Prescription for profit: Hits and misses as state tries to crack down on Medicaid fraud

They care for hundreds of thousands of patients across Hawaii, but some doctors who are paid by Medicaid, the state’s safety-net insurance, misuse it as a prescription for profit.

Even when they’re caught in suspected fraud, waste, and abuse, many medical providers get to stay in practice and keep right on collecting, and when there are crackdowns, some say they feel unfairly targeted, while the state’s says their own hurdles are extremely high to take cases all the way.

Medicaid is one of the state’s largest expenses, a $2 billion-plus program distributing mostly federal tax dollars to insure care for 356,000 of Hawaii’s low- and moderate-income families and nearly half of Hawaii’s children.

“If we are defrauded or overpayments are being made, that means in the end, we are denying people the services who are legitimately entitled to it,” said Department of Human Services director Pankaj Bhanot.

DHS is making inroads against payments providers shouldn’t have gotten, nearly tripling the dollar amount recovered in its dozens of annual investigations. Out of 29 cases investigated in 2014, DHS got back $687,000; 39 cases in 2015 recovered $1.56 million; and 24 cases last year netted $1.91 million in returned overpayments.

View a summary of the program and the state’s investigations into potential provider fraud here.

Medicaid Fraud Control Unit Investigations

2015: 1,938 complaints

  • Opened 95 cases for investigation
  • Closed 99 cases
  • 4 convictions

2016: 1,643 complaints

  • Opened 143 cases for investigation
  • Closed 108 cases
  • 6 convictions

2017: 552 complaints

  • Opened 21 cases for investigation
  • Closed 48 cases
  • 1 conviction

Sometimes providers have made unintentional billing errors.

“They can make those innocent mistakes, but my job is to make sure those are not made,” Bhanot said, “and if they are made, I must recover it. I can’t just let it go.”

Other times it’s outright fraud. Patients report something odd on their bills, like services they never got or dates they weren’t there.

“They say, ‘I didn’t get the diabetes shot,’ or ‘I didn’t get the tetanus shot,’ ‘I didn’t get this screening,’” Bhanot said, “because they do get their statement.”

The state’s contracted health plans check claims in their own fraud-watch departments.

“They say there are billing irregularities, there are anomalies regarding the usage of certain authorization codes, that they are using codes for services that were not provided,” Bhanot said.

Yet even when busted, these medical providers usually keep right on seeing patients, even collecting Medicaid money.

Always Investigating asked, why still do business with those who have been caught with these intentional cases?

“Very good question, because what happens is when they are found to be in violation,” Bhanot said, “they can go on the exclusion list.”

That’s a list maintained by the federal U.S. Department of Health and Human Services, Office of the Inspector General, which cuts providers off from Medicaid, but despite dozens of investigations a year, only a small handful of those end up on the exclusion list.

Click here for a look at Hawaii’s exclusion list as of May 8, 2017, and here to download Hawaii’s current exclusion list.

Always Investigating asked, if a doctor has been investigated for suspected or proven intentional fraud, happens to either not end up on the exclusion list, or get him or herself off the exclusion list, DHS still has to end up paying that same person for services again?

“That would be correct, because in certain cases a lot of the times, a mistake was made. They made the payment in full,” Bhanot said. “We have to be very, very concerned and cautious that we don’t just simply remove medical providers from their communities.”

Putting providers on the exclusion list is not DHS’ call. DHS can freeze payments for short while and hand findings over to the Attorney General’s Medicaid Fraud Control Unit to investigate the kinds of cases that could get a provider on the blackball list. The unit is within the Department of the Attorney General, so we spoke with Attorney General Doug Chin.

“The exclusion list that we’re talking about, again, is any type of recommendation like that, is always going to be based upon looking at the evidence that we have, and if all we have is just a lot of records,” Chin said. “You have to be able to prove they have a state of mind to defraud the federal government. The types of cases that involve actual fraud that’s being committed by a Medicaid provider honestly are very difficult to prove. It helps to have people to come forward to speak up, whether they were people that worked with the provider, or patients of the provider.”

How to report suspected fraud:

  • Department of Human Services Provider Fraud Hotline: (808) 692-8072
  • Attorney General Medicaid Fraud Control Unit: (808) 586-1058

So what are the kinds of things a patient or a coworker can look for to know something’s not quite right?

“Here’s what you need to do if you’re a patient: Check your bills, and we understand those can be very complicated, but if you’re looking at your bill and you see something being charged for a day you know you showed up and that wasn’t something that occurred as part of your services, then you should call us,” Chin said.

As for people inside the providers’ offices: “It really helps to have live people who have actually seen the fraud take place or seen the abuse and neglect.”

Always Investigating asked Chin, how can a provider get caught doing something and still be providing a service months or years later?

