Below is an article released by DHHS on October 17, 2012: (Remember, the 37 providers were placed on a “questionable Medicaid fraud” list with no hearing, no appeal… nothing. This means that the recipients from these providers were dropped. With no notice, the Medicaid recipients could not receive care from the providers.)

The Medicaid section of the North Carolina Department of Health and Human Services released data October 17, 2012, showing that efforts to curb expenditures for fraudulent or abusive claims are paying off to the tune of more than $19 million in a six-month period. The specific effort – placing 37 providers with questionable billing on “prepayment review” – triggered an overall 99 percent drop in their Medicaid claims to the state.

Many of the 37 were initially identified by North Carolina’s anti-fraud, data analysis software system designed to root out questionable billing practices in Medicaid. The software, designed by IBM, has already found nearly 200 providers with questionable billing worth $191 million. North Carolina is the first in the nation to use this software in the fight against Medicaid fraud.

Providers placed on prepayment review must have every one of their Medicaid claims thoroughly reviewed for compliance and for signs of fraud, waste or abuse prior to receiving payment. Because the state’s system processes some 88 million Medicaid claims a year, and federal regulators require prompt payment of those claims, most claims are paid without the closer scrutiny now possible with the IBM software.

The 37 providers cumulatively billed $19.2 million in the six month period prior to being placed on prepayment review. After DHHS took that action, their cumulative billing dropped to only $138,807. The cost avoidance for this action is just more than $19 million.

I understand fraud is important to catch and the misuse of Medicaid funds negatively impacts the entire system, but due process (a hearing or an appeal) is required before the state takes dramatic action, such as accusing providers of fraud without an appeal or hearing.