Tuesday, 24 June 2014

The Medicaid Black Hole That Costs Taxpayers Billions

Here’s some cheerful news: States and the federal government are doing little to stop a costly form of Medicaid fraud, according to a government report released last week.

Medicaid, the federal-state health insurance program for poor Americans, now covers more than half its members through what’s known as Medicaid managed care. States pay private companies a fixed rate to insure Medicaid patients. It has become more popular in recent years than the traditional “fee for service” arrangement, in which Medicaid programs reimburse doctors and hospitals directly for each service they provide.

Despite the growth of managed care in recent decades, officials responsible for policing Medicaid “did not closely examine Medicaid managed-care payments, but instead primarily focused their program integrity efforts on [fee-for-service] claims,” according to the Government Accountability Office, the investigative arm of Congress. The managed-care programs made up about 27 percent of federal spending on Medicaid, according to the GAO. The nonpartisan investigators interviewed authorities in California, Florida, Maryland, New Jersey, New York, Ohio, and Texas over the past 12 months.

STORY: No Background Checks Needed for Home Health Workers in 10 States
Funded jointly by the federal government and the states, Medicaid provided health insurance to about 72 million low-income Americans at a cost of $431 billion last year, according to the report. By the Medicaid agency’s own reckoning, $14.4 billion of federal spending on Medicaid constituted “improper payments,” which include both overpayments and underpayments. That’s 5.8 percent of what the federal government spends on the program. The $14 billion figure doesn’t tally what states lose to bad payments.

The fraud risk for managed care is twofold. Doctors or other health-care providers could be bilking the managed-care companies, which pass on those fraudulent costs to the government. Or the managed-care companies themselves could be perpetrating schemes that cost taxpayers money and harm patients.

What does this look like in practice? New York Times reporter Nina Bernstein wrote a Dickensian report last month detailing the competition among managed-care companies in New York to find the most profitable Medicaid clients:

Even well-meaning managed-care companies may not have an incentive to stop fraud by medical providers, the GAO says. “If [managed-care organizations] are making payments that are too high, or have some waste, fraud, and abuse, sometimes those payments then get put into the calculation for next year’s rates,” says Carolyn Yocom, director of health care at the GAO and author of the report.

The Department of Health and Human Services, in a five-page written response to the GAO included with the report, says the agency periodically assesses states’ managed-care programs, promotes best practices, and offers training for state leaders. The agency’s “comprehensive reviews have identified findings and vulnerabilities related to managed care program integrity,” according to the response. The agency also noted that managed-care audits can be more complex than policing traditional Medicaid payments, so “states can benefit from more direct support.” A spokeswoman for the department declined provide additional comment.

Part of the problem is that Medicaid in general “has not traditionally been very transparent, nor has it been very easy to see where the money goes,” the GAO’s Yocom says. Managed-care arrangements are even more difficult to monitor. “The visibility of what happens is once-removed, because of the managed-care entity itself.”


Monday, 23 June 2014

READER'S VIEWS: Enabling or blocking health insurance fraud

When the subject of health insurance is discussed someone raises the argument that because Medicare or Medicaid are government programs, they are subject to fraud.  This is usually an objection from politicians who support Free Enterprise and fear Big Government.

Let’s be honest with ourselves, any human event that involves something of value attracts fraudsters.  A bank robber, a hacker, a big company submitting false claims; all fall into the category of fraud.  Any googling of Medicare fraud brings up some infuriating examples.  For example, health care industry giant HCA (which the New York Times notes was bought by Bain Capital in 2006) eventually settled a Medicare fraud scandal (overcharging) for more than $1.7 billion.  Or, last May the feds arrested 107 health care providers, including doctors and nurses, in several cities and charged them with cheating Medicare out of $452 million.  In 2010, 94 people were charged with submitting $251 million in phony claims.  Fraud isn’t the product of scheming low-income beneficiaries – Mitt Romney’s 47 percent – it is most often committed by big companies and rich doctors, not a patient seeking a second colonoscopy.

We should admit that fraud is endemic to the insurance business, whether public or private. The Coalition Against Insurance Fraud estimates that in 2006 a total of about $80 billion was lost in the United States due to insurance fraud.  According to estimates by the Insurance Information Institute, insurance fraud accounts for about 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses.

