Tennessee Bureau of Investigation

Medicaid Fraud Control Unit

Bob SchlaflySpecial Agent- in- Charge

October 21, 2009

What is an M.F.C.U.?

MFCU (mŭ-few´-kew) n. 1. acronym for Medicaid Fraud Control Unit

• A state agency designated to investigate and prosecute provider fraud and violations of state law pertaining to fraud in the administration of the Medicaid program

• Also reviews complaints of abuse, neglect, or financial exploitation of nursing home and other assisted living residents

M.F.C.U. Jurisdiction

• Fraud in the Administration of the Program

• Provider Fraud– Doctors, Pharmacists, Dentists, etc.– Hospitals & Clinics– DME Companies– Transportation– Pharmaceutical Companies (Globals)

• Neglect and Abuse of Medicaid Patients

• Medicaid Patient’s Private Funds

Recipients are NOT Our Jurisdiction

• Federal regulations prohibit MFCUs from investigating recipient fraud

– EXCEPTION: MFCUs may investigate recipient fraud if there is an alleged conspiracy with a provider (i.e. drug diversion)

• MFCUs are prohibited from data mining - even for providers

What is the N.A.M.F.C.U.?

NAMFCU (nam-few´-koo) n. 1. acronym for National Association of Medicaid Fraud Control Units

• A professional association of state Medicaid fraud control units created in 1978 to provide training, promote communication and interstate cooperation, provide for the exchange of information, and educate the public about the work of the MFCU programs

www.namfcu.net

National Association of Medicaid Fraud Control Units

• MFCUs are in 49 states and the District of Columbia (North Dakota is the only state without one)

• 42 MFCUs are located within the offices of the State Attorney General

• All MFCUs are required to be a single, identifiable entity of state government, separate and distinct from the Medicaid agency

• All MFCUs are 75% federally funded• “Global case” recovery since 1994 is more than $3

Billion

MFCU Oversight

• The Department of Health and Human Services, Office of the Inspector General, oversees all MFCUs

• Each MFCU must comply with 12 performance standards to carry out their duties and responsibilities in an effective and efficient manner

• Annual recertification is required

Regional Comparison of MFCU Staffing Levels

Sizes of MFCUs vary greatly:– Alabama- 8 employees– Florida- 205 employees– Georgia- 56 employees– Kentucky- 27 employees– North Carolina- 28 employees– South Carolina- 14 employees– Tennessee- 35 employees

Tennessee’s MFCU

• Located within the Tennessee Bureau of Investigation (TBI) since 1984

• Responsible for identifying and helping to recover over $246.6 million since 1984 ($175.8 million since July of 2005)

• Spent only $39.0 million since 1984• Most fraud prosecutions are in federal

court• Most abuse prosecutions are in state court

$ 3,384,694

$35,161,565

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

IDENTIFIED FRAUD/ RECOVERIES VS. MFCU COSTS

(Average 2005 - 2009)

Cost

Identified / Recovered

Statistics by Year

Year Fraud

Convictions

Abuse/Patient Funds

ConvictionsRecoveries

06-07 14 12 $ 4,080,350

07-08 34 17 $39,447,075

08-09 14 21 $44,274,375

Map of Tennessee MFCU Offices

Tennessee MFCU

• Awarded National State Fraud Unit Award in 1998 and 2004

• Four agents given special recognition nationally for case work

• Like all MFCUs, is considered a “health oversight agency” under HIPAA, and is therefore authorized to receive PHI from “covered entities” and “business associates”

Things We Do…

• Investigate and prosecute providers- criminally and civilly

• Conduct office reviews onsite

• Execute search warrants

• Subpoena records

• Conduct interviews

• Make arrests if needed

…but we’re not the only ones:

• Federal Bureau of Investigation

• United States Postal Inspectors

• Internal Revenue Service

• Drug Enforcement Administration

• Health and Human Services - OIG

• Local PD / Sheriff's Offices

• Tricare / Military Inspectors

• …and many, many, more

Not to mention…

• Other state revenue and insurance regulatory agencies– Adult Protective Services– State departments of health– State Medicaid auditors

• Managed Care Organization investigators*Where applicable

TBI MFCU Caseload(4/1/08 through 3/31/09)

• 77 total cases opened– 238 abuse referrals

• 68 total cases closed• 49 cases referred out for prosecutorial

consideration, with 74 abuse cases referred to other agencies for non-criminal consideration

• 28 indictments• 35 convictions

MFCU Caselaod

• Abuse Cases– Approximately 25% of total MFCU cases

• Fraud Cases– Physicians- 31% – Medical Support- 30%

(includes nurse practitioners, physician assistants, transportation, labs, DMEs, etc.)

– Hospitals and other facilities- 7%

Healthcare Costs

• 1994 TennCare budget- $3 billion

• 2007 TennCare budget- $7 billion

• 2003- Healthcare costs reached $1.7 trillion

• 2013- Healthcare costs are predicted to reach $3.4 trillion

• Healthcare Fraud is estimated to be 10% - 20% of all health care costs

Comparative Distribution of E&M Procedure Codes by Number of Claims

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

99211 99212 99213 99214 99215

Peer Group 1 Peer Group 2 Dr. Burns

Is this Criminal?

• In this case, Dr. Burns was upcoding, but he was also downcoding to a similar degree

• In the end, Dr. Jones’ submitted claim amounts for ALL E&M procedures was in line with the average submitted claim amounts for all E&M’s of the peer groups

• Dr. Jones probably needs to be counseled on his coding methods, but there’s nothing criminal here

After further review…

• Other cases that may initially appear to be fraud:– Poor documentation: services were performed

but not detailed correctly – Ambiguity: when the rule is not clear whether

or not the service is billable– Prior authorization: if ANY “agent” of the

Medicaid program tells the provider that a certain action is permissible

After even further review…

• Other referral guidelines:– Has the provider been counseled or audited in

the past for the similar activity?– Some providers plead ignorant, but is the

ignorance intentional?– Is your evidence credible?

