Topeka — Though Medicaid fraud surely costs Kansas taxpayers at least $27 million a year, state officials aren't doing much to stop it.
Out of hundreds of potential cases involving someone knowingly charging the government for services that aren't provided, only a handful are uncovered. Even fewer are prosecuted.
In 1999, for example, the Medicaid Fraud and Abuse Division in the Kansas Attorney General's Office logged six Medicaid fraud convictions, netting the state less than $55,000.
"If I had to grade Kansas on the effort it makes in going after fraud, I'd give it a D-plus or a C-minus," said David Riley, an Omaha, Neb.-based accountant hired by the Legislative Division of Post Audit to study the state's fraud-detection efforts.
"To get the bad guys, that effort has to be at a B-plus or A-minus level."
Riley, a founding member and secretary of the Forensic Accounting Association of North America, testified Tuesday for the committee.
'No state is immune'
During his review, Riley said state officials repeatedly assured him there was little Medicaid fraud going on in Kansas.
Riley has participated in fraud reviews in Nebraska and Hawaii and said no state is immune from false claims.
"I can tell you they (Nebraska and Hawaii) have fraud and abuse going on," he said. "It's going on here, too."
About 10 percent of the nation's more than $1 trillion annual Medicaid billings are thought to involve fraud, Riley said.
"In Kansas that 10 percent figure may be high, so let's say it's only 2 percent. That's still $27 million," Riley said, noting that far less than 1 percent of the 12 million claims filed each year in Kansas are investigated.
Last year, Kansas' Medicaid payments a blend of state and federal funds came to $1.38 billion.
Riley cited several problem areas causing the state's apparent lack of enforcement:
l No one seems to be in charge. For several years, Blue Cross and Blue Shield of Kansas has administered the state's Medicaid system on behalf of the Kansas Department of Social and Rehabilitation Services.
According to SRS, Blue Cross is supposed to run computer programs aimed at detecting unusual billings. Abnormalities are supposed to be called to SRS' attention for investigation.
But Blue Cross officials say the contract is unclear on which checks are to be run and how they'll be paid.
SRS has done little to clarify the contract, Riley said.
Hundreds of suspicious billings/payments, Riley said, "end up in storage with little or no action initiated" on their validity.
"The largest area of concern," Riley said, "is the lack of initiative" on SRS' part.
l Under state law, the Fraud and Abuse Division in the Kansas Attorney General's Office can only prosecute cases submitted by SRS. It does not have the authority, Riley said, to scour the SRS/Blue Cross database on its own.
l There's little to stop someone suspected of fraud in another state from setting up shop in Kansas. Backgrounds are rarely checked.
l SRS has focused most of its attention on small-time contractors workers caring for the elderly patients in their homes, for example but does little to go after bigger players.
SRS response
Laura Howard, assistant secretary at SRS in charge of health care policy, conceded the department hasn't done enough to detect fraud.
"Our efforts have to be more sophisticated," she told committee members.
Howard said SRS is dropping its contract with Blue Cross and switching to a different contractor.
Plans call for many of the problems being ironed out in the new contract, she said.
Howard said she expected the new contract to be announced next week. She declined to identify the new company.
SRS, Howard assured committee members, "takes these issues very seriously" and expects to be made accountable.
Legislators react
Riley's findings apparently took committee members by surprise.
"It looks to me like we've got some real gaps in the system," said Rep. John Ballou, R-Gardner.
Committee vice chairwoman, Rep. Lisa Benlon, R-Shawnee, said she expected the committee would introduce legislation to give the attorney general authority to scour the state's Medicaid database and develop cases on its own.
"I want to see the process opened up," Benlon said. "We need to make it quicker and easier to get to this."
Though the Medicaid Fraud and Abuse Division was established in 1995, Atty. Gen. Carla Stovall has not pressed the Legislature for laws giving the division more clout.
"It's something we've thought about," said Stovall spokesman Mark Ohlemeier. "Medicaid fraud is a relatively new area, and it's taken some time to see how things worked out and what might be needed."
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