Highlight on Alaska: ‘Good Faith’ Medicaid Fraud Guilty Plea

An ongoing federal and state criminal investigation led to guilty pleas from three individuals and entities involved in a far-reaching scheme to defraud Medicaid, according to the Alaska Department of Law’s Medicaid Fraud Control Unit (MFCU).

Background

Good Faith Services, LLC (Good Faith), was an Anchorage personal care agency. Good Faith provided eligible Medicaid recipients with personal care, transportation, and care coordination services. A citizen complaint was filed against Good Faith, which led to a joint investigation by MFCU, the Alaska Department of Health and Social Services, the HHS Office of Inspector General (OIG), the Federal Bureau of Investigation (FBI), and Immigration and Customs Enforcement (ICE). The investigation revealed that 10 full-time Good Faith office employees billed Medicaid almost $400,000 for services they claimed to be providing while simultaneously working in the office; MFCU also alleges that Good Faith fraudulently billed Medicaid for more than $1 million in services provided in violation of Alaska Administrative Regulations by PCAs who had not yet received a valid background check.

In July 2013, 25 Anchorage-based personal care attendants (PCAs) and Medicaid recipients, all of whom were associated with Good Faith, were charged with criminal medical assistance fraud. An additional 53 individuals associated with Good Faith, including 13 of the company’s 16 office staff employees, have also been charged with criminal medical assistance fraud.

Plea Deals

On November 28, 2014, Good Faith pleaded guilty to a single count of medical assistance fraud, which is a class B felony. At the same time, one of Good Faith’s owners, Agnes Francisco, entered a guilty plea to a single count of attempted medical assistance fraud, a class C felony and a related entity, and Anchorage Adult Day Services entered a plea of guilty to a single count of class B misdemeanor medical assistance fraud.

Under its plea agreement, Good Faith will be required to pay a fine of $300,000 and restitution of $1.2 million. Further, Good Faith must permanently dissolve as a corporate entity and provide a declaration to the OIG that it will no longer provide Medicaid services. This follows the state suspending Good Faith’s billing privileges in November 2013. Anchorage Adult Day Services will pay a fine of $20,000 and is permanently suspended from providing Medicaid services.

Francisco, 55, will be sentenced by the court on March 31, 2015. Under the terms of her plea agreement, the court must find that Francisco’s conduct was designed to obtain a substantial pecuniary gain with a low risk of prosecution and punishment, which is an aggravating feature allowing the court to impose a longer period of incarceration. The presumptive range is zero to two years; with the aggravator, Francisco faces up to five years. She may also be fined up to $50,000.

Medicaid Expansion has Positive Effect on Health Care for the Homeless

The Medicaid expansion option has not only increased access to health care for the homeless, but has had a positive impact on their health outcomes, and has given providers who treat homeless patients wider treatment options and increased revenue streams leading to operational improvements and additional staffing. These findings were part of a Kaiser Family Foundation (KFF) web briefing on December 15, 2014, which examined the early impacts of the Patient Protection and Affordable Care Act’s (ACA) (P.L. 111-148) Medicaid expansion on the homeless population, as well as opportunities and challenges looking forward.

The briefing, offered by KFF’s Commission on Medicaid and the Uninsured, highlighted key findings obtained from focus groups conducted with administrators, providers, and enrollment workers at four sites serving homeless individuals in states that have expanded Medicaid (Albuquerque, New Mexico; Baltimore, Maryland; Chicago, Illinois; and Portland, Oregon) and one site in a state that has not expanded (Jacksonville, Florida).

The KFF briefing draws upon the recent paper, Early Impacts of the Medicaid Expansion for the Homeless Population, co-authored by Barbara DiPietro, Director of Policy for the National Health Care for the Homeless Council; Samantha Artiga, Associate Director of the Kaiser Commission on Medicaid and the Uninsured; and Alexandra Gates, a Policy Analyst at the Commission. The paper provides an early look at the impact of the expansion for homeless providers and the patients they serve, building on an earlier KFF brief examining the potential role of Medicaid expansion for the homeless population.

