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Nevada agencies fight Medicaid fraud, return millions annually to program

Date:

Sean Whaley, Nevada News Bureau: Medicaid fraud is a growing problem here and around the country, and two different Nevada agencies are tasked with investigating cases and returning ill-gotten taxpayer dollars to the program.

The cases can be worth hundreds of millions of dollars when they involve multi-state investigations of large pharmaceutical firms, such as the $400 million paid by Merck in 2008 over rates charged to the program for its prescription drugs. Nevada, which played a key role in the Merck case, received $1.5 million as its share of the nationwide settlement with the company.

Or the cases can be more modest, such as the investigation earlier this year of two elderly brothers from Las Vegas, one of whom was eligible for Medicaid while the other was not. The ineligible brother attempted to use his sibling’s Medicaid identity to pay for a surgery.

Unluckily for him but fortunately for taxpayers, both brothers had scheduled surgeries for the same day. When the two different hospitals checked with the Nevada Department of Health and Human Services to verify the eligibility information, the situation came to light. The case is still under review.

The dollars involved in Medicaid fraud are not small, and even the money recouped from the more modest cases can quickly add up.

In the first seven months of this year, $1.15 million has been recovered by the attorney general’s Medicaid Fraud Control Unit, about half of it state funds. In 2010 the total recovery in both state and federal Medicaid funds was $5.72 million, and $5.5 million in 2009.

The big year for the unit came in 2008 when nearly $10.5 million was recovered, including $1.5 million from the Merck settlement. About $4.6 million was the state’s share of the recoveries.

“Obviously this is an important unit in my office and a top priority,” Attorney General Catherine Cortez Masto said in a recent interview. “It is important what we do because at the end of the day the goal here is to ensure that we’re protecting the integrity of the Medicaid dollars, the money that comes into the state, and we’re going after the bad players, holding them accountable.”

Medicaid in Nevada will cost $1.6 billion this year

catherine-cortez-masto-5553594-2596266
Attorney General Catherine Cortez Masto. / Nevada News Bureau file photo.

Medicaid is a health insurance program for low income residents, many of them elderly or disabled. The cost of the program is shared between the states and the federal government. The program is a big cost to the state general fund and continues to grow, so fraud is a serious problem that drains taxpayer dollars at a time Nevada can least afford it.

For this 2012 fiscal year, the total Nevada Medicaid budget is $1.6 billion, with just over $500 million coming from the state general fund. The federal government is paying 55 percent of the cost of the Nevada Medicaid program. Other revenues also support the program.

Brenda Lee Burch, chief of investigations and recovery for the Division of Welfare and Supportive Services within HHS, said the fraud investigations save state taxpayer dollars.

“I truly believe that one of the best ways my unit can help save taxpayer money here in Nevada is through Medicaid investigations and prevention of fraud and recovering back those wrong payments,” she said.

Mark Kemberling, chief deputy attorney general and director of the Medicaid Fraud Control Unit since 2008, said his office is charged with investigating providers of Medicaid services. These can be physicians, a hospital, a long-term care facility and many other types of health care providers. He has been with the unit since 1996.

He has a staff of 17, with 14 positions filled. The costs of the unit are paid for through fines and other assessments resulting from successful prosecutions. No Medicaid dollars or general fund tax dollars pay for its operation.

Burch said her unit is charged with investigating Medicaid fraud by both those individuals seeking eligibility and those already enrolled in the program. Her staff of 16 investigators also review potential fraud in other programs offered by the agency, from cash assistance grants and food stamps to energy assistance grants.

It was her staff who uncovered the case of the ineligible brother trying to obtain medical services through the Medicaid program. Families attempting to share Medicaid cards to receive services for ineligible family members are becoming more frequent, she said.

For the 2011 fiscal year that ended June 30, Burch’s unit received 3,800 referrals regarding allegations of Medicaid fraud. The top two types of allocations were potential duplicate assistance in two states, and eligibility questions because of under-reported income.

So far $500,000 in over payments have been identified in the previous fiscal year for which the agency is seeking reimbursement, with another $400,000 saved in “cost avoidance,” a calculation based on keeping ineligible people off the Medicaid rolls.

Burch said the cases come to her attention from a variety of sources, including the public, a hotline, school nurses, home care staff and pharmacists, among others.

“A medical benefit for a month can be huge if you have a large family and you take into account there could be surgery and all kinds of coverage, so it is the highest cost avoidance we see for all the programs we investigate,” she said.

High stakes Medicaid fraud cases frequently rely on False Claims Act

Some of the biggest Medicaid fraud cases both in Nevada and nationally involve a legal process called qui tam, where a court action is brought against a provider, frequently a pharmaceutical firm, by an individual on behalf of a state or the federal government. It is also known as the false claims act, which Nevada and about two dozen other states have in statute.

The claims are often filed by individuals within the companies as whistle blowers. Those who file such claims can receive a portion of any settlement. There are about 250 such cases currently under way around the country currently, Kemberling said.

The Merck case was one of these and was filed under Nevada’s False Claims Act. It resulted in a landmark legal decision by U.S. District Court Judge Howard McKibben in May 2006 allowing the case to proceed.

After seven years of investigation and litigation, it was settled in 2008, returning more than $400 million to the Medicaid program nationwide. The case involved the prices charged for the prescription drugs Vioxx, a discontinued arthritis drug, and Zocor, a cholesterol drug.

Another false claims act case now under way involves Wyeth, a pharmaceutical company being sued by the United States government and 16 states, including Nevada.

In the legal action, Wyeth is alleged to have failed to provide the same discounts to the government for its drugs, Protonix Oral and Protonix IV, as it provided for private purchasers. By failing to give the government equal discounts, Wyeth fraudulently avoided paying hundreds of millions of dollars in rebates, and in so doing violated the Medicaid Drug Rebate Program, according to the lawsuit.

“What we’re doing is taking the dollars that rightfully belong to Medicaid and putting them back there if somebody fraudulently took them,” Masto said.

Audio clips:

Attorney General Catherine Cortez Masto says Medicaid fraud investigation is a top priority for her office:

092211Masto1 :25 holding them accountable.”

Masto says the fraud unit does a great job at no cost to the state general fund:

092211Masto2 :18 pays for itself.”

Brenda Lee Burch, chief of investigations and recovery for the Division of Welfare and Supportive Services, says fraudulent Medicaid costs can add up quickly:

092211Burch1 :19 that we investigate.”

Burch says recovering improper Medicaid payments is one of the best ways her unit can save taxpayer dollars:

092211Burch2 :17 those wrong payments.”

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