So, how to tackle any fraud.  Putting more police on the streets is an acceptable way of reducing crime.  Private industry is free to hire as many investigators and accountants as it takes to catch fraudsters.

While research has shown that the typical anti-Medicaid-fraud worker recovers, on average, $200,000 per year, it is unpopular in some quarters to admit that hiring more government workers saves taxpayers money.  But unlike private industry, the government is not free to hire the staff and solve problems.  A major block in Congress argues that each and every new accountant is Big Government.

Currently, major government departments are even without an Inspector General to head waste, fraud and abuse programs.  The Department of the Interior has been without an IG for over 1,800 days; AID, no IG for over 900 days.

So, Congress provides neither anti-fraud heads nor anti-fraud bodies.  The knee-jerk response of “no money” and “no appointees” rather than being a deterrent, empowers fraudsters.


Sunday, 22 June 2014

NJ targeting unemployment insurance fraud; the check may not be in the mail

When the Bergen County couple filing for unemployment certified they were "able and looking for work," they did so the same way thousands of others do from home every week — by logging into the state Department of Labor website.

The online world, however, is not quite as anonymous as many believe. Every computer carries a unique electronic address so it can be found on the internet, and what alerted state investigators to this particular claim was the location of the network being used. It was not in New Jersey. It was registered to Royal Caribbean Cruises in Miami, and no one was under any illusion that the couple was looking for work at sea.

Unemployment fraud is a multimillion-dollar business in New Jersey, say officials, with 1,600 to 2,000 attempts to bilk the system each week — from the couple on vacation certifying they were able to work while cruising to the Bahamas, to hackers from all over the world trying to game the system, to people still trying to collect unemployment benefits even after finding new jobs.

"No one likes to be ripped off, but the volume of money we put out is staggering," said Harold Wirths, the commissioner of the Department of Labor and Workforce Development.
New Jersey’s Unemployment Trust Fund went broke in 2009, not only under the strain of the severe recession that led to high unemployment levels, but from years of fraud that went on through decades of neglect. Wirths said the fund is now solvent again, due in part to anti-fraud measures being put into play that he said have saved the state $448.7 million the past three years.

"We’re fighting fraud on every front," the commissioner said.

It is a national issue, according to Douglas Holmes, president of UWC Strategic Services, a Washington, D.C., group that represents businesses on unemployment issues. He suggested that 2 to 3 percent of all unemployment claims across the country might be fraudulent.

"It’s easier now to commit fraud than 10 to 20 years ago because it’s so fast," Holmes said. "So much is on the internet that you don’t have to go anywhere to file for unemployment, as long as you have a Social Security number. The money goes right into your bank account."

A private piggy bank
Here in New Jersey, a spate of recent criminal cases brought by state and federal prosecutors suggest the labor department’s unemployment insurance program served as a private piggy bank for years, paying out millions when nobody was watching:

• This month, five former prison inmates were charged by the state Attorney General’s Office with stealing $100,000 in unemployment benefits obtained while they were behind bars.

• In a wide-ranging scheme that turned unemployment fraud into a family business, 31 people — led by a Newark couple and their children — were charged with defrauding the state of more than $2 million by filing unemployment claims in the names of relatives, friends and victims of identity theft. Two of those charged, Janice Allen, 58, and her daughter, Janice Dilligard, 37, were sentenced in February to 15 years in prison. Others are awaiting trial.

• In November, Livingston accountant Todd Halpern, 49, pleaded guilty to filing $700,000 in false unemployment claims in the names of clients and others, which prosecutors said helped pay for season tickets to New York Giants games, purchases of gold and silver jewelry, and expensive wheels, including a Cadillac Escalade, a Lexus GX-470 and a classic 1957 Chevy Bel Air. He is expected to be sentenced in August.

• Ryan Bird, 36, of Clementon is awaiting sentencing after pleading guilty in federal court last June not only to scamming time-share owners out of $200,000 in bogus fees they thought would get them out of their contracts, but also to collecting $18,104 in unemployment benefits he received by claiming he was out of work.

