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.

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

  1. Psst. Would you like to buy a bridge, Jim? The Medicaid Fraud operation at the AG’s office is one of the largest and best funded operations around, with most of the money coming from awards on successful cases – contingency fees. They get to eat what they kill. Their incoming pot often overflows and produces revenue that gets transferred elsewhere in state government. In reading budget amendments the other day I noticed that somebody was trying to claw back $500K or so being transferred out, and perhaps that is what is going on. But rest assured that no additional GA action or $$ is required for MFCU to do its job on bad actors like these. Since I left that office in 2002 that part of it has exploded.


    • Oh I LOVE THIS! Maybe all govt programs for fraud should work like this!

      Fraud, by the way is not just a problem with govt programs. It’s a BIG problem with private health insurance.

      Fraud is a way of life – both private and public. I consider what the Cable TV companies do as “fraud” myself.

    • To follow up on Steve’s comment, that unit is funded entirely with nongeneral funds. The $26,000 increase from the former biennium was likely the result of some technical amendments providing the unit more appropriation to spend for salary and fringe benefit increases that had already been calculated. This summary from the recent JLARC report on the operations of the Office of the Attorney General is a good depiction of the funding for that division:

      “The unit’s investigations have resulted in $29 million in collected recoveries over the past five years for Virginia’s Medicaid program, mostly from multi-state civil cases. The unit’s services are also free to Virginia. Since FY09, the state share of the unit’s costs has been paid for by recoveries collected from a major, multi-state case. These funds are expected to last until FY27.”

  2. Speaking of spending, how about spending for the gun control rally?

  3. The mentally ill who need help are scammers? Get a soul.

  4. Jim, the real issue is how the state underserved the mentally ill not cracking down on petty corruption

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