“When we’re talking about people who are potentially being prosecuted criminally, or being subject to some sort of civil penalty, you’re really talking about ending their career,” Chin said, “so in order to be able to bring those kinds of cases, it’s a very, very serious allegation that needs to be proven. I think in situations that we have, we have to be able to go very carefully through the evidence to make sure that we have enough to be able to go forward. What we’re looking at is we need to satisfy a criminal standard of beyond a reasonable doubt.”

The attorney general’s office declined to prosecute criminally one of DHS’s largest-dollar civil pursuit cases to go public: accusations against Hilo Dr. Frederick Nitta. Nitta’s attorney says the OB/GYN was unfairly targeted so the state could score a big recovery.

“He discovered an alarming rate of young women who were on drugs,” attorney Eric Seitz explained, “and so he began to create a requirement for people who came to him. (He said) ‘I will treat you, but you need to deal with the drug issue and we’re going to drug test you on a regular basis, because we need to stem the tide of drug babies who are being born.’”

To the state, Seitz says this looked like repetitive billing of unnecessary service.

“He did that for about four years and all of a sudden, out of the blue one day in about 2014, he got a letter from MedQuest saying you have been overpaid more than $2 million and we want it back by next month,” Seitz said.

Nitta’s tests covered 14 drugs a mother could be on, and he’d been billing them as 14 separate tests instead of one panel per patient. Nitta was cleared of fraud over the drug tests, and the state’s nearly $2 million reimbursement issue is still up in the air. The state sued again and got a more than $200,000 judgment over specialty rates, saying Nitta shouldn’t have billed as a general practitioner.

Nitta’s attorney plans to appeal that judgment, and says his client is a victim in a game of catch-up.

“They had been lax in going after providers who were getting paid monies they weren’t entitled to,” Seitz said, “so in sort of a knee-jerk reaction the state decided okay, we’re going to go after people.

“I certainly support going after people who are cheating,” Seitz continued, “but you have to do it in an organized way with some integrity, and in my view, Dr. Nitta has been a really significant victim of a process that has gone out of control.”

When asked if he thinks meanwhile other cases of fraud are slipping through because of the focus that’s gone to this case, Seitz replied: “I’m sure that’s the case.”

“There are lots of medical care providers who are very careful about their records, who make sure that their accounting is just spot on,” Chin said, “and so I don’t think it’s fair to say, ‘Well, I think everybody does it.’”

Always Investigating asked, does Seitz see better way to go about catching dishonest doctors and making sure potentially innocent victims aren’t caught in the crossfire?

“I think it is a complicated process, and one of the problems everyone faces and I’m sympathetic to is that the documentation, the reporting requirements, are horrendous,” Seitz said. “The first question ought to be: Is this doctor doing what he’s getting paid for? And if that happens and then you think there are some technical problems in the amounts of billings or the way the billings are being presented, then you ought to look to how you want to address that, not from a punitive standpoint, but how do we encourage this doctor not only to provide the services, but to do it properly, especially in a community like Hilo which is grossly under-served.”

DHS says it’s keeping a close watch on providers with a history of questioned practices, whether or not a case ever goes all the way to court.

“I think my eye will be on them far closer than they otherwise would have been,” Bhanot said.

Some new high-tech approaches are helping DHS head off overpayments in the first place:

  • The automated KOLEA (Kauhale Online Eligibility Application) system can quickly cross-reference eligibility, types of services, and claim settlements;
  • Supervisory staff can comb through lots of data more quickly to assign cases to the DHS investigations office; and
  • From there, some can even rise to the criminal Medicaid Fraud Control Unit AG’s office.

Starting in July, DHS will begin criminal background checks of doctors who accept Medicaid.

“We want to make sure our recipients and patients, that they are totally safe when they go there,” Bhanot said.

Enrolling new providers already involves a look at Department of Commerce and Consumer Affairs licensing, checking their standing with the U.S. Centers for Medicare & Medicaid Services (CMS), and the history tied to their national provider identifier number; and verifying just what type of doctor they are with the American Association of Medical Colleges and the American Board of Medical Specialties to weed out attempts to bill at the wrong specialty rate.

“There are a lot of instances in the crosschecks we find, those things happen all the time and we keep an eye on it,” Bhanot said.

Always Investigating asked, do some doctors say, “This is just too much of a headache, all this checking. I’m just not going to see Medicaid patients”?

“That’s fine. They can say that,” Bhanot said. “Some doctors we know for sure do not take Medicaid patients, but going through these checks may not be the reason they don’t take it. Some feel reimbursement rates are not high enough, and I think that’s a concern.”

That’s a concern that may get worse for all the Medicaid providers as the federal government weighs drastic changes to the program as they repeal and replace the Affordable Care Act. DHS doesn’t have a dollar figure yet, but officials say coverage for about 110,000 Medicaid recipients is on the line, putting even more urgency on catching and preventing Medicaid fraud.

“Every dollar is going to be at a premium,” Bhanot said. “I think that we need to make sure our resources are maximized.”

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