Fraud detection would change under statewide Florida Medicaid Reform

In my recent blog posting, I explained the likely motivation for Governor Scott to move to statewide Medicaid Reform expansion. It remains to be seen whether the Florida will follow this path. However, if mandatory managed care enrollment for Medicaid recipients does happen, the government’s approach to Medicaid fraud detection and prosecution will change. Florida’s new Attorney General, Pam Bondi, acknowledged this challenge in a recent news conference.

Under Medicaid Reform, a Jeb Bush era policy, most Medicaid recipients are required to enroll into a privately-run managed care company or provider services network. In theory, this means that the current fee-for-service system would all but disappear. Mandatory enrollment in managed care means that a middleman will be required to operate between the patient and healthcare provider. These organizations - not the state of Florida - must pay the healthcare provider claims for approved services.

According to the St. Petersburg Times article, Ms. Bondi said that the Florida A.G. office will “have to go to a different policing system. We'll need to have more auditors and forensic accountants involved.” Why? This is because Medicaid managed care makes reviewing claims for fraud more complicated.

According to Roberta K. Bradford, the Deputy Secretary for Medicaid, the Florida Agency for Health Care Administration (AHCA) Medicaid Program Integrity unit “concluded that 97% of [fraud] cases were fee-for-service related and 3% were [managed care] related.” She admits that these numbers should not be taken “to purport to represent the level of fraud and abuse in any particular arena [i.e., fee-for-service vs. managed care],” but that the agency’s “current detection methodologies” uncover vastly more fraud cases in the fee-for-service system.

If Medicaid managed care becomes mandatory, then the Attorney General’s office and AHCA may lose the opportunity to boast that they saved Florida $134 million in 2007, $124 million in improper payments and more than $56 million in fraud and abuse in 2008, and $287 million in Medicaid overpayments and ... more than $18.9 in improper payments in 2009. These announcements are designed to promote the idea that government fraud, waste and abuse fight is “not a giant money drain” but an actual money-maker, as U.S. Attorney Patrick Fitzgerald told the Chicago Sun-Times recently.

If Medicaid Reform goes statewide, profound pressure will be placed on the private managed care companies to help the new A.G. find millions in healthcare fraud.

First, the AHCA contract with managed care companies requires that Medicaid managed care companies “report all suspected or confirmed instances of provider or enrollee fraud and abuse under state and/or federal law to MPI within fifteen days.” Yes, the AHCA contract requires reporting of SUSPECTED fraud.

Next, if Medicaid fee-for-service system changes to mandatory managed care, then the recently touted federal waiver for the Florida government “to review Medicaid’s fee-for-services program and identify any outliers, anomalies, or other indicators of fraud” will be severely undermined. It remains to be seen if the waiver can be applied to managed care claims data, or if this would violate federal law, as written in the Houston Chronicle. Nonetheless, the Florida A.G.’s office will need for their forensics review. As of March of 2010, the managed care healthcare claims encounter data reporting was not sufficient for AHCA to detect fraud. (Uh oh.)

Statewide Medicaid Reform expansion will bring additional scrutiny to private managed care companies’ fraud and abuse efforts. Added government auditors will certainly bring additional legal and technology expense to managed care companies. It is unclear if this will make the Florida Medicaid program less fraudulent and more efficient. It will be interesting to follow, though.