State getting serious
Defense attorney Jef Henninger of Tinton Falls, who specializes in fraud cases, said it is clear the state is taking unemployment cheats more seriously.

"A lot of people know it’s wrong, but they don’t think it’s a crime. They think it’s a civil issue and they can pay the money back," he said. "That’s like saying I’m going to steal a car and if I caught, I’m going to give it back. Well, things don’t work that way."

It was the Janice Allen case that led labor department officials to take a second look at their fraud detection systems and realize the foxes were not only in the henhouse, but getting well fed. According to the Attorney General’s Office, the unemployment benefits paid to Allen and her family predominantly went through debit card companies associated with MetaBank, an online bank that first noticed unusual activity with the cards and went to the state with its concerns.

"That was the best thing that could have happened," said Ronald Marino, assistant commissioner of income security at the labor department. "It was their software that uncovered it."

He said they soon realized if a bank’s programming could uncover suspicious activity, so could the state.

"From that point on, we started zeroing in on it," Marino said.

In New Jersey, claimants seeking benefits must check in weekly with the labor department, certifying they are able and willing to work. But with the benefits system largely automated and computerized, no one is grilling the applicants.

Following the bank’s lead of looking for unusual transactions, the state began examining ways to electronically query its list of unemployment claimants to look for things that did not match — including "identity proofing" applicants by matching answers to background questions with public records, checking for those who had returned to work, and ultimately looking at where the claims were originating.

The state first started cross-checking unemployment claims against the National Directory of New Hires, a national database of wage and employment information culled from employer W4 new hire reports and other information, to see if those who had returned to work were still getting checks after they returned to work. From April 2011 through April 2014, the program found 272,479 "hits" indicating filed claims from those who were no longer out of work. It saved the state $323.7 million.

"Everyone wants a few more weeks," Marino said. "It’s the biggest hit to the system."

After an audit by the Office of the State Comptroller last year found $10.6 million in unemployment insurance checks had gone out to more than 7,600 inmates, who are ineligible for unemployment — including one who received $39,631 while jailed for more than a year on a drug-related offense — the state also began checking unemployment claims against databases of those incarcerated in county jails. Five former inmates, along with the wives of three of them, were charged this month with fraud, and at least 50 other names have been referred to the Attorney General’s Office.

International fraud
Pinpointing where claims originate, meanwhile, has cut off thousands of additional ineligible unemployment certifications from as far away as Kazakhstan.

Every computer hooked up to the internet carries a unique numerical code, called an Internet Protocol, or IP address. It not only tells computers how to find other computers, it also provides a physical location. But by looking at the IP address of any unemployment claim, investigators can generally figure out where the claim was made, and flag it for further inquiry.
Using a software program that looks for out-of-state IP addresses, labor department officials said they stopped 12,705 unemployment claims for $65.3 million in benefits since May of 2012. Among those cut off was an Atlantic City casino worker who had lost her job, but had been certifying her ability to work, the records showed, from Belarus.

They also began tracking what they thought was an organized crime group or hackers looking for an entry into the system. The hits were clearly automated, coming from different foreign countries every 2 hours and 2 minutes, and went on for days, from the United Kingdom, Hong Kong, Germany, Netherlands and Israel.

"We picked it up as soon as it went online," said Charles Walkowiak, a former FBI agent brought in to head the labor department’s anti-fraud unit.

And a few weeks later, the system brought their attention to the couple on the cruise ship.

Marino won’t identify them because they have not been criminally charged, but said their certification came from an IP address for a network operated by Royal Caribbean Cruises in Miami, when they claimed to be looking for work in New Jersey.

The cruise line, which did not respond to requests for comment, has internet access on its ships.

Marino said as they looked deeper into the case, they found the same couple had filed unemployment claims four months earlier on a different cruise in the Mediterranean, and for weeks were filing from an IP address in Petah Tikva in Israel. But a six-month log of the IP addresses detailing the weekly certification claims showed most came out of a computer presumed to be in their home in New Milford, in Bergen County.

The department has obtained a judgment against the couple to reclaim more than $70,000 in benefits paid to them between March and August of 2012.

Officials say they are under no illusion that they have locked the backdoor. Those stopped from certifying outside the United States can call friends in New Jersey, and have them file for them. Computer hackers can mask IP addresses. And identity theft remains a pervasive problem.

