Assistant US Attorney Ted Radway on fighting Medicaid fraud

Medicaid fraud and abuse are burgeoning problems for insurers and the government. FierceHealthPayer: Anti-Fraud spoke to Ted Radway for a federal law enforcement perspective on Medicaid integrity threats and how payers can respond to them effectively.

Radway is an assistant United States attorney in the fraud and public corruption section of the U.S. Attorney's Office for the District of Columbia.

FierceHealthPayer: Anti-Fraud: What are the top areas of Medicaid fraud and abuse that payers should be aware of?

Ted Radway: We've seen an explosion of fraud in community-based treatments, home healthcare, home health agencies, community mental health clinics, assisted living facilities and group homes. We see billing for services not rendered, services provided by unqualified individuals or services tainted by kickbacks.

There are problems with school-based billings for services that aren't covered or aren't provided. Dental--especially for children--is still an issue, specifically performing and billing for unnecessary procedures which can present patient safety risks. Several U.S. attorneys' offices have prosecuted those cases.

Drug diversion is a huge, growing problem. The Office of Inspector General workplan for 2014 notes that OIG will look at Medicaid drug utilization reviews for prescription painkillers, specifically opiates. We see Medicaid beneficiaries obtaining prescriptions--usually for schedule II drugs (opiates)--and selling them back to the pharmacy or selling them to a drug ring. So it's not just the diversion, but double billing for the same medication.

In Medicaid managed care, the OIG will look at managed care organization encounter data on the provider side. Some plans are having trouble providing basic data to the Centers for Medicare & Medicaid Services on how many enrollees they have, how many providers they have, what's been paid to providers.

The OIG is also going to look at the rate setting process. There have been public allegations in several states that this process is being misused through inflated capitation rates and improper cost shifting.

FHPAF: What about Medicaid fraud related to healthcare reform?

Radway: The Affordable Care Act changes bring a new set of challenges. Anytime you add millions of covered recipients and hundreds of millions of dollars to a program, there will be increased opportunities for fraud and more potential fraudsters eyeing that pot of new money.

We'll see a focus on whether enrollees are actually eligible for the plans. That area will be ripe for fraud, and payers might not be ready for the tsunami of enrollees they could get.

There's also the new ACA requirement that Medicaid must terminate providers who have been terminated by another state program. We see providers with numerous enrollments. Some sign up under different or slightly variant names, some enroll in different locations, some enroll as group providers to get around prior termination.

Keep in mind that when providers find a scam that works, they expand, they branch out, they form other companies to bill the same fraud scheme. And they export the scheme geographically to other jurisdictions. We've seen this time and again, and I think it's going to continue.

FHPAF: What are your best tips and advice for insurers about how to fight Medicaid fraud effectively?

Radway: Use data analytics effectively. Private companies have always been ahead of the government on this front, but we're definitely catching up. And while data analytics and predictive modeling have become necessary tools in the fight against healthcare fraud, the key is to make sure we have full and accurate data.

It's also important to make early contact with law enforcement on potential fraud cases. We have tools the special investigations units don't. For example, we can conduct undercover operations and recover financial assets. But this also goes the other way: SIUs can have access to information law enforcement doesn't have, such as beneficiary complaints and documentation of provider contacts and education.

Remember that if providers defraud one healthcare program, it's likely they're defrauding others. For example, if an insurer has educated a provider on proper coding and billing procedures, and the provider changes her commercial billing but keeps billing Medicaid the same way, we can use that to show knowledge and intent; but only if payers share that history with us.

Coordination across companies is important in fraud fighting, and this goes back to the issue of defrauding more than one program. Whether it's through the National Insurance Crime Bureau, the National Health Care Anti-Fraud Association, or local working groups and task forces, the more information we can share, the more accurate our data will be which betters our chances of catching fraud before it gets too big.

FHPAF: How else can payers close vulnerability gaps?

Radway: Sometimes Medicaid vulnerabilities can only be fixed by a state agency. But if insurers are empowered by their state agency to implement claims processing edits for procedure codes, that's one of the most effective tools they can use to fight fraud.

Here's an example: Facet point injections (needles inserted into the spine) require accompanying use of fluoroscopic (x-ray) guidance to ensure the needles are inserted accurately. But if facet point injection claims arrive from providers without accompanying fluoroscopy billing, there should be an edit to catch that. That should be a red flag that providers aren't actually doing the procedure because otherwise they'd be billing for fluoroscopy as well.

If payers identify these types of coding issues, they should share information on them. We've seen examples where providers will hit one insurer on a certain scheme using specific codes like this and we shut them down. Then providers move to other plans that aren't aware of the vulnerability. We're getting better at sharing this type of information, but we can go further.

There's another issue with application process documents. We don't have uniform provider applications or agreements across jurisdictions for Medicaid. As a point of comparison, the forms Medicare uses have very thorough certifications where the provider must certify his or her knowledge of and familiarity with laws such as the anti-kickback statute and the False Claims Act and agrees in the certification to comply with them all.

Many Medicaid applications, on the other hand, have a much less thorough certification. Sometimes it's in the provider agreement or on claim forms. But nonstandard claim forms often don't contain any certification language. This is another issue payers can look at to close a vulnerability gap.

Editor's Note: This interview has been edited and condensed for clarity.