New Tools to Fight Fraud Child Welfare Programs

Once again, the U.S. Department of Health and Human Services in partnership with the U.S. Department of Justice plum forgot to address the multi-billion dollar industry of child welfare fraud.

Why, you ask?

Because there are not enough Inspectors General and Attorneys General reading my posts.

The Affordable Care Act takes historic steps toward combating health care fraud, waste and abuse by providing critical new tools to crack down on entities and individuals attempting to defraud Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and private insurance plans....except child welfare.

The Centers for Medicare & Medicaid Services (CMS) is using state-of-the-art technology review claims before they are paid to track fraud trends and flag suspect activity. Everyone knows an individual is guilty until proven innocent in child abuse and neglect proceedings which means it is impossible to review a damn claim, no matter how fancy the computers.  SACWIS is not state of the art because the states will report what they want, when they want where details on legitimacy of the claims are kept a secret.  New power to fight fraud, granted in the health reform law, will also help achieve the 2012 goal of cutting the rate of improper payment claims in the traditional Medicare program by half.  Child welfare is a traditional Medicaid program.

Summary of Fraud Prevention Accomplishments Under the Affordable Care Act

Tough New Rules and Sentences for Criminals: The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50 percent for crimes that involve more than $1 million in losses. In child welfare, you get to keep the money and immunity if busted.  The law establishes penalties for obstructing a fraud investigation or audit and makes it easier for the government to recapture any funds acquired through fraudulent practices.  If you are found obstructing a Medicaid fraud investigation in child welfare, you can easily file a reimbursable claim to Medicaid for your inconvenience.  The law also makes it easier for the Department of Justice (DOJ) to investigate potential fraud or wrongdoing at facilities like nursing homes.  Juvenile detention centers, temporary shelters and foster homes are untouchable so you will never have to worry about the Department of Justice ever walking through your front door. If they do, remember, bill Medicaid for your troubles.  Convictions under the Health Care Fraud and Abuse Control Program increased by over 27 percent (583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74 percent compared with 2008 (1430 vs. 821).  Child welfare false claims convictions: 0, an increase of 0 from the previous decade.

Enhanced Screening and Other Enrollment Requirements: Last year CMS published rules to enforce some of the Affordable Care Act’s most powerful new fraud prevention tools.  New requirements for providers and suppliers wishing to participate in Medicare, Medicaid, and CHIP who may pose a higher risk of fraud or abuse are now required to undergo a higher level of scrutiny.  This scrutiny includes licensure checks and site visits to confirm legitimacy and location. 

If you are in child welfare, you are exempt from any licensure checks and excluded from site visits to confirm legitimacy and location.  The chances of having license revocation, contractual debarment or any prosecution when found to have participated in filing false claims are slim to none.  If you do get caught by the state, just rename your company.

To support the Affordable Care Act’s new requirements for risk-based provider enrollment CMS implemented a new Automated Provider Screening (APS) system in December 2011.  The APS uses existing information from public and private sources to automatically and continuously verify information submitted on a provider’s Medicare enrollment application including licensure status.  The new system replaces the time- and resource-intensive process of manual review of the enrollment application. Anything in child welfare is a secret.  You try getting a copy of a former foster child's medical records.  Better yet, I double dare the U.S. Attorney General to go examine any foster care medical records.  Impossible to do because they will shred them before the AG walks through the door.

In addition to the enhanced enrollment and screening requirements, the Affordable Care Act also allows the Secretary to impose a temporary moratorium on newly enrolling providers or suppliers of a particular type or in certain geographic areas if necessary to prevent or combat fraud, waste, and abuse.  Could you even imagine a moratorium on child placing agencies?  The child abuse propaganda machine will rev up and kick into high gear making it a moral imperative to keep these human harvesting factories open at all costs.  Society would shut down is a foster care system was penalized for filing false claims to Medicaid.  Please.  CMS will publish a Federal Register notice to announce any enrollment moratorium and to explain the agency’s rationale for its action.