The systems are also not perfect. The department has admitted mistakes in the past, cutting off benefits to some who committed no wrongdoing.

Still, Marino said the automated checks work in sync, backstopping each other, and sniffing out suspicious unemployment claims like multiple tripwires.

"If it doesn’t hit one, it hits another," he said.


Tuesday, 10 June 2014

A Health Insurer Calls, With Questions

Not long after she signed up for health insurance under the Affordable Care Act, Judy Shoemaker received a phone call that puzzled her.

The caller said she was welcoming new members to the insurance network and then asked Ms. Shoemaker to take a survey about health care issues, so information could be provided to her physician. Ms. Shoemaker declined, saying she didn’t understand why her insurer would be seeking medical information to give to her doctor. “I thought it was strange,” said Ms. Shoemaker, a consultant to nonprofits in Indiana. “I can talk to my doctor myself.”

James Tuck, who runs a dog care business in Chicago, got a similar call after signing up for insurance through the Affordable Care Act in March. The caller said he was contacting Mr. Tuck on behalf of his new insurer, Blue Cross Blue Shield of Illinois, to go over his benefits and ask him some questions. Mr. Tuck hadn’t yet received his insurance card and was hesitant to answer questions, especially after he consulted a private health advocate, who had helped him evaluate insurance options. She advised him not to answer the queries. “She said their goal is to find a reason to get you booted off your insurance.”

Insurers say they are doing nothing of the sort. Lauren Perlstein, a spokeswoman for the Health Care Service Corporation, parent of Blue Cross Blue Shield of Illinois and plans in four other states, said in an email that the company contacted new policy holders to help “new members get the proper coverage and medical assistance they need, by helping guide them through the health care system.”

The company’s “experts” contact new members to explain benefits and answer any questions, she said, as well as to “identify members who can benefit from our personalized medical management program so they can best manage their health.”

Medical management options include, for example, programs for expectant mothers, to help make sure they get prenatal care. They are an outgrowth of disease management programs, which aim to improve care and lower costs by helping patients with chronic conditions adhere to treatment regimens.

As of April 30, the company has identified about 38,000 new members who would qualify for medical management programs “and, by working closely with providers,” has helped them more easily navigate the health care system to get proper care, she said.

Members aren’t terminated because of responses they may give on the calls, she said. Rather, “this outreach is only to help our members by providing assistance and tools to best manage their health.”

David Nash, dean of the school of population health at Thomas Jefferson University in Philadelphia, said Mr. Tuck had received “inaccurate” advice, since the Affordable Care Act bars insurers from considering your health status when enrolling you in coverage.

“It’s against the law to deny coverage for any prior conditions,” Dr. Nash said. Insurers commonly conduct such surveys, known as “health risk assessments,” to help make sure members with specific health needs receive proper treatment, as well as to help predict costs so insurers can accurately set premiums. It’s understandable, he said, that someone who hasn’t had workplace-based insurance, where such assessments are very common, might be taken aback by being asked questions about personal topics, like their exercise habits. But gathering such information helps insurers design sustainable policies, he said.

Yet Sarah O’Leary, who advised Mr. Tuck, said such insurer-initiated calls were reminiscent of those that insurance contractors made before the Affordable Care Act, to help vet applicants for individual policies for pre-existing medical conditions. (One such company contacting consumers on behalf of insurers, she said, is RSA Medical, which previously helped insurers underwrite individual applicants). Her firm, ExHale Healthcare Advocates, advises patients about medical coverage and negotiates medical bills, for fees ranging from $25 to $500 depending on the complexity of the situation.

Ms. O’Leary said she was not aware of any consumers who had been improperly terminated from coverage, but that she considered the calls a “red flag.” She advises clients not to answer health questions from their insurers unless they have an active claim.

Here are some questions about keeping your coverage under the Affordable Care Act:

What should I do if I get an unsolicited call from my insurer asking health-related questions?

Dr. Nash noted that answering insurer surveys was voluntary, but if you decline you can miss out on programs that may help you.