Prior to Medicaid Expansion

According to Early Impacts of the Medicaid Expansion for the Homeless Population, prior to Medicaid expansion, homeless individuals were uninsured at high rates even when compared to other low-income groups. For example, of the 851,641 patients served by Health Care for the Homeless grantees in 2013, 57 percent were uninsured, compared to 35 percent uninsured patients served at all health centers and over four times the rate of the general population. In addition, the paper contends that people who are homeless have high rates of both chronic disease and acute illnesses, with many of these conditions associated with or exacerbated by their living situations.

Homeless Enrollment Levels

The Early Impacts paper indicates that Medicaid enrollment of the homeless has increased in all five of the study sites from January 2012 through July 2014:

  • Albuquerque, New Mexico increased from 5 percent to 31 percent.
  • Baltimore, Maryland increased from 51 percent to 87 percent.
  • Chicago, Illinois increased from 36 percent to 47 percent.
  • Portland, Oregon increased from 60 percent to 84 percent.
  • Jacksonville, Florida (despite no Medicaid expansion) increased from 0 percent to 3 percent.

Program Manager Viewpoint

During the briefing, Kascadare Causeya, a Program Manager at Central City Concern in Portland, Oregon, indicated that Medicare expansion resulted in the following challenges at his facility: (1) new Medicaid enrollment systems and requirements created confusion for frontline workers; (2) the lack of telephone numbers and email addresses for the homeless made follow-up contacts difficult; (3) the loss of year two funding created shortages in the enrollment workforce; and (4) the potential for Medicaid coverage loss upon annual renewal. From an enrollment worker’s perspective, however, Causeya found that their homeless clients were happy to enroll in Medicaid, willing to spread the word to other homeless persons, and their outward appearance was visibly improved after initial care.

Clinical Perspective

Nilesh Kalyanaraman, M.D., Chief Medical Officer for Health Care for the Homeless in Baltimore, Maryland, described the following clinical challenges in caring for the homeless: (1) the continued lack of reimbursement for key services (i.e., case management, outreach, and dental); (2) changing drug formularies and the need for prior authorization in managed care plans created delays in access; (3) the lack of housing; and (4) providers learning how to navigate the insurance landscape. Kalyanaraman, however, noted numerous improvements, including:

  • better access to comprehensive care (prevention services and specialty care);
  • increased availability and wider choices of medications (asthma, Hepatitis C, and arthritis drugs);
  • patients having greater control over their health (i.e., able to schedule appointments and obtain refills of medications on their own); and
  • the potential for improved health outcomes over the long term.

Administrator Viewpoint

Karen Batia, Executive Director of the Heartland Health Outreach in Chicago, Illinois, described the following challenges from the perspective of a program administrator:

  • the ongoing need for grant-based funding;
  • managed care plans require multiple provider contracts and significant increases in staff and infrastructure to fulfill compliance requirements;
  • homeless client data is fragmented and remains in silos;
  • increased demand for services stretches provider capacity and creates recruitment and retention issues; and
  • the cost of care for the homeless is initially high as clients access long-needed care.

Batia sees the following administrative opportunities: (1) increased revenue from Medicaid expansion will allow growth in staffing and infrastructure; (2) by treating the homeless, they will obtain better data on the population, which should result in a better understanding of their health needs and the associated costs; (3) the potential to establish risk stratified reimbursements based on the homeless population and appropriate outcomes; and (4) building a system of integrated services.

Kusserow on Compliance: OIG Reports $5B Return as Result of Its Efforts

The HHS Office of Inspector General (OIG) is required to issue semi-annual reports to Congress regarding the results of its efforts. On December 10, 2014, it released its second half of fiscal year (FY) 2014 report that included a summary of accomplishments for the entire year. The report included a lengthy list of achievements by the OIG. One of the major accomplishments claims was $4.9 billion improperly spent federal health care dollars having been returned to the government as result of the OIG’s oversight and investigation efforts conducted during the year. This was broken down to $834.7 million in program audits and about $4.1 billion in investigative work that included $1.1 billion as states’ shares of Medicaid restitution. The OIG also reported $15.7 billion in estimated savings resulting from legislative, regulatory, or administrative actions that were supported by report recommendations. Some other statistical accomplishments noted included a number of enforcement actions:

