Louisiana crackdown on Medicaid fraud paying off

BATON ROUGE—Louisiana Department of Health and Hospitals Secretary Alan Levine and Attorney General Buddy Caldwell announced today that Louisiana’s crackdown on Medicaid fraud is showing results for taxpayers.

“When the Attorney General and I took office two years ago, we agreed on a partnership to fight fraud and abuse, and we wanted to see results,” said DHH Sec. Levine. “Medicaid fraud is theft – from taxpayers and from those who rely on the program for their health care. I’m proud of the results so far, and I commend the Attorney General, his staff and the DHH staff who have answered our call to make this a priority.”

The results of the combined efforts of the Attorney General’s office and DHH include:

DHH increased identification of improper payments by 222 percent since fiscal year 2005, and by 337 percent since fiscal year 2007. Improper payments identified increased from $1.9 million in 2005 and $1.4 million in 2007, to more than $6.2 million in fiscal year 2009.

Of the improper payments identified, DHH’s recovery rate increased from 84 percent in fiscal year 2005 and 73 percent in fiscal year 2006 to 93 percent in fiscal year 2009, with collections increasing from $1.6 million in fiscal year 2005 to $5.85 million in fiscal year 2009. The number of recoupments increased by 120 percent, from 234 in fiscal year 2005 and 235 in fiscal year 2007 to 516 in fiscal year 2009.

As a prevention measure against prescription drug fraud and other types of enrollee fraud, DHH operates a pharmacy and provider “lock-in” program, which requires suspected Medicaid enrollees to utilize a single pharmacy or provider. The number of people in this program has increased by 23 percent since fiscal year 2007 from 1,020 to 1,253 in fiscal year 2009.

When DHH identifies possible fraud, it refers cases to the Attorney General’s Medicaid Fraud Control Unit (MFCU) for possible prosecution. The number of cases referred to the Attorney General increased to 182 in fiscal year 2009 from 47 in fiscal year 2005 (a 287 percent increase) and from 71 in fiscal year 2007 (a 156 percent increase).

The Attorney General’s office increased the number of prosecutions to 113 in fiscal year 2009 from 64 in fiscal year 2005 (a 77 percent increase) and 82 in fiscal year 2007 (a 38 percent increase).

The Attorney General is also increasing the number of convictions from prosecuting these cases. In fiscal year 2009, the Attorney General won 56 convictions, up from 39 in fiscal year 2005 (a 44 percent increase) and 44 in fiscal year 2007 (a 27 percent increase).

Total judgments from all sources obtained by the Attorney General have increased to $19.8 million in fiscal year 2009, up from $17.7 million in fiscal year ending 2005 (an increase of 12 percent), and $9 million in fiscal year 2007 (an increase of 120 percent). In the current year, the Attorney General has obtained $45.2 million in judgments, including the successful multistate prosecution of large prescription drug manufacturers.

“It should be clear that the Attorney General and DHH, together, are focused on finding people who try to steal from the taxpayers, and are aggressively pursuing them,” said Attorney General Caldwell. “I applaud this progress, and I join Secretary Levine in stepping up our challenge to our agencies to continue working even harder to root out fraud and abuse.”

Medicaid fraud is a major problem facing the nation’s health care system. The Obama administration acknowledged earlier this year that more than $55 billion of improper payments was made in Medicaid and Medicare last year alone. Estimates of several organizations, including Attorneys Generals, the Government Accountability Office and the FBI have estimated that 10 percent of all Medicaid expenses are diverted through fraud.

Secretary Levine pointed out that one of the key contributors to fraud is the very design of the program itself. Referring to the Medicaid fee-for-service program as a “pay and chase system,” Levine highlighted that, functionally, providers bill Medicaid and the state simply pays the bill. As bills are received from providers, a payment is processed, usually within a week. In the current fiscal year, the total of paid claims for Medicaid services is $6.8 billion, spanning more than 18,982 participating agencies and generating more than 60 million claims.

“We must change the design of this system to get taxpayers off the hook,” said DHH Sec. Levine. “Right now, the taxpayers shoulder all the risk for fraud. The bad guys can move faster than the government bureaucracy can, and if all we are doing is paying claims and asking questions later, than this effort simply becomes an exercise in measuring how fast we can chase dollars that we may never recover.”

DHH has proposed a transformation of the Medicaid system, moving from the fragmented, fraud-laden fee-for-service system toward a coordinated care model where every enrollee chooses a Medicaid provider network that is accountable for the funding, clinical care and clinical outcomes for their consumers. Among the provisions of this new model include mandatory fraud detection and reporting mechanism that, for the first time, will engage provider partners in the fight against fraud.

Anyone suspecting any fraudulent activity by a Medicaid provider or recipient is urged to call DHH’s Fraud Hotline at 1-800-488-2917.

The Louisiana Department of Health and Hospitals strives to protect and promote health statewide and to ensure access to medical, preventive and rehabilitative services for all state citizens. To learn more about DHH, visit http://www.dhh.louisiana.gov.

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