FL Medicaid too lenient, report says

Mar 25, 2010

By Jim Saunders
3/25/3020 © Health News Florida

Florida Medicaid's fines for fraud and abuse have been so low --- and so often waived --- that they might not be a deterrent to wrongdoing, a new state report says. Also, it warns that officials need to set a limit on how much of state-paid premiums HMOs can keep for themselves.

The report, released Wednesday, focuses on the state Agency for Health Care Administration's handling of fraud and abuse in the Medicaid system.

It indicates that providers in recent years have often been able to avoid fines if they quickly repaid amounts that had been over-billed. Also, it indicates that fines were relatively small.

As an example, the report said only 39 percent of over-billing cases during the 2008-09 fiscal year led to fines or other sanctions against providers. It said such a lack of penalties could hurt efforts to rid Medicaid of fraud and abuse.

"Providers may consider these repayments as simply a cost of doing business and may not be dissuaded from repeating abusive behavior or continuing poor billing practices,'' the report from the Legislature's Office of Program Policy Analysis and Government Accountability says.

AHCA Secretary Tom Arnold said Wednesday the agency is changing rules that deal with fines. The changes, at least in part, would lead to the agency looking at how much money providers receive improperly and compare that to their overall Medicaid billings. Providers with high percentages of over-billing would get hit with stiffer penalties.

Senate Health Regulation Chairman Don Gaetz, R-Niceville, said he agrees that fines need to be higher when providers commit "bad acts" and try to bilk the Medicaid system.

"Bad acts ought to be penalized significantly more than they are now,'' said Gaetz, who is sponsoring a bill to try to crack down on Medicaid fraud.

The report, which is a follow-up to other studies in recent years, says AHCA has "taken steps to better safeguard" Medicaid money --- but still could do more.

It comes as lawmakers look for ways to reduce costs in the Medicaid system, which is expected to total more than $19 billion during the upcoming fiscal year. Lawmakers have vowed to reduce fraud, along with considering other money-saving steps such as requiring more Medicaid recipients to enroll in managed-care plans.

OPPAGA focused its report on the Agency for Health Care Administration, though other parts of state government, such as the attorney general's office, also are involved in trying to combat fraud.

The report said there is no "firm estimate'' on the amount of money lost to Medicaid fraud, waste and abuse. While some over-billing stems from errors, the report also said providers can deliberately bill for services that are unnecessary or never provided.

Also, the report describes what are known as "hit and run" schemes. In those cases, providers file a large number of false claims, get paid and then close their businesses before the fraud is detected.

The report includes a series of recommendations, such as calling for the use of more-advanced technology to help detect patterns of potential fraud.

It also calls for using standards, known as "medical loss ratios,'' to make sure managed-care organizations spend enough money on services to Medicaid beneficiaries --- a move that effectively would limit the amount that can go to profits, administrative costs and other expenses.

With a medical-loss ratio, the state would set a minimum percentage of money that managed-care organizations would be required to spend on care.

The report says medical-loss ratios are "particularly important as the state moves towards requiring more beneficiaries to enroll in managed care.'' About 1 million Medicaid recipients are enrolled in health-maintenance organizations, and lawmakers are looking at expanding a program that requires Medicaid recipients in five counties to enroll in managed-care plans.

Arnold said AHCA would move forward with medical-loss ratios if directed by the Legislature. But he said the agency has other ways to determine whether beneficiaries are receiving appropriate care, such as scientifically valid surveys.

"Who best to tell you whether patients are getting services than the patients themselves?'' Arnold said.

Also, Arnold argues that moving more Medicaid beneficiaries into managed-care plans is the best way to reduce fraud in the system. That is because managed-care companies are paid to take on the financial risks of caring for patients, giving the companies an incentive to avoid wasteful costs.

--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida.org.