A press conference last week gave Gov. Tim Walz the opportunity to say what steps his administration has taken to uncover scam health care providers that are defrauding the Minnesota Department of Human Services.\u00a0<\/p>\n
Amid questions that ranged from whether Medicaid fraud complicated the state\u2019s budget prognosis to whether publicity from fraud indirectly led to Immigrations and Customs Enforcement agents descending upon Minneapolis, Walz repeatedly returned<\/a> to the fact that the Department of Human Services, or DHS, hired an independent auditor to investigate payments in 14 Medicaid programs.\u00a0<\/p>\n \u201cWe know that the programs have been paused,\u201d Walz said last Thursday. \u201cWe have an independent auditor from the outside with the power to stop payments.\u201d<\/p>\n But the governor omitted an important detail.\u00a0<\/p>\n The independent auditor \u2014 Optum State Government Solutions, a subsidiary of health insurance giant UnitedHealth \u2014 only reviews payments made directly by DHS. Optum does not review payments made by health insurers, who are contracted by Minnesota Medicaid.\u00a0<\/p>\n Ninety percent of the state\u2019s approximately 1.2 million Medicaid recipients access services billed directly to these health insurers \u2014 which are known as managed care organizations \u2014 and not DHS.\u00a0<\/p>\n Moreover, according to DHS, managed care organizations pay 80% of direct care costs in Medicaid.<\/p>\n Put another way, the audit touted by Walz reviews roughly 20% of these 14 programs\u2019 direct care costs, costs that are ultimately paid by taxpayers as \u2014 at the end of the day \u2014 Medicaid is entirely financed by the federal and state government.\u00a0<\/p>\n That the audit only examines a small portion of claims came as a surprise even to lawmakers whose job it is to address Medicaid fraud.<\/p>\n State Rep. Kristin Robbins, R-Maplewood, said in an interview Monday that she had no idea the audit only covered claims directly paid out by DHS, even though a late October governor\u2019s press release<\/a> announcing the audit pointed this out.\u00a0<\/p>\n Related: Talking points for all. Amid wild federal uncertainty, here is what to know about Minnesota\u2019s economic outlook.\u00a0<\/a><\/p>\n Robbins, chair of the House Fraud Prevention Committee and a Republican candidate for governor, said that she nonetheless got the impression from news reports that the audit covered all payments in these programs.\u00a0<\/p>\n Robbins said that she felt misled by DHS \u2014 which did not respond until Monday to an Oct. 31 letter that she wrote inquiring about the audit\u2019s scope. Robbins now says that the Optum audit is an insufficient step to addressing fraud.\u00a0<\/p>\n \u201cThe vast majority of payments are done through managed care organizations and so I would guess that the vast majority of the fraud is on the managed care side,\u201d Robbins said.\u00a0<\/p>\n Rep. Steve Elkins, DFL-Bloomington, also sits on the Fraud Prevention Committee. Elkins has expertise in ferreting out health care fraud having worked as a data architect for Optum Technology.\u00a0<\/p>\n But even Elkins said that he was flummoxed by the audit\u2019s reach, a misunderstanding that he said he came to after reading the 26-page contract brokered by Optum and DHS.\u00a0<\/p>\n \u201cI read the contract and it was such generic boilerplate that I couldn\u2019t tell what services would be provided and did not know that it only covered fee-for-service claims,\u201d Elkins said.\u00a0<\/p>\n (Fee-for-service means direct DHS payments in this context. More on that in a sec.)<\/p>\n A spokesperson for the governor\u2019s office said that they limited the breadth of the audit to direct service payments because it would break existing contracts with the managed care organizations.<\/p>\n The spokesperson added that if patterns of fraud are diagnosed by Optum in direct payment claims, the governor and DHS may then pursue targeted action in ferreting out waste in payments done by the managed care organizations.\u00a0<\/p>\n Walz\u2019s spokesperson said that he did not specify the limitations of the audit last week because it would be too complicated in a press conference format \u2014 where a throng of reporters shout questions at the governor.