Highlight on Kansas: Medicaid Privatization Dims the ‘Shining Star’ of Fraud Prevention

The privatization of Medicaid in Kansas is complicating the state’s ability to detect fraud and abuse in its $3 billion KanCare Medicaid program. According to a report from the Kansas Health Institute, when Kansas moved to a privatized Medicaid program in 2013, where Medicaid is offered through three private managed care companies, the state’s Medicaid fraud control unit was handed additional burdens that have obstructed the unit’s ability to effectively combat health care fraud. The Kansas attorney general’s Medicaid Fraud and Abuse Division 2014 Report sets out the cause of the inadequate fraud detection and points its finger at the three managed care companies who are reportedly not providing the state with adequate information to investigate abuse claims.


KanCare was devised as a cost saving mechanism in Kansas. The Medicaid program serves consumers through three managed care organizations that offer Medicaid plans. The KanCare health plans are Amerigroup of Kansas, Inc. (Amerigroup), Sunflower State Health Plan (Sunflower), and UnitedHealthcare Community Plan of Kansas (United). The two organizations in charge with oversight and administration of the program are the Kansas Department of Health and Environment (KDHE) and the Kansas Department for Aging and Disability Services (KDADS).


According to the report, the three managed care organizations are not submitting sufficient data to the state. Specifically, the attorney general reported that the managed care plans are providing incomplete and obscured claims data. The lack of adequate data is worsened by the fact that fraud investigators now have to navigate three separate organizations and three separate sets of rules and procedures when investigating claims of fraud. One example of failures in communication offered by the report was an instance where the Medicaid Fraud and Abuse Division was investigating a claim of fraud without awareness that all three of the managed care organizations either had or were in the process of their own investigation of the provider at issue.


Although KDHE, KDADS, and the state attorney general are aware of the problem, opinions differ as to how it should be corrected. According to the Kansas Health Institute, Kansas state Senator Jeff King said that a legislative reaction to the problem was a “last resort” despite the fact that he characterized the state’s Medicaid fraud unit as having historical been one of the “shining stars” of the state’s attorney general’s office. The Kansas Health Institute also reported that A.J. Kotich, a Democrat who is running against Kansas Attorney General Derek Schmidt’s in the state’s upcoming election, said that if he were elected he would “use the full authority of the office” to address the problem.

Bigger than Kansas

There are some suggestions that Kansas is not alone with its fraud control problems. A May, 2014, GAO report was devoted specifically to the fact that gaps are often developing in the tracking of Medicaid funds that are transferred through private organizations. A 2013 Medicaid Fraud Control Unit report from the HSS Office of Inspector General (OIG) highlighted similar concerns. Whatever the true cause of the inefficiencies, the problems plaguing federal and state healthcare programs are diverse and widespread. The states facing such issues need to act to correct what appear to be simple communication errors before they lead to more fundamental failures in the administration of Medicaid.