Thousands of Inmates, Dead People And Unlicensed Docs On Medicaid Gravy Train

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Ethan Barton Editor in Chief
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Four states approved $580 million of potentially phony Medicaid payments in 2011, and the officials responsible don’t seem to be in a hurry to fix the problems that allowed the wasted spending to happen in the first place.

Jail inmates, dead people and doctors previously thrown out of the program were among the thousands of recipients in the wasteful federal spending gravy train.

New Jersey, Arizona, Michigan, Florida, and likely more states, allowed the fraudulent Medicaid payments because they didn’t check databases to ensure that beneficiaries and providers were eligible, according to a Government Accountability Office report.

“The bottom line … is to narrow the windows of opportunity for improper payments,” GAO Audit Services Director Seto Bagdoyan, the report’s author, said Friday.

Preventing “fraudulent health-care providers from entering” Medicaid is the “most important element in an effective fraud-prevention program,” he said.

The GAO’s investigators chose those states for their usually credible data and because they account for about 13 percent of Medicaid’s $310 billion cost to taxpayers in 2014. The program is a major reason why the Department of Health and Human Services is the most expensive government agency, according to the report. Medicaid has been designated as high-risk since 2003.

Investigators said that the Centers for Medicare & Medicaid Services in HHS must do a better job of getting information to state officials to protect against improper payments.

Nearly 212,000 beneficiaries received $524 million, even though their Social Security numbers were either invalid or didn’t match the identity information in Social Security Administration databases, the GAO report said.

Incomplete records of beneficiaries’ identities “can be an indicator of identity-related fraud,” the report said.

Also, 8,600 beneficiaries received payments from at least two states, totaling $18.3 million. Another 3,600 jailed beneficiaries received $4.2 million, though investigators noted it’s more likely they were subjects of identity theft, since their imprisonment would make it challenging to file claims.

Further, the four states’ Medicaid programs documented $9.6 million of service to 200 dead beneficiaries.

The states’ officials told investigators they didn’t frequently use the SSA’s Death Master File, which is a database of Social Security numbers that belong to dead people.

“Without using information from the full” database, states can’t “detect individuals who have moved to and died in other states and prevent payments of potentially fraudulent benefits,” the report said.

However, the SSA inspector general reported in March that the Death Master File showed that 6.5 million likely dead people still had active Social Security numbers.

Also, an estimated $3.4 million was likely wrongfully paid to 400 Medicaid providers in 2011, according to the accountability office. Of that, around 90 Medicaid doctors with suspended or revoked licenses received approximately $2.8 million.

However, states don’t fully use the Provider Enrollment, Chain and Ownership System database, which contains information on doctors already screened for Medicare, according to the report.

For example, Michigan only uses the database for medium- or high-risk providers “to determine whether a site visit is warranted,” the report said.

Arizona officials disagreed with the accountability office and claimed the report was full of errors and misstatements. Investigators primarily dismissed the complaints.

Bagdoyan will testify on Medicaid’s fraud and abuse before a House Energy and Commerce subcommittee Tuesday.

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