Iowa cracks down on Medicaid fraud 

Kathryn Milton was a 96-year-old resident of Des Moines' Calvin Community nursing home when two of her caretakers began stealing checks from her room.


Over a period of four weeks, nurse aides Jolene McNew and Jodi Smith repeatedly forged checks from Milton and two other residents of the nursing home, stealing $9,415.


At the same time that was happening, a convicted burglar named Vincent Stroman was running We Care Wheelchairs, a Sioux City company paid by Medicaid to provide transportation for the disabled.

Over a period of several months, Stroman submitted a series of bogus bills for fictitious trips, collecting an extra $153,338 from the taxpayer-funded program.


The cases appear to have little in common, but each was investigated by the Iowa Department of Inspections and Appeals' Medicaid Fraud Control Unit, an 11-person task force that last year quietly pursued dozens of cases involving elder abuse and Medicaid fraud.


Over the past two years, the unit has stepped up its enforcement efforts, ferreting out more forms of fraud and winning significantly more criminal convictions.

It's a unit of government that pays for itself - and then some. During the 12-month period that ended in March, the unit recovered $11.1 million in Medicaid overpayments. The unit's expenses consumed only $1.1 million in state and federal resources.


Dean Lerner, the head of the inspections department, says the unit's work - fighting elder abuse and recovering taxpayer money lost to health care fraud - is critical.


Iowa has one of the nation's oldest populations, he said, and every dollar lost to Medicaid fraud is a dollar that can't be used to care for the poor and the sick.

Since late 2008, the unit has been headed by John Judisch, a former Polk County prosecutor who has aggressively pursued cases of fraud and abuse. Since Judisch took over, annual Medicaid overcharges recovered by the unit have grown from $1.7 million to $11.1 million.


Criminal convictions have increased from 24 per year to 62 per year.


For example, nurse aides McNew and Smith were convicted of felonies and placed on probation. Stroman, who tried to improperly collect thousands of dollars from Medicaid, was recently sentenced to 15 years in prison.

"The data doesn't lie," Lerner said. "The data shows we have been very successful."


While 49 of the 50 states have their own Medicaid fraud control unit, the Iowa office appears to be among the most cost-effective operations.


Among the states, only 12 have fewer employees in their fraud units, yet Iowa ranks seventh in terms of criminal convictions.


Judisch attributes much of the success to his staff's ability to juggle a wide range of cases. The better they get at their jobs, he said, the bigger their caseloads.

"Criminals get very good at coming up with new ways to commit fraud," he said. "They'll expend $1,000 worth of effort in coming up with ways to steal $100."






Last month, Gerald Bruening pleaded guilty of stealing $34,769 from the Marian Home care facility in Fort Dodge, where he had worked as the administrator.


Between September 2005 and August 2008, Bruening took money from the facility, used it for personal expenses and then factored those purchases into the facility's federal cost reports to justify increased Medicaid funding from the state and federal government. Bruening was sentenced to two years of probation.

In Clinton last week, Fire Chief Mark Regenwether and the city's emergency medical services director, Andrew McGovern, were fired after the city agreed to pay $4.5 million to settle a lawsuit alleging Medicaid overcharges related to ambulance calls.


The lawsuit was brought by one of the city's own firefighters, who claimed the city had falsely categorizing routine ambulance calls as trips that required advanced life support measures.


The scheme enabled the city to collect a higher rate of payment from Medicaid and Medicare.

Some fraud cases involve national settlements with major drug companies or other health care providers doing business in multiple states. In those cases, Iowa shares in the millions of dollars recovered by investigators working at the national level.






The Iowa fraud unit has been particularly successful in what Judisch calls the homegrown Medicaid-fraud cases: Iowa-focused investigations handled largely by his own staff.


In 2008, those cases accounted for just $7,543 in money recovered for taxpayers through fines and restitution. In the past three months, however, the unit's homegrown cases alone have accounted for $231,238 in recoveries.

The increased focus on Medicaid fraud involves a trade-off.


The unit once focused more of its efforts on elder abuse - cases that now get less attention from the unit. Last year, the unit investigated 139 complaints of abuse, a significant drop from the previous year's 233 investigations.


Judisch and Lerner say the shift in focus makes sense given the fact that information on suspected abuse is always shared with county prosecutors, local law enforcement officials and state care-facility inspectors.

"So while Medicaid Fraud Control Unit may not deal with some of these cases, they are being addressed by others," Lerner said.


Federal officials say state and federal agencies lose at least $60 billion each year to various forms of health care fraud. Those losses coincide with recent cuts in government services and increased demand for public assistance.


"It makes good financial sense for Iowa to continue to enhance these recovery efforts," Lerner said.

"We have a limited number of dollars to meet people's needs and we don't want any of them to go to waste," Lerner said.