  • 4,017 individuals and entities were excluded from federal health care programs
  • 971 criminal actions against individuals or entities that engaged in crimes against HHS programs
  • 533 civil and administrative cases, including false claims and unjust-enrichment lawsuits filed in federal district court and civil monetary penalties administrative matters, which included both OIG-initiated actions and provider self-disclosures.
  • Participation in Department of Justice (DOJ) Strike Force efforts resulting in the filing of charges against 228 individuals or entities, 232 criminal actions, and $441 million in investigative receivables

Other highlights from the report included findings that:

  • The OIG conducted congressionally mandated reviews of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) that include the Health Insurance Exchanges, also called Marketplaces, and found that not all internal controls implemented by the federal, California, and Connecticut Marketplaces were effective in ensuring that individuals were enrolled in qualified health plans (QHPs) according to federal requirements.
  • The Exchanges were unable to resolve 2.6 million of 2.9 million inconsistencies from October through December 2013, most commonly as citizenship and income issues.
  • Medicare inappropriately paid $6.7 billion for claims for evaluation and management (E/M) services in 2010 that were incorrectly coded and/or lacked documentation, representing 21 percent of Medicare payments for E/M services that year. A further note on this was that E/M services are 50 percent more likely to be paid for in error than other Part B services.
  • Medicare and beneficiaries could save $12 billion during calendar years (CYs) 2012 through 2017 if CMS reduces hospital outpatient department payment rates for ambulatory surgical center (ASC)-approved procedures to the same level as ASC payment rates. When outpatient surgical procedures that do not pose significant risk to patients are performed in an ASC instead of an outpatient department, the payment rates are generally lower.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Highlight on Arkansas: Will Arkansas See Medicaid Contraction?

Following Republican success in the midterm elections, changes in Arkansas’ executive and legislative leadership are putting the future of Arkansas’ Medicaid expansion up in the air. Through bipartisan efforts, Arkansas is home to a unique form of Medicaid expansion under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), known as “the private option.” However, according to a New York Times report, supporters of the expansion are concerned that, with new lawmakers, legislative support may now be insufficient to keep the system in place.

Arkansas Expansion

The Arkansas private option functions somewhat differently from other Medicaid expansions by allowing covered Medicaid beneficiaries to use federal money to buy private health insurance plans on the state’s marketplace. The program is unique because, instead of offering low-income residents a health insurance plan administered by the state, Arkansas residents are choosing from the same insurance plans that higher-income residents are choosing from. The rationale behind the system, according to the New York Times, was to provide lower income residents with higher access to care and to stabilize the insurance market for higher-income residents because the Medicaid population is generally younger and healthier.

Budget

The outgoing Governor, Mike Beebe, a democrat, explained to the New York Times that future success for the Medicaid expansion is difficult because the Arkansas state constitution requires that all budget bills pass the legislature with a three-quarters majority in both of the legislative houses. In other words, because Arkansas voters replaced lawmakers in both legislative houses with legislators who campaigned against expansion, the reauthorization of Arkansas’s private option could mean elimination for the state’s novel program. For example, Linda Collins-Smith, one of the new Republican state senators, who campaigned against the program, told the New York Times, “we can’t afford it…Obamacare by any name, it is absolutely horrible policy.”

Results

Despite the incoming criticism for the program, the results of an Arkansas Hospital Association study, released by the Arkansas Center for Health Improvement (ACHI) revealed that, at least in some ways, the program is achieving the desired effects. The study revealed that during the first six months of 2014, the number of people hospitalized without insurance in Arkansas fell 46.5 percent, when compared to the same period of time in 2013. At the same time, the amount of uncompensated care losses resulting from uninsured hospital care, dropped 56.4 percent or $69.2 million. According to the ACHI release, those numbers are particularly telling because over that same period of time hospital admissions only increased one percent. Similarly, the ACHI released a factsheet detailing the successes of the private option and explaining, in particular, how the program has benefited hospitals.

Uncertain Future

The fate of Medicaid expansion in Arkansas is undecided. Although the program has brought benefits to hospitals and, according to a Gallup poll, dropped the uninsured rate 10 percent in a single year, there are new opponents who view the program as too costly. The private option, like ACA itself, is a policy that continues to be fraught with large doses of success and controversy. Now, it is up to Arkansas law makers to weight the costs and benefits of the private option and to decide whether the state’s unique Medicaid model will continue to break new ground.