Medicaid personal care programs target for fraud, say investigators

November 15, 2012

Keith Foreman, like a growing number of disabled Americans on Medicaid, qualified for a personal caregiver to help him with daily activities such as dressing, shaving and preparing meals.

Foreman, 57, who has a spinal injury, hired his girlfriend, Sheila McDonald. In 2011, McDonald received almost $5,000 from Medicaid for six months of care she provided to Foreman.

These personal-care services, which are available in all 50 states, are designed to help the sick, elderly and disabled remain in their homes and out of expensive nursing facilities. But Foreman was not living at home. During the days marked on McDonald’s time­sheets, he was housed in the Massac County jail in Metropolis, Ill., serving time for using a stolen debit card at a local liquor store. Foreman and McDonald pleaded guilty to making false statements.

Lax requirements for both caregivers and patients, along with poor state and federal oversight, have made the rapidly growing Medicaid personal-care programs an increasingly lucrative target for fraud, according to a federal report scheduled for release Thursday.

The report, by the Office of the Inspector General of the Health and Human Services Department, brings together six years of OIG investigations and 23 reports. It describes programs hindered by poor claims documentation, insufficient monitoring of claims data for fraud and waste, and a crazy-quilt of requirements for care workers in different states.

In particular, it faults the federal Centers for Medicare & Medicaid Services for inadequate oversight of the programs, whose costs are shared by states and the federal government, as is the norm for Medicaid.

“Historically, CMS has left a lot of the responsibility for overseeing waste, fraud and abuse to the states,” said Christi Grimm, special assistant to the principal deputy inspector general. “As a result, we have 301 different sets of requirements for caregivers across the states.”

Although some states mandate criminal background checks and licensing for home health workers, others lack even the most basic requirements, including age minimums, leading to cases in which juveniles escape prosecution for fraud and abuse, she said.

“We are asking CMS to step up to the plate,” Grimm said.

The report urges the CMS to improve oversight and monitoring of state plans, including standardizing rules for personal-care workers to set minimum age and education levels, and requiring criminal background checks.

In a written response, the CMS — part of the Health and Human Services Department — explicitly concurred with only one of the OIG’s recommendations: that it should provide states with claims data to help root out cases in which recipients are simultaneously receiving institutional care and home health services. As for the recommendation on establishing federal guidelines for personal-care workers, the CMS noted that there is a shortage of attendants.

CMS spokesman Brian Cook said the agency is “working to protect personal care from fraud and abuse by promoting stronger training programs for workers who provide personal care, working with states on background check programs for these workers, and developing new data methods to analyze claims for potential fraud and abuse.”

According to investigators, most fraud schemes in personal-care services involve billing for care that was not provided or was not allowed. Self-directed programs, which allow recipients to hire and manage their helpers, may be particularly vulnerable, but some prosecutions have involved home-health-care agencies.

In January, for example, the owner of a home-health-care company outside Minneapolis was sentenced to two years in prison for cheating Medicaid out of more than $650,000 in charges for personal-care services. In March, the owner of Families First Home Health Care in Sparta, N.C., pleaded guilty to fraud and money laundering stemming from a scheme in which she billed Medicaid for personal-care services she did not perform and split the proceeds with plan members.

“Fraud goes where the money is,” said Barbara Zelner, executive director of the National Association of Medicaid Fraud Control Units, which represents state agencies that investigate Medicaid fraud.

Personal-care programs have grown quickly since a 1999 Supreme Court decision held that unjustified segregation of the disabled is a civil rights violation. The ruling led to increased spending for home health services; in 2011, Medicaid paid more than $12 billion for personal-care services, up 35 percent since 2005, according to the inspector general. Investigators say fraud has kept pace. In 2010, state Medicaid fraud units investigated more than 1,000 cases involving personal care, more than any other type of Medicaid service.

Not everyone agrees with the inspector general’s views on personal-care services. In 2011, an OIG review of Medicaid claims for personal-care services in New Jersey found that 40 percent should have been denied. But Sherl Brand, president of the Home Care Association of New Jersey, which advocates for home health care providers, says the agency often draws broad conclusions based on a limited number of claims. “It is almost a bit ridiculous because of the extrapolation they do,” Brand said.

New Jersey home health workers face criminal background checks, along with certification and licensure requirements, Brand said. Personal-care-services programs save money, she said, and help disabled people live better lives. When New Jersey was considering budget cuts, Brand said, the association determined that the average cost for personal-care services was $242 per week, only slightly higher than the cost of a single day in a nursing home.

But as funding for the programs increases, fraud follows. Kirk Ogrosky, a former top federal health-care fraud prosecutor who is now a partner at the Washington law firm Arnold & Porter, said home health has long been a hotbed of fraud, both in Medicaid and Medicare. The scams, he said, are not hard to uncover. Ogrosky recalled that after an extensive analysis of Medicare claims, he sent agents out to interview certain recipients. When the agents knocked on doors, they often learned that the person they were looking for was at work, Ogrosky recalled.

“That’s utterly preposterous,” he said, “since home health requires that you are homebound.”

In other cases, Ogrosky said, agents found that home-health-care agencies were filing claims for beneficiaries who did not live at the homes indicated on the claims. “One of my favorite stories is about a homeless guy we found,” he said. “He didn’t even have a home to be homebound to.”

The Center for Public Integrity is a nonprofit, independent investigative news outlet. For more of its stories on this topic, go to www.publicintegrity.org.

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