Feds fault state for Medicaid fraud efforts

A federal report on Wednesday criticized South Dakota’s commitment to fighting Medicaid fraud, finding the state is understaffed in a key area for rooting out fraud and abuse.

The report from the United States Health and Human Service’s Office of Inspector General was ostensibly a review of the state’s Medicaid Fraud Control Unit, or MFCU, within the attorney general’s office. Nationally, MFCUs are responsible for prosecuting Medicaid fraud cases, levying civil fines or prosecuting abuse and neglect cases.

Medicaid is a taxpayer funded health program for the poor.

The federal review found that the state’s MFCU was in “general compliance” with federal requirements. But it also found that the fraud unit was receiving few referrals of potential cases from the Department of Social Services, which administers Medicaid.

In the three years from 2013 through 2015, just 8 percent of unit’s referrals for fraud investigations came from the Program Integrity Unit within Social Services. The Program Integrity Unit is responsible for analyzing Medicaid claims and reporting potential cases of fraud and abuse to the MFCU for prosecution.

“Typically,” the report noted, “referrals from the PI Unit are an essential component of a (MFCU’s) ability to effective investigate and prosecute Medicaid provider fraud,” the report said. It noted that the 8 percent referred by Social Services – an office with access to provider billing data – was less than half the referrals received by the MFCU from private citizens.

The report blamed staffing levels for the few number of referrals, noting that as of March 2016, Social Services had only two investigators looking for fraud.

“The limited number of staff within the PI Unit may have affected the PI Unit’s ability to provide referrals to the MFCU,” the report concluded.

A spokeswoman for the Department of Social Services did not immediately respond to an email.

Sara Rabern, a spokeswoman for Attorney General Marty Jackley, said the state’s Medicaid Fraud Control Unit works closely with numerous partners, including the Department of Social Services.

“The source of referrals is not important to us,” she said. “Once we receive a referral, we will work with all of our partners in an attempt to resolve the case. We are thankful for these working relationships as they are important to the success of our division and the cases we work.”

Still, it was the second time in less than two years that federal officials questioned the state’s commitment to combating Medicaid fraud. Last year, a review from the Centers for Medicare & Medicaid Services also determined that South Dakota lacked the resources to adequately analyze data and identify fraud. Compared to other states of similar size, South Dakota’s Program Integrity Unit was the smallest in the country. By comparison, Wyoming, which has a Medicaid program only 75 percent the size of South Dakota’s, still had 9.5 staff members assigned to its Program Integrity Unit.

In 2013, the final year analyzed, the South Dakota Program Integrity Unit had managed to collect just $26,990 in over payments, down from $385,297 in 2010. The number of preliminary investigations over the same period decreased from 49 in 2010 to 22 in 2013.