<\/p>\n \u201cAt some point, we have an obligation to explain in plain language what we\u2019re doing or it becomes meaningless,\u201d said a governor\u2019s spokesperson.\u00a0<\/p>\n Here is the simplest explanation possible about what this audit really does.\u00a0<\/p>\n Could you first review what people are talking about when they discuss Medicaid fraud in Minnesota?<\/p>\n The U.S. Attorney\u2019s Office of Minnesota announced in September<\/a> that eight defendants were charged in defrauding the Housing Stabilization Services Medicaid program.\u00a0<\/p>\n The indictment alleges that these providers billed over $8 million in total to Medicaid, claiming that they were helping program recipients find housing, when they were, in fact, simply pocketing the money. The cases are before a federal judge.<\/p>\n Also, DHS in August shut down the Housing Stabilization Services program.\u00a0<\/p>\n DHS budgeted Housing Stabilization Services to cost $2.6 million annually when it started in 2020. Instead, the program racked up over $300 million in total payments before its termination.\u00a0\u00a0<\/p>\n The U.S. Attorney\u2019s Office also accused a company<\/a> called Smart Therapy of submitting $14 million in false claims for a Medicaid program to help children with autism.\u00a0<\/p>\n The U.S. Attorney\u2019s Office and DHS Inspector General say that they are just scratching the surface of uncovering fraud.\u00a0<\/p>\n \u201cWhat is still needed to address provider fraud? A lot,\u201d said DHS Inspector General James Clark at a September hearing<\/a> of the Fraud Prevention Committee. \u201cGreedy people in businesses have learned to exploit our programs.\u201d<\/p>\n What do you mean by direct payments and how does it contrast with this managed care?<\/p>\n The part of these 14 high-risk programs that Optum audits are direct payments, or \u2014 in Medicaid jargon \u2014 fee-for-service.\u00a0<\/p>\n (These 14 programs being investigated include a post-mortem on Housing Stabilization Services as well as audits of early childhood autism services and a program giving assistance to adults with disabilities.)<\/p>\n Fee-for-service means what it sounds like.\u00a0<\/p>\n To tweak the above example, DHS \u2014 and not a managed care organization \u2014 pays a $200 fee to the autism therapist for their service.\u00a0<\/p>\n Let\u2019s say that a Medicaid patient brings their child to a therapist specializing in autism care. The therapist charges $200 for an hourlong consultation.\u00a0<\/p>\n DHS \u2014 after reviewing to make sure the claim is legit \u2014 then pays the therapist that $200 for their health care service.\u00a0<\/p>\n Here, by contrast, is how managed care organizations work.\u00a0<\/p>\n There are currently eight managed care<\/a> organizations with contracts, all of which are nonprofit. Examples include Hennepin Health and PrimeWest Health.\u00a0<\/p>\n Under managed care in the above example, it is Hennepin Health, or whomever the managed care organization is, that reimburses the $200 for that therapist.\u00a0<\/p>\n Hennepin Health is later reimbursed by DHS. How much Hennepin Health is reimbursed is based on a formula by DHS that takes into account the numbers of patients enrolled in the managed care plan.\u00a0<\/p>\n To repeat, payments that shuttle through managed care are 80% of the direct care costs in Minnesota Medicaid.\u00a0<\/p>\n And \u2014 to repeat \u2014 these payments are not audited by Optum.\u00a0<\/p>\n Instead, the managed care organizations police their own payments.<\/p>\n \u201cManaged care organizations are contractually responsible for investigating fraud allegations that concern MCO recipients and payments, referring providers to law enforcement, and sanctioning providers,\u201d said a spokesperson for DHS. \u201cEach managed care organization crafts their fraud, waste and abuse detection and prevention practices within DHS standards.\u201d<\/p>\n Did the alleged Medicaid fraud happen from fee-for-service claims or managed care claims?<\/p>\n DHS said it could not ascertain this information by this story\u2019s deadline. Messages left with the U.S. Attorney\u2019s office were not returned.\u00a0<\/p>\n The indictments themselves yield a glimmer of information.<\/p>\n