Increased Coordination of Fraud Prevention Efforts: Many of the Affordable Care Act antifraud provisions increase coordination among states, CMS, and its law enforcement partners at the Office of the Inspector General (OIG)  and DOJ.  For instance, the law expressly authorizes CMS, in consultation with OIG, to suspend Medicare payments to providers or suppliers during the investigation of a credible allegation of fraud.  What about Medicaid?  Does anyone remember the GAO cohort study of the top 5 states improperly and unnecessarily  drugging foster kids with psychotropic cocktails at an alarming rate or is it just me?  This initiative  reverses a long-standing Medicare practice of paying claims then attempting to recoup funds if the claim is found to be an error or fraudulent.  States must also withhold payments to Medicaid providers where there is a pending investigation of a credible allegation of fraud unless the State Medicaid agency has good cause not to do so. If there is a pending investigation  in child welfare, the state attorney general will never prosecute as it will be too busy advocating for the filing of false claims. The Affordable Care Act also ensures that fraudulent providers and suppliers cannot move easily from state to state or between Medicare and Medicaid by requiring all states to terminate anyone whose billing privileges have been revoked by Medicare or who has been terminated by another state Medicaid program for cause.  There is no enforcement of the Interstate Compact on the Placement of Children.  Why would a state give away its cash cow of a child.  The more children are placed in foster care, the more revenue a state generates.  The longer a child is in foster care, the more revenue a state generates.  The more psychotropic drugs a child is prescribed in foster care, the more revenue a state generates.

Health Care Fraud Prevention and Enforcement Action Team (HEAT): One of the most visible examples of increased collaboration is the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint effort between HHS and DOJ to fight health care fraud.  It has engaged law enforcement and professional staff at the highest levels of HHS and DOJ to increase coordination, intelligence sharing, and training among investigators, agents, prosecutors, analysts, and policymakers.  A key component of HEAT is the Medicare Strike Force: interagency teams of analysts, investigators, and prosecutors who can target emerging or migrating fraud schemes, including fraud by criminals masquerading as health care providers or suppliers. Little known fact: a foster care case worker, who does not have to hold a college degree, can do Axis III diagnosis.  There is no such thing as intelligence in foster care.  Any semblance of logic are grounds for termination of parental rights and immediate adoption proceedings.  Why?  Because once a child is adopted, all files are hermetically sealed for all eternity.   Try analyzing that.

In 2011, HEAT coordinated the largest-ever federal health care fraud takedown. Nothing was done in child welfare.  In one action, Strike Force teams charged 115 defendants in nine cities, including doctors, nurses, health care company owners and executives, for their alleged participation in Medicare fraud schemes involving more than $240 million in false billing.  In another takedown, Strike Force prosecution teams charged 91 defendants in eight cities for their alleged participation in a Medicare fraud scheme involving more than $290 million in false billings.  I have personally uncovered larger schemes and have reported to the U.S. HHS OIG and U.S. DOJ AG.  Want to know their response when I walked in with boxes of original files?

[sic] "We heard about it but we just don't know what to do."


Seriously.  Out of the mouth of a U.S. HHS Inspector in a room filled with U.S. Attorneys.

Use of State-of-the-Art Fraud Detection Technology: To target resources to highly suspect behaviors, CMS has implemented the new Fraud Prevention System, which uses advanced predictive modeling technology to fight fraud.  The system has been screening all Medicare fee-for-service claims before payment is made since June 30, 2011. Targeted Case Management is a Medicaid fee-for-service claim which can only be forensically reviewed.  The only robust analysis that can be executed is if an actual federal law enforcement entity physically comes down and talks to the parties involved and seizes all case files.  Much like the predictive technologies used in the credit card industry, the Fraud Prevention System uses advanced technology to identify suspicious behavior and billing irregularities. This targets investigative resources on areas of vulnerability that demand immediate attention and response.  By streaming claims on a prepayment basis, CMS and its investigative partners are  able to more efficiently identify fraudulent claims and respond quickly to emerging trends. 


I constructed an algorithm which can detect child welfare fraud, not just Medicaid fraud.  My R was .9238 when analyzing my two variables.  I could predict actual months where there would be spikes of Child Protective Services actions.  Anyone want to guess which months?  Allow me to assist you.  April:  Child Abuse Prevention Month which also happens to be midpoint of a fiscal year and November: National Adoption Month, the beginning of a new fiscal year.

