California launches plan to crack down on Medi-Cal fraud

The state attorney general says the proposal would help catch those who steal physician identification.

By Tanya Albert, amednews staff. May 17, 2004.

California officials want to get even tougher on Medi-Cal fraud, which they say costs as much as $3 billion annually -- 10% of the program's $30 billion budget.

The state has increased prosecutions by 199% over the past five years. Now it wants to take that experience and create an even more targeted and aggressive approach against those who abuse the system.

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The plan, if approved by the Legislature, would result in more scrutiny of doctors but also could help physicians who are fraud victims.

The California Medical Assn. said it supports fair and reasonable ways to root out fraud. "We support programs to catch fraud and abuse, whether it is by a patient or a physician," said CMA spokesman Peter Warren. Only a small number of doctors are involved in fraud, he noted.

The 10-point proposal, announced by California Attorney General Bill Lockyer in late April, already has the support of a bipartisan group of legislators. It would be implemented by passing six proposed bills.

"[The plan] will help us more aggressively detect, investigate and prosecute Medi-Cal fraud, protecting the system for the taxpayers who pay for it and for the beneficiaries who depend on it for vital health care," Lockyer said.

Lockyer and lawmakers are suggesting reforms that would:

Give the Dept. of Health Services the right to make unannounced visits to businesses that bill Medi-Cal to inspect records.
Create a more accurate way to track how drug manufacturers price pharmaceuticals so that the state is billed fairly.
Mail letters to Medi-Cal recipients asking them to confirm that they received the care or products, such as eyeglasses, that they were reported to receive. Doctors and others also would receive a notification for services billed under their IDs.
Provide a monetary reward for those who report fraud.
Stiffen penalties for those who knowingly interfere with a fraud investigation.
Create a task force to improve the state's fraud detection system, drawing from the experience of credit card companies and other industries that have developed more sophisticated ways of detecting problems.
Hire more officers and prosecutors to investigate and prosecute Medi-Cal fraud.
Establish geographic boundaries for how far Medi-Cal recipients can travel to get care and deny payment to doctors and others who treat non-emergency patients from outside their geographic areas.

"People are being bribed with money, sneakers for their children and other incentives to be transported hundreds of miles for unnecessary treatment, all so a fraudulent provider can bill Medi-Cal," said state Sen. Mike Machado, a Democrat.

Fine-tuning needed

The specifics of the plan still need to be worked out, said California attorney general spokeswoman Hallye Jordan. The office plans to work with the CMA and other stakeholders to fine-tune the proposal.

"We want to enlist providers and the beneficiaries in detecting fraud," she said. "We see a lot of cases where fraud would not happen if both were more involved in helping detect it." She said sending letters to doctors and patients could be particularly helpful.

In fiscal years 2001-2002 and 2002-2003, claims that doctors or others padded bills by charging for goods and services that weren't provided or by upcoding visits were part of 101 complaints that the AG's office received. That constituted 43% of complaints.

Although the proposed changes would help detect physicians who are committing fraud, they also would help protect physicians who were victims of fraud, Jordan said.

"They have been victimized by Medi-Cal fraud as well," she said. "We have found many instances where physician IDs have been stolen. We go to talk to the doctors, and they have no idea that someone has been billing the state using their ID."

In two years, 69 complaints were filed that involved someone stealing a physician's or other health professional's identification, according to the AG's statistics. That made ID theft a part of 30% of the complaints the office received from the 2001-2002 and 2002-2003 fiscal years. "Doctors are definitely a part of helping root out fraud," Jordan said.