A Spending Boost We Won’t Object to: Medicaid Fraud Prevention

Participants in the REAL LIFE program.

by James A. Bacon

As legislators ponder the next two-year budget, which incorporates a $2.2 billion-per-year increase in spending (14%) in FY 2022 compared to the current fiscal year, they would do well to take into account a new Medicaid scam.

Medicaid covers expenses categorized as “mental health skill building.” These mental-health services are particularly valuable to the homeless, drug and alcohol addicts, and people coming out of incarceration. Since the enactment of Medicaid expansion, the number of agencies providing such services has increased significantly. And so have the fraudsters who have learned how to game the system.

‘We have seen mental health skill builders drive their clients to our Community Center, sit in the waiting room sometimes for two to three hours while waiting for us to deliver services; meanwhile they are billing Medicaid,” says Sarah Scarbrough, director of REAL LIFE, a nonprofit that serves marginalized populations.

Engaging in what Scarbrough describes as “predatory and unethical practices,” these phony “skill builders”  have targeted the homeless next door to her facility. They discretely approach people in the breakfast-feeding line and ask if they need help with transportation or a job.

“One individual reported to us that he was promised that he was going to be taken to drop off a job application, but instead he was brought to a building on the other side of town while the skill builder was in a two hour meeting. He was then brought to drop off the application and the entire time his Medicaid was billed,” reports the REAL LIFE press release. When that individual said he no longer wanted her services, “she was very persistent and pushed on the phone, reminding him the services were free.”

Continues the press release:

Other agencies have reported Mental Health Skill Building Agencies have requested closed door meetings, telling them, ‘We will pay you $15-$20 in cash for every person you refer to us.” Similarly, the clients being served are being paid to continue to participate and engage in services.

We had a former Skill Builder, who quickly quit her position due to the unethical practices she was asked to engage in. She shared that she was told, “Do something with them for 5 minutes so you can say you helped them with mental health, but then just watch TV with them for the remaining time.” She was also told that on progress reports to report, ‘no progress’ so that they could continue to work with the person and bill.

Said Scarbrough: “Many who bully their way into the lives of those we serve through the many phone calls often pushing them and pressuring so much, they feel as if they cannot say no. In addition to this, our taxpayer dollars fund these sorts of programs, and if they are not providing a service, the funds should be spent elsewhere.”

The Attorney General’s office is tasked with policing the Medicaid program. In Governor Ralph Northam’s proposed budget, the AG’s office were allocated $14,387,303 for “Medicaid Program Services” in Fiscal Fiscal 2019 and 2020 and $14,413,873 in Fiscal 2021 and 2022 — an increase of $26,000, or 0.2%, even while inflation has been running close to 2.0% per year. In other words, real, inflation-adjusted to fight fraud has declined even as programmatic spending and enrollment has exploded.

As the REAL LIFE press release makes abundantly clear, Medicaid scammers are taking full advantage of the situation. The General Assembly needs to bolster AG funding to combat fraud prevention of risk squandering millions, maybe tens of millions, of dollars reimbursing the kind of fraudulent activity REAL LIFE describes.