One way to avoid cutting Medicaid

(Cross-posted from the COFAR blog)

The Patrick administration’s “Community First” approach to caring for people with intellectual  and other disabilities depends on a huge, $2.6 billion, state and federally funded network of nonprofit contractors.

Many of these contractors or providers are excellent; but, all too often, we hear about cases of abuse, neglect, mismanagement, and fraud, such as the allegations this past weekend by Attorney General Martha Coakley that Adlife Healthcare and three other companies had bilked the state’s Medicaid program out of $10 million.

Adlife Healthcare would seem on the surface to be a shining example of the Community First approach.  The company’s website states that it tailors its health care programs for disabled persons in a manner that “maximizes the client’s independence and dignity.”  The program, the website states, allows clients to remain in the “familiar comfort” of their own homes, and begins with a visit from a registered nurse who then arranges for services from additional nurses, physical therapists, case managers, and home health aides.

All well and good, except that, as Coakley alleges, Adlife charged Medicaid for services without having provided them, including billing for people who had died.  Ultimately, the company over-billed the state by $5.5 million, according to Coakley.

Medicaid, which is one of the state’s largest sources of budgetary spending, funds a wide range of services, from health care for both low income families to care and services for persons with intellectual disabilities in both the state developmental centers and community-based system.   Because of its sheer size, Medicaid nationally is likely to be a source of at least $1.2 trillion in revenue cuts that the “super committee” in Congress is required to recommend by November.

But there are experts around who argue that a significant portion of those cuts would not be necessary if the state and federal governments did a better job in preventing and detecting the kind of fraud that providers such as Adlife are accused of perpetrating in the Medicaid system. 

In his 1996 book, “License to Steal: Why Fraud Plagues America’s Healthcare System,” Malcolm Sparrow maintains that if the health care industry:

learns the art of fraud control, then the industry will have learned  a discriminating way to save money — by investing in the capacity to distinguish between legitimate and illegitimate claims.  The alternative is to use less discriminating methods, such as across-the-board reductions in benefits, further restrictions on eligibility, or lower reimbursement rates for providers.

State Auditor Suzanne Bump has reportedly decided to follow Sparrow’s advice.  According to The Globe, she plans to intensify her office’s focus on Medicaid fraud and has appointed a former federal prosecutor  to head those investigations.  One Medicaid fraud expert told The Globe that most Medicaid fraud is perpetuated by “providers who take advantage of loopholes in regulations to process claims that would be detected by more rigorous analysis.”    

Last week, COFAR President Tom Frain and I met with three members of Bump’s staff, to urge them to investigate the state’s human services provider system, particularly the contracting network funded by the Department of Developmental Services.   We hope Bump’s intensified focus on Medicaid fraud will include the DDS contracting system.

We fully support the community-based system of care in Massachusetts; but as the Adlife and too many other examples show, it is a system that is all too vulnerable to waste, fraud, and abuse and needs much better governmental oversight than is currently the case.