrupting innocent providers, Judith Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told me. The Centers for Medicare & Medicaid Services could improve their use by relying on data mining to determine whether fraud allegations are legitimate before imposing a payment suspension, Waltz said.

Payment suspensions require a credible allegation of fraud against a provider, and can be lifted if the Medicaid agency determines there’s no fraud. The OIG recommended that the CMS provide better technical assistance to Medicaid agencies to help boost the use of payment suspensions.

While the CMS agreed with the recommendation to promote more payment suspensions, individual Medicaid agencies are often pulled in a different direction, Ellyn Sternfield, a health-care attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC in Washington, told me.

“Most Medicaid fraud investigators I know will bend over backwards not to let a suspect know they are under investigation for a particular practice and will want the program to forgo the suspension during the duration of any investigation,” Sternfield said.

Imposing a payment suspension triggers a provider’s due process rights, which can complicate an ongoing investigation, Sternfield said.

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