Medicaid fraud a $30 billion industry

Illinois taking steps to stop improper health care payments

Want to make some easy cash? Try defrauding Medicaid.

It’s a booming business, according to the federal Centers for Medicare & Medicaid Services, which says the total amount of “improper payments” for Medicaid last year totaled more than $29 billion and accounted for nearly a tenth of all payments. Just one caveat: you’ll probably get caught, and you may serve some prison time.

This illicit industry – along with other kinds of costly health care waste – is the subject of a new report released last week by the Illinois Health Care Fraud Elimination Task Force. Created by Gov. Bruce Rauner in April, the panel hopes to battle fraud, waste and abuse in Medicaid, state employee health insurance and workers’ compensation cases. The surprising thing is, however, that the vast majority of fraud in government-funded health care programs isn’t perpetrated by patients; it’s done by doctors, nurses, pharmacists and other medical providers.

Illinois already has a handful of programs to fight fraud in Medicaid. One of the main programs is the Illinois State Police Medicaid Fraud Control Unit, which investigates allegations of fraud in state-funded Medicaid programs across a handful of agencies. During the state’s 2015 fiscal year, the ISP fraud unit obtained 42 convictions and $16.9 million in recovered payments.

Earlier this month, the unit’s work led to convictions of two people in Greene County, in which a personal care provider asked the Illinois Department of Human Services for more than $28,000 in fraudulent payments. The provider split the money with her patient, who was also convicted in the case.

Also this month, ISP obtained a conviction in a case from Cook County, in which a personal care provider asked DHS for nearly $29,000 in fraudulent payments for a patient who was living in Mexico and vacationing in the Bahamas at the time.

The federal database of “excluded providers” – those individuals or businesses who aren’t allowed to work with Medicaid or Medicare programs – shows 48 providers in Springfield. Providers can be excluded for a variety of reasons, including fraud, abusing and neglecting patients, or even testing positive for illicit drugs, and some can be removed from the list after a specific time.

An “improper payment” in Medicaid or Medicare isn’t always nefarious. It can happen if a medical provider accidentally uses the wrong billing code for a procedure, for example. However, it’s possible for providers to bilk the government in many ways, such as billing for services not performed or “unbundling” – billing a bevy of related tests or procedures as individual visits to drive up the total cost.

Despite the existence of state programs to fight fraud, waste and abuse, the task force report says too many cases slip through because governmental agencies don’t communicate enough with one another and with providers. The agencies don’t do enough data collection, sharing and analysis, according to the report. It calls for fixing those deficiencies and performing more frequent audits to check for scams like inmates billing the state as medical providers.

This isn’t the first time state government has waged war on fraud in health care programs. In 2012, the Illinois Department of Healthcare and Family Services announced it was joining forces with the Illinois State Police to coordinate efforts and implement a sophisticated computer system to analyze data and root out fraud.

While announcing the task force report last week, Gov. Bruce Rauner touted a 2015 audit of the state employee group health insurance program, which Rauner said found that 6,454 dependents were receiving benefits but were not eligible for them. According to Rauner, the audit saved $22 million last fiscal year and is expected to save an estimated $32 million in the current fiscal year. Those 6,454 dependents represented about 3.5 percent of the more than 182,000 dependents in the system.

That, too, is a familiar step. In 2013, Gov. Pat Quinn’s administration began auditing the state employee group health insurance program to ensure that all beneficiaries were actually eligible to participate.

The report released last week also focuses on workplace safety as a way to reduce the state’s costs for workers’ compensation. The task force will continue to meet at least through June 2019. Read the report online at

Contact Patrick Yeagle at

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