Cheryl Fish-Parcham, private insurance program director at Families USA, which helps consumers, said health insurance companies were most likely trying to better understand the health profile of new enrollees as a group, to help them design their offerings for next year. Or, they may be trying to get on top of patients with complex needs, such as those who suffer from multiple illnesses. It is up to consumers if they want to answer any questions from their insurer, she said, but consumers “can rest assured” that their policies can’t be canceled because of their health.

Ms. O’Leary suggests that if you get a call from your insurer that you didn’t initiate, you should at the very least hang up and call the number on the back of your insurance card, to make sure the caller is legitimate.

Is there any way I can lose my health coverage under the Affordable Care Act?

You can be terminated if you don’t pay your monthly premium, so it’s important to get your payment in on time. If you get assistance through premium tax credits, or subsidies, you’ll have a grace period before your policy is actually canceled, to allow you to catch up. Ms. Shoemaker, the Indiana consultant, said she paid her premium online several days before the due date and then telephoned to confirm her payment was properly credited.

Another way to lose coverage is if you fraudulently filled out your application. It’s not entirely clear yet what would be considered fraud, said Karen Pollitz, a health policy expert at the Kaiser Family Foundation. But one classic example might be listing a nonrelative on your application for a family policy in order to gain coverage for them; if the insurer learned the truth later, coverage could be rescinded. Saying that you don’t smoke on your application, when in fact you are a smoker, isn’t grounds for termination of coverage under the law. But if your status as a smoker is discovered, insurers can retroactively impose higher premiums and cancel you if you don’t pay.

Can disease management programs be beneficial?

A study by RAND researchers found that disease management programs, which help patients with conditions like diabetes stick to specific medical and drug regimens by, for example, having a nurse call them to remind them to refill prescriptions, can help patients and may save money. (In contrast, generic “wellness” programs focusing on, say, weight loss, didn’t save money, the study found).

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Sunday, 8 June 2014

Obamacare costs to taxpayers rise further as HHS reveals more costly fraud

On May 17, 2014, The Fiscal Times reported that the government is:

“paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors, according to internal documents and three people familiar with the situation.”
A 7-page slide presentation created by HHS confirms that one-in-four people who have signed up for Obamacare have “data discrepancies.”

Reports are that some two million people’s health care coverage may be at risk. Out of some 8.8 million persons who have signed up for coverage, about 5.5 million are in the federal insurance exchange receiving reduced rates, or benefits, to pay for their health insurance policies.
The sliding scale subsidized policies are priced based on income, family size, and geographical location of the individual. Under the law, only citizens and legal immigrants are entitled to subsidized coverage.

The presentation shows that the data errors involve information concerning details on income, citizenship and immigration status.

Julie Bataille, Director of Center for Medicare and Medicaid’s Office of Communications, says that the discrepancies can be resolved over the summer, however there is a system in place to “turn off” benefits for anyone receiving benefits but who are ineligible.

“The fact that a consumer has an inconsistency on their application does not mean there is a problem on their enrollment,” said Bataille. “Most of the time what that means is that there is more up-to-date information that they need to provide to us.”
Illegal immigrants are not eligible for health care coverage via the exchanges and the current cost of treating uninsured immigrants who entered this country illegally is estimated by The Center for Immigration Studies to be $4.3 billion a year, primarily at emergency rooms and free clinics.

American taxpayers are still paying for those costs, as well as the cost of subsidies offered through the federal exchanges.

The insurance exchanges involved have been offering subsidized private coverage to lower-income and middle-class people who are not able to access private health care via their work or who do not have work.  Some consumers will be asked to repay if they have received “too generous” of a subsidy.

Because the program has been structured around tax credits, the IRS can deduct an overpayment from a taxpayer’s following-year refund. But those deductions can only be made if the individual has a job and pays taxes.

Of those affected, discrepancies are said to be:

- 1.2 million related to income
- 505,000 related to immigration
- 461,000 related to citizenship information
- Correcting the issues will require a “laborious effort requiring hands-on work from a legion of -- workers employed by government contractor Serco, Inc.”

The administration says it will be triple-check consumer information to ensure that subsidy benefits are only being awarded to persons who are eligible due to income, immigration and citizenship status, among other factors.