New Focus on Compliance and Prevention: Under the new law, some preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies,  and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers. Child Placing Agencies and Child Community Mental Health are excluded, of course.

On November 17, 2010, CMS  published final regulations authorized under the Affordable Care Act requiring physician certification of a patient’s “face-to-face” visit with an appropriate health care professional to ensure Medicare only pays for necessary and covered Medicare home health and hospice services. In child welfare, there is a method called "flip signing".  This is when a physician is signing medical procedures such as annual check ups or prescribing psychotropics to foster children in massive stacks because they have never seen the child.  This practice is so blatant that if one took the time to look at the files, it will be found that there were medical examinations of little girls who were actually boys because of the name.  On July 12, 2011, CMS proposed “face-to-face” encounter requirements for Medicaid home health including medical supplies, equipment and appliances.  Additional face-to-face requirements to combat fraud among Medicare DME suppliers will be proposed later this year.  

Expanded Overpayment Recovery Efforts:  The Affordable Care Act expands the Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage, and Medicare Part D programs. The Medicaid RAC program became effective on January 1, 2012 and is projected to save $2.1 billion over the next five years, of which $900 million will be returned to states.  These efforts build on the success of the Medicare fee-for-service RAC program which in fiscal year 2011 recouped nearly $800 million in overpayments.  The reason the RAC will never work in child welfare is because of confidentiality laws.  It just would not be in the best interest of the child to allow anyone to look at the case files because fraudulent billing and fraudulent generation of documents would be found.  A pattern would be detected of racketeering of a child welfare organization, in collaboration with state officials and the court.  


A portion of these overpayments are used to support political campaigns of judges who adjudicate child welfare proceedings.

New Durable Medical Equipment (DME) Requirements: Under a new risk-based approach to fighting fraud, CMS has focused its efforts on combating fraud among DME suppliers by instituting enhanced enrollment standards and screening requirements.  On August 27, 2010, CMS issued final rules enhancing Medicare enrollment standards for DME suppliers such as more stringent operations and facilities requirements to ensure only legitimate suppliers can participate in Medicare.  Additionally, the competitive bidding program is expected to save the Medicare program and its beneficiaries $28 billion over 10 years.  The second phase of the program will be expanded from 9 to 100 metropolitan areas across the country.  Competitive bidding in child welfare does not exist.  There are no rate comparisons with other counties or states, there is no continuous quality control of the delivery and efficacy of services.  Hell. most of the time the services only exist in a pretty shiny brochure allowing for arbitrary price setting.

New Resources to Fight Fraud: The Affordable Care Act provides an additional $350 million over 10 years to ramp up anti-fraud efforts, including increasing scrutiny of claims before they’ve been paid, investments in sophisticated data analytics, and an increased number of law enforcement agents and others to fight fraud in the health care system.  Give me a million of that and watch me generate a billion in recovery.  Seriously, I am going to submit a proposal.

Greater Oversight of Private Insurance Abuses: The new law also provides enhanced tools and authorities to address abuses of multiple employer welfare arrangements and protect employers and employees from insurance scams. It also gives new powers to the Secretary and Inspector General to investigate and audit the health insurance exchanges. This, plus the new rules to ensure accountability in the insurance industry, will protect consumers and increase the affordability of health care.  If you can afford private insurance, there is a strong likelihood that you will not cross paths with child welfare because it is just that, social assistance.  Remember, child protection is an entitlement program.  This is why poverty is codified as abuse and neglect.  Every time a social program funding is cut, a call is made to CPS.

Senior Medicare Patrols:  As a part of the new resources dedicated to fighting fraud, the Obama Administration has significantly expanded funding for Senior Medicare Patrols – groups of senior citizen volunteers to educate and empower their peers to identify, prevent and report health care fraud.  The 75 percent increased funding from FY2008 to FY 2011 has helped thousands of Medicare beneficiaries host thousands of community meetings and educational events to increase awareness of fraud among people with Medicare and to solicit their help in preventing fraud.  


Child Welfare Fraud Patrols:  If you suspect Medicaid fraud in child welfare, report it to me and I will post it up and forward to the U.S. HHS OIG and U.S. DOJ AG.