The State Medicaid Auditors Who Cried, “Fraud!”

Similarly to the “Boy Who Cried Wolf” from Aesop’s fables, The state Medicaid auditors are crying, “Fraud.”

Remember in Aesop’s fables, the boy repeatedly cried, “Wolf.”  Each time the villagers ran to help the  boy, only to find the boy laughing at the villagers’ naivety.  After numerous “fakes,” a wolf truly came to hunt the boy’s sheep.  While he feverishly cried, “Wolf” at the top of his lungs, the villagers were nowhere to be found.

Now it seems that the state’s Recovery Audit Contractors (RAC) are mimicking the actions of the boy who cried wolf. How do I make this literary analogy between the boy who cried wolf and the RAC’s actions? Because the purpose of the RACs were to detect fraud.  The federal government required all states to implement a state-wide RAC program to detect fraud, not innocent paperwork mistakes.

Fraud is defined as: an intentional deception made for personal gain or to damage another individual.

If you saw WRAL 6:00 news Friday, then you saw one of my clients who had been placed on prepayment review. What a horror story!! My client noticed last August (2012) that the State stopped paying her Medicaid reimbursements. Now six months later she received a notice that her Medicaid contract was being terminated.  The reasons were unclear, but the statute  under which the State may, first, place a health care provider on prepayment review, and, subsequently, terminating the health care provider’s Medicaid contract was drafted to detect Medicaid fraud.

However, my client did not commit fraud. All the mental health services for which she was paid, were actually rendered for Medicaid recipients.  The alleged problems? Innocent paperwork errors, or, in some instances, errors on the part of the RACs.

For example, DMA Clinical Policy 8C requires the service notes to indicate the duration of the service.  However, for most of the Outpatient Behavioral Health services, the CPT code, by definition, states the duration.  If a provider bills for 90816: the services was 20-30 minutes.  Therefore, by the provider writing the CPT code, the provider stated the duration of the service.  Yet, the RACs are citing lack of duration written on the service notes, despite the CPT codes providing the duration.

Why? Why would the RACs proceed to audit Medicaid claims crying “Fraud” for these innocent paperwork errors, or in the case of the lack of duration of services, not even errors on the part of the provider?

Good question. I do not have the answers.  However, I have theories:

1.  Lack of Supervision/Confusion:  The RACs have these government contracts to audit  Medicaid payments, but the state is not supervising the audits.  Basically, the state created these RACs and then turned them loose. The lack of supervision by the state is creating a free-for-all.  The RACs are trying to do the jobs for which they were hired, but without guidance.

2.  Incentive:  Interestingly, RACs  are reimbursed by a contingent fee. Meaning, if the contracted companies recover more money from the health care providers, the contracted company received a higher reimbursement.

Now because the contracted companies are paid more if they recover more, does that create a bias? A perceived bias? Certainly a desire by the contracted companies’ employees to recover more Medicaid money; after all, the employees are only human.

Since these RACs have been implemented, many, many providers are having to defend themselves from the allegations of, “Fraud.”

I wonder if crying,”Fraud” so many times, like the boy who cried wolf, will create a sense that maybe fraud truly is not being found.  So when the RACs find true fraud, will anyone come running?

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on February 11, 2013, in Health Care Providers and Services, Medicaid, Medicaid Fraud, Medicaid Recoupment, Mental Health, Mental Illness, NC DMA Clinical Coverage Policy 8C, North Carolina, Outpatient Behavioral Health, RAC and tagged , , , . Bookmark the permalink. 11 Comments.

  1. Hmmmm….I have a slightly different situation that is somewhat analagous to your client. I was a whistler blower on the now infamous medicaid fraud committed by Linda Radeker and Vicotria Brewton (former employer) to the tune of 8.2 million dollars. What has happened in my situation is that I am now being billed for (w-9) for what she fraudently passed through my bank account. I am in the process of going through the Western NC Federal Court system for assistance, but it seems that once I provided evidence the authorities (NC Attorney General’s Office and FBI) have largely ignored me and have not protected me from harassment, assisted me with this aforementioned issue, nor mentioned any whistleblower compensation for lost wages and reward for willingly coming forward to provide evidence. I feel revictimized again! Shame on the state and the feds! Enough mental health therapists should simply stop being medicaid/medicare providers to proof the point that we are professionals who provide a useful service and deserve professional respect. Also, I put all providers who try to commit fraud and defile honest therapists’ profession on notice that we, the honest licensed therapist, will find you and turn you in to the appropriate for prosecution and arrest!

    • Ronald,

      I commend you for whistle-blowing a Medicaid provider who was committing fraud. I’m sure the decision was not easy and it sounds like you are still reaping the negative effects. I, by no means, suggest that no health care providers commit fraud. Those health care providers who commit fraud should be punished. However, many many health care providers are being treated as if they are committing fraud, when, in fact, they committed no fraud.

      Thanks for your comment. I truly hope you get all your issues resolved!


  2. Are there also Efficacy Audit Contractors?

  3. Ed,

    There should be!!! Maybe that could be your new profession! 🙂

    • I think, without sounding facetious, it would be more prudent if it were therapists and clients who did the auditing….might be more effective, motivating, and CHEAPER! I would love to have a job like this to stick to the state, feds, and unscrupolous mental health providers!

  4. Sounds ike you should see if Program Integrity is hiring:)

  5. They wouldn’t hire us because we are too honest and ethical….(eg we care about clients more than the bottom line…saving money!).

  6. Good! The Medicaid recipients should be the priority.

  7. cassandra little PHD

    OMG!! I have been fighting this excact issue for three years. In June I was indicted by the Feds for Fraud and Money Laundering, I was in complete shock. I have been in my profession for 27 years and never been in any trouble and I am now facing up to 20 years in jail. All I have ever wanted to do was serve my community and now I have lost everything. No resources to fight so I will definitely lose. I have been bullied, harassed and slandered by the governement and I have no recourse. I am hoping to one day tell my story thouroughly and hope others will do the same so decen, law abiding people like myself don’t continue to suffer through this process.

    • I am undergoing an inner struggle on how to respond to your post, Cassandra. On one hand, I am horrified at the thought that, if you are innocent, you may be thrown in jail. If this is the case, then I’m confused why you don’t have a lawyer and fight the charges tooth and nail. On the other hand, getting indicted by the feds is not a small thing. I truly hope that if the feds indicted you that they had good reason and that the reason is not over paperwork mistakes. That said, I wish you the best.

Leave a Reply

%d bloggers like this: