Managed Care Medicaid and Medicare Fraud and Abuse

When we hear about Medicare and Medicaid fraud and abuse cases, we typically think of cases against the operation of mills and illicit billing practices of providers. When was the last time you heard of a Federal case against Managed Care Companies (MCC) for Medicare and Medicaid fraud? We all know it is happening, but no one seems to do anything about it. With CMS’ renewed interest in the misuse of Federal funds through Medicaid and Medicare programs, the time is now. However, ARA can’t use its existing clients’ database without expecting negative repercussions. We need a joint effort with as many psychiatric hospitals, corporations and other treatment providers as possible to launch an effect counter to the increased rate of denials you have no doubt experienced over the past 10 months.

The current recession plays a critical part in accelerating the trend of the denial of admissions in full or part by capitated MCC’s claiming 17% to 38% reductions in cost over other financial models. Is there a natural logic to this trend? The State Agencies that contract with Medicaid MCC's and are required to provide oversight of them would likely have had their budget cuts resulting in reduced staff. At the same time, many states required more Medicaid contracts to be outsourced to MCC’s under at-risk severely reduced flat-rates. To make a profit, the MCC’s must cut current costs. As the provision of review services is sub-contracted out by the MCC’s, the ability to detect fraud becomes increasingly problematic at the same time that the State Agencies’ reduced staff is less capable of providing the more numerous and complex oversight required by Federal statutes. This is the proverbial domino effect.

Capitated MCC’s have a perverse incentive to deny medically necessary care at the same time that they deny such actions, claim great savings to the States’ by controlling the greedy fee-for-service providers. Claims related fraud detection techniques are well developed, but there are few procedures and/or regulations to address fraud by MCC’s. The potential for illicit monetary gain by the MCC’s has to be suspect whether it be the result of underutilization and/or denial of clinically necessary services we are all familiar with. They also do this by not providing covered services, illicit subcontracts with physicians/review organizations, or business practices that result in an unnecessary cost to the Medicaid program.

ARA has identified patterns of denials of medically necessary services, questionable “peer” review procedures, misinformation, etc. that need to be considered, but we cannot act on this information on behalf of our existing clients without expecting negative consequences to their referral base at the very least. We need to join together to identify the MCC’s who you suspect of similar activities. Here are some examples:
· Patients who receive repetitive short-term treatment but who clearly require long-term treatment. Many of these are denied services under the pretext of “chronic” or “custodial” labels.
Reviewers who routinely label suicidal or homicidal ideations as being “without intent”;
Reviewers with inappropriate board certification e.g. Geriatric or Forensic Psychiatrists, denying Children and Adolescents.
Reviewers involved in more than one level of review on the same case.
An increase in MCC’s denials on admit or a day after that immediately go to “peer” review;
MCC’s from out-of-state not abiding by rules/statutes in your State.
Denials of children referred to treatment by Child Protective Services or denied days after a delayed discharge due to Child Protective Services issues.
State Agencies “rubber-stamping” the denials of care by MCC’s.