In the meantime, the cost of fixing the shoddy rollout and administration of Obamacare continues to crush the middle class.
From The Heritage Foundation, following are the five most prevalent and harmful burdens the middle class will be forced to bear under Obamacare:

1. More taxes. Obamacare imposes $502 billion of new or increased taxes and fees. Heritage expert Curtis Dubay explains that several of the taxes “will ultimately be passed on to [middle-income families] through higher prices. These include the fees on medical device manufacturers, pharmaceutical companies, and health insurance companies and the new tax on tanning services.”
The middle class will also be burdened by the individual mandate to purchase insurance, new restrictions and limits on their tax-free health and flex savings accounts, and a new tax on high-cost (Cadillac) health plans.
Starting next year, Obamacare increases the Medicare payroll tax from 2.9 percent to 3.8 percent for individuals earning above $200,000 and couples earning more than $250,000 and for the first time extends the tax to income earned from investment. But the threshold for the higher rate isn’t indexed to inflation and will impact more middle-class families each year.
The 2012 Medicare trustees report states, “By the end of the long-range projection period, an estimated 80 percent of workers would pay the higher tax rate.”

2. Loss of existing coverage. As many as 35 million people could lose their existing coverage because of Obamacare. This is because Obamacare creates financial incentives for employers to drop coverage for their employees.
One report that examined the health insurance costs of 71 fortune 100 companies estimated savings of $422.4 billion between 2014 and 2023 if they dropped their employee coverage and paid the employer mandate penalty. Another study predicts that 30 percent of employers will definitely or probably drop coverage under Obamacare.
3. Higher premiums. Americans who purchase coverage in the new Obamacare exchanges will find that health insurance is still very expensive. American Enterprise Institute resident scholar Scott Gottlieb, MD, explains, “For a family of four, premiums on even one of the lower priced ‘silver’ options could still cost more than $15,000 annually on the exchanges.”
A family’s income might exclude them from subsidies but not be high enough to pay $15,000 for Obamacare’s government-approved insurance. “A family of four earning $90,000 annually takes home about $60,000 after local, state, and federal taxes. If they lose workplace coverage, and move onto the exchanges, they could find themselves spending as much as 25 percent of the family’s take home pay for an average policy ($15,000 for the ‘silver’ plan).”

4. Rising health care costs. As premiums and overall health care costs continue to rise, middle-class families, including those receiving a subsidy, will be left paying more. Beginning in 2019, Obamacare’s cost-containment strategy for the exchanges is to hold the total cost of the subsidies to 0.504 percent of GDP.
Charles Blahous, a Medicare trustee, concludes that “this limitation would likely cause the federal subsidies to grow less rapidly over the long term than the cost of health care and thus require low-income individuals in the exchanges to shoulder a steadily increasing percentage of their health costs.

5. More government control of health care. Obamacare transfers massive authority over to the Secretary of Health and Human Services and expands the role of government in delivering care and coverage.
This huge expansion of government’s role in health care delivery means that, by 2020, more than half of all Americans will be dependent on the federal government for health care and government bureaucrats will be in charge of deciding what you can and cannot buy and the level of health care you will receive.
With Americans paying for insurance via the exchanges, a repeal of the law becomes increasingly impossible.  Meaning that the program will continue to be funded via higher premiums for those who are not eligible (i.e., working) for subsidized coverage and increased consumer taxes.

GOP pollster David Winston, who advises House Republicans, says that “Obamacare” has remained unpopular”.

“The challenge for Republicans is to make this a policy fight, not a political fight. It’s incumbent upon Republicans to come up with an alternative. For most people, going back to where we were is not an option.”
Winston does not expect the laws popularity among Republicans to change much before the November midterm elections, saying, “the challenge, and opportunity, for Republicans is to come up with solutions to new issues voters are experiencing, such as unexpectedly high deductibles.”

“This plan has created a whole new raft of problems, and what they want to see is those problems resolved, and so the idea of shifting back to the previous set of problems versus the existing set of problems is not necessarily where they’re focused.”
“While health care is a very important issue, Republicans must focus on what is the overwhelmingly top issue — jobs and the economy, just like they did in 2010 with the question ‘Where are the Jobs?’ ” said David Winston.

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