• Referrals from criminals looking to “cut a deal” with a prosecutor (not all bad, but proceed with caution)

• Recently fired employees• Poor data quality or mining practices

Algorithms

• High Rollers– Works well with independent home

health providers, but can be used with all provider types

– Can sometimes be explained (i.e. exclusive provider in area, institutional contracts, etc), but to find the highest overpaid, looking at the highest paid is a good place to start

– Simple Query: Amounts paid in descending order

– Highest paid are your targets

• Zombies– Services provided to dead

recipients – In many cases, claim was just

submitted in a backlog and can be explained

– Some providers may intentionally bill services immediately following the death of a patient because he or she believes it will fly under the radar

– Simple Query: Date of Service > Date of Death

Algorithms

• Insomniacs– For those who work 24 hours a day

or more– Sum the service units for a date and

convert to hours– Two ways to look at this:

• Services to a single recipient on one day from multiple providers > 24 hours

• Services to multiple recipients on one day from a single provider > 24 hours

– Some courts have ruled that services provided beyond 16 hours in a day on a consistent basis exceeds the reasonable allowance for those services by a single provider

Algorithms

• Workaholics– For those who refuse to take their

vacations– Look for providers who bill services

every day of the year – they are out there!

– Count individual service dates from a particular provider’s claims for the previous year – look for 365 or 366 on a leap year

– Once you identify these providers, someone can search vacation properties, plane tickets, hotel reservations, etc to PROVE beyond any doubt that the provider was not at work every day in that year

Algorithms

• “Neglectful” Hospital Search– Hospitals are considered full service, therefore there

is no need for home health or transportation services– Compare dates of services for patients in hospitals

(excluding the first and last dates of service) with the dates of home health and transportation services

– Your “Resort Hospital” may offer a

variety of amenities, but Medicaid

shouldn’t be paying for them!

Algorithms

Health Care FraudTrends and Schemes

• Billing for unnecessary services• Billing for more expensive services than

those rendered (“upcoding”)• Billing for services not performed• Billing for professional services not

rendered by the type of professional represented on claim form

• Billing twice for the same service

More Health Care FraudTrends and Schemes

• Kickbacks

• Off-label usage

• Drug diversion

• “Short-fills” of prescriptions

• Patient recruitment fraud

• “Cherry-picking”

• Transportation fraud

Statutory Fraud Tools

• Federal laws– 18 USC 1035- False Statements Relating to

Health Care Matters– 18 USC 1347- Health Care Fraud– 18 USC 1518- Obstruction of Criminal

Investigations of Health Care Offenses– 18 USC 1341- Mail Fraud– 31 USC 3729- False Claims

Statutory Fraud Tools

• State Laws– TCA 71-5-2601 TennCare Fraud

• May 2007- amended to include causing a fraudulent claim to be filed

• June 2007- amended to include doctor shopping by TennCare recipients

• July 2008- amended to include making false statements in connection with a TennCare fraud investigation

Statutory Fraud Tools

• TCA 71-5-181 et seq – Tennessee Medicaid False Claims Act– allows $5,000- $25,000 penalties plus

treble damages– June 2009- amended to allow TennCare

to bring administrative proceedings upon request of the Attorney General against individuals other than enrollees in cases less than $10,000.00

Recent Case Examples

• State Senator John Ford– Legislative committee member– Two- week jury trial in July 2008– Convicted on all six counts– Received over $400,000 as “consultant” to

help win a TennCare contract– Received another $400,000 as a “consultant”

to assist a TennCare MCO with state officials– Sentenced to 14 years imprisonment

Recent Case Examples

• John Emory Sawyer III– Licensed clinical psychologist– Billed for psychotherapy to nursing home

patients, when he wasn’t there– Falsely inflated the amount of time his

employees billed– More than $77,000 paid in an eight month

period for services not provided– Sentenced to 18 months incarceration

followed by 3 years supervised release

Recent Case Examples

• Glenesha Moye and Tabitha Jones– Unlicensed individuals who owned a home

health agency– Billed for unsupervised “home health” and

psychotherapy services performed by unlicensed individuals

– Pled guilty of conspiring to defraud Medicare and TennCare of more than $1.1 million

– Sentencing set for November 2009

Recent Case Examples

• Kindred Healthcare, Inc. and Pharmerica– Provide pharmaceuticals to TennCare

patients in group homes and long-term care facilities

– Billed for a higher number of pharmaceuticals than were actually administered

– Investigation prompted by billing clerk who blew the whistle, the employer was unresponsive

– Civil settlement of $1,307,752

Recent Case Examples

• Billie Anderson– Nursing Home Owner/Administrator– Had no medical director for 10 months– Presented the state with a contract for

employment of a medical director with a forged signature of a doctor

– Billed Medicaid $1.4 million as if facility was in compliance with federal regulations

– One week federal trial

Convicted and sentenced to two years imprisonment

“They cited me for not having a medical director for a short time because I had to let him go for womanizing and not charting on his patients… they found a niche to get in on me. Just because I let a doctor go who wasn’t taking care of his patients”.

Billie Anderson, as quoted in the Johnson City Press

Recent Case Examples

• Drug Diversion– Overprescribers who keep Tennessee in the

top rankings for prescriptions per capita– Four types of cases:

• Drugs for Money• Drugs for Sex• Drugs for Drugs• Prescribers who just can’t say no!

Cupid Poe

Questions?

Bob.Schlafly@tn.gov

615-744-4362