2004 Spring, 71. Combating Health Care Fraud And Patient Abuse: The Role of the Medicaid Fraud Unit.

AuthorBy Attorney Jeffrey S. Cahill

New Hampshire Bar Journal


2004 Spring, 71.

Combating Health Care Fraud And Patient Abuse: The Role of the Medicaid Fraud Unit

New Hampshire Bar Journal Spring 2004, Volume 45, Number 1 Combating Health Care Fraud And Patient Abuse: The Role of the Medicaid Fraud Unit By Attorney Jeffrey S. Cahill I. INTRODUCTION

The Medicaid Fraud Unit ("Unit") of the Attorney General's Office has statewide jurisdiction to investigate and prosecute fraudulent and abusive practices in the provision of medical assistance under New Hampshire's Medicaid program. The Unit's duties cover fraudulent and abusive billing practices by health care practitioners as well as fraudulent activity relating to the State's administration of Medicaid (EN1).

The Unit has a second - and equally vital - responsibility. It investigates and prosecutes cases involving the victimization of vulnerable adults residing in New Hampshire's nursing and assisted living facilities (EN2). Such acts of abuse encompass physical abuse, sexual assault, emotional abuse, neglect, and financial exploitation.

New Hampshire's Medicaid Fraud Unit has been operating for twenty years (1984-2004). An eight-person team that includes two attorneys, three financial analysts/auditors, two investigators, and one legal assistant manages the Unit's investigations and prosecutions. The Unit's auditors are expected to have substantial prior experience investigating complex fraud matters. The Unit receives 75% federal funding for its operations. Over the past five years, the Unit's investigations and prosecutions have resulted in the conviction of more than 30 individuals or entities and produced $5.5 million dollars in criminal and civil recoveries.

The Medicaid Fraud Unit benefits substantially from working closely with "sister" Units located in 46 other states plus the District of Columbia. Working together, the fraud units are able to collaborate on cases originating anywhere in the country. Collectively, the 48 fraud units are committed to advancing the same objectives nationwide: (1) to combat provider fraud in the nation's Medicaid program; and (2) to protect the country's long-term care residents from being victimized by health facility employees and unscrupulous third parties.

To contact the Unit on-line, visit our website at www.doj.nh.gov/medicaid.


National Scope. Congress enacted the Medicaid program in 1965, at the same time as Medicare. Medicaid is commonly referred to as the nation's health care safety net. It covers three main groups of low-income Americans: (1) parents and children, (2) the elderly, and (3) the disabled.

Unlike Medicare, in which both the administration and financing are exclusively the province of the federal government, Medicaid is a joint venture between the states and the federal government (EN3). While the federal government must approve each state's Medicaid program, including proposed modifications, the states are responsible for the day-to-day administration of the Medicaid plan (EN4). The primary administrative duties of the state agency include enrolling eligible individuals, determining the benefits to be covered, determining the compensation for covered services, processing health care provider invoices, monitoring the quality of services, resolving grievances by applicants, enrollees, and providers, and accounting to the federal government for its share of Medicaid funds.

States must provide a minimum level of Medicaid benefits, for example: hospital care, nursing home care, and physician services. States can also opt to provide additional services. The more common optional services include prescription drugs, home and community-based care for the elderly and chronically ill ("HCBC-ECI"), and personal care and other community-based services for individuals with disabilities.

The federal government's financial commitment to a state's Medicaid program depends on the state's per capita income. The guaranteed minimum matching rate is 50% while the maximum rate is 83%. The federal government covers approximately 57% of Medicaid costs nationwide. New Hampshire's federal participation rate is 50%, a figure that has remained constant for several years (EN5). Nationally, Medicaid covers more individuals than Medicare. Approximately 40 million Americans are covered under Medicaid. About 4 million (10%) are elderly, about 7 million (17%) are blind or disabled, about 21 million (51%) are children, and about 8.6 million are adults in families with children (21%). Medicaid accounts for an estimated 7% of all federal outlays. It is the largest grant program to the states, accounting for over 40% of all federal funds flowing to the states. In the aggregate, states spend approximately 20% of their annual budgets on Medicaid.

The vast majority of Medicaid spending is used to benefit the elderly and disabled. Although approximately 73% of Medicaid beneficiaries are parents and children, that group accounts for less than 30% of Medicaid spending. The remaining 70% covers the needs of the elderly and disabled, who represent about 27% of Medicaid beneficiaries. The high-level of Medicaid spending for the elderly and disabled is driven largely by the costs associated with long-term care. Medicaid is the nation's single largest purchaser of long-term care services, accounting for about 46% of all nursing home spending and 38% of all home health care spending.

Fraud and Abuse Enforcement: National Solution. When Congress initiated the Medicaid program, it did not implement safeguards to protect the program against fraudulent practices. With few controls to prevent fraud, and without any specific state or federal law enforcement entity responsible for monitoring illegal activity, the Medicaid program's first decade of operation was marred by evidence (revealed in congressional hearings) of widespread fraud perpetrated by a dishonest segment of the health care community. Meanwhile, in New York, following revelations of abuses in the nursing home industry, an independent counsel's office was established to investigate and prosecute Medicaid fraud and abuse. Within a few years, that office had convicted more than 50 nursing home owners and operators and recovered millions of dollars in restitution and fines.

Following New York's lead, Congress passed legislation in 1977 that encouraged states to dedicate resources to investigate and prosecute health care fraud in the Medicaid program (EN6). The legislation offered 90% federal reimbursement for the first three years of operation, followed by 75% funding thereafter. Under the legislation, the fraud units are required to be organized like a task force, consisting of a team of attorneys, investigators, and auditors that are specially trained to investigate and prosecute health care fraud and patient abuse (EN7). Fraud unit operations must be detached from the state agency that administers the Medicaid program (EN8). The mandated independence is necessary because the duties of fraud units include investigating fraud in the state's administration of the Medicaid program.

When signing the law creating the fraud units, President Jimmy Carter took care to recognize the high level of integrity demonstrated by most health care practitioners:

The overwhelming majority of doctors and nursing home administrators are honest, patriotic and deeply dedicated to giving good health...

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