State defends itself from federal Medicaid fraud report

The South Dakota Department of Social Services has issued a lengthy statement defending itself from a federal report that criticized the department for not devoting enough resources to combating Medicaid fraud.

The report issued last week by the U.S. Health and Human Service’s Office of Inspector General summarized its inspection of the state’s Medicaid Fraud Control Unit, which resides in the Attorney General’s Office and is devoted exclusively to pursuing fraud cases committed by Medicaid providers as well as abuse and neglect claims committed against Medicaid patients.

In its review, the Inspector General noted that the unit appeared to be limited in its ability to pursue fraud cases because it wasn’t getting enough referrals from the Program Integrity Unit, an office in the Department of Social Services responsible for vetting possible fraud cases and then referring them to the Attorney General’s Office for prosecution. The review noted that just 8 percent of referrals came from the Program Integrity Unit, a percentage far lower than other states.

The report concluded that Program Integrity Unit was short staffed: “The limited number of staff within the PI Unit may have affected the PI Unit’s ability to provide referrals to the MFCU,” it said.

But in its statement, the Department of Social Services noted that South Dakota has been recognized by the Centers for Medicare and Medicaid Studies for its low number of erroneous payments to providers. That has resulted in South Dakota being one of only a few states to be exempted from a mandatory federal audit program.

“Due to the low volume of provider fraud in South Dakota, it’s not surprising that referrals to MFCU are low compared to other states,” the statement said.

The statement went on to say that the PI Unit tries to identify billing errors up front when claims are processed. Those errors are brought to the attention of providers for correction.

“If errors are not corrected, or there is a credible allegation of fraud, then a referral is made to MFCU,” the statement said. “The OIG report counts only official cases reported to MFCU, it does not reflect all of the collaboration and information sharing that occurs.”

The statement concluded that the four staff members dedicated to the Program Integrity Unit also receive outside help with provider records, audits and billing reviews.