With literally billions of dollars a year at stake, Medicaid and Medicare has become the second most expensive tax-funded program in the United States, second only to national defense.
In fact, there's so much money in the pot, it may not seem like a big deal if a doctor dings the government for a few dollars here and a few dollars there."We're not talking small change. We're talking millions and millions of dollars in fraud, and, historically, those kinds of practices have gone undetected," said Andy Anderson, head of a unit of state investigators that investigates Medicaid fraud.
Undetected until now, that is.
Since July, state Medicaid fraud investigators have been plugged into a new computer system that can track the Medicaid billing practices of virtually every doctor in the state.
"We finally made it to the 20th century," said Anderson, noting that Medicaid fraud cases "are up several hundred percent."
The formula for determining fraud is rather simple:
According to predetermined rates, doctors are reimbursed by the federal government for medical services performed on Medicare and Medicaid patients. The government has assigned individual numbers for the thousands of types of injections, consultations, operations and medications.
Fraud investigators start with the concept that the overall group of medical providers is honest. They then examine the normal billing practices within that group, based on the numbers assigned to particular types of bills. Doctors that deviate from the norm are flagged by the computer, said Anderson.
"We're just getting a feel for what the system can do. Absolutely anything that is abnormal or inconsistent can be flagged. Obstetricians shouldn't be doing root canals; pediatricians shouldn't be billing for knee surgeries."
The computer program can also analyze the separate Medicaid bills of different doctors who assist on the same surgery.
"If the anesthesiologist bills Medicaid for a one-hour surgery, and the backup surgeon bills for a one-hour surgery, but then the surgeon bills for a three-hour surgery, then you know something's fishy," said Anderson.
But the greatest potential for detecting fraud is the "general-case comparison" formula - comparing doctors against their own peers in the same medical disciplines.
For example, investigators recently ran a computer program to compare the Medicaid billing practices of all 250 Utah pediatricians with previously determined averages in four separate billing categories.
The computer immediately flagged seven pediatricians who had an abnormally high number of "comprehensive" visits (the type of visit that yields the highest Medicaid reimbursement). In fact, those seven pediatricians (2.8 percent of the total) were responsible for 90 percent of all comprehensive Medicaid payments made to pediatricians.
Investigators are still trying to put a dollar total on those suspected frauds, but say it could be as high as $140,000.
"With the computer, we know how many visits they have billed Medicaid for and how much they were paid," said Anderson. "We have all the physical evidence in front of us to prosecute a case in court."
Investigators first contact each of the doctors in question to determine if there was any intent to defraud the government. Are they doctors who specialize in comprehensive care? Is there a valid reason for the unusual billing practice?
"Unless they are specialists who treat terminally ill leukemia patients, they probably don't have a good explanation," said Anderson. "Then we can determine the element of intent to defraud."
The comparison techniques usually reveal what is called "up-coding." By changing a single number in the Medicaid bill, doctors who abuse the system can receive reimbursement for much more expensive services than what they actually provided. Usually, billing practices change immediately after contact by fraud investigators.
Utah doctors have mixed reactions to the Medicaid fraud investigations. "We oppose fraud and abuse in any form, and we will do anything to combat that and bring those people to justice," said Dr. John Nelson, president-elect of the Utah Medical Association.
"But it is disconcerting to have one more entity looking over our shoulder. We have lawyers looking over our shoulders, we have Blue Cross-Blue Shield, we we have the HMOs, we have the federal government, and now we have state investigators. We are not opposed to peer review, but state investigators are not our peers."
Many Utah doctors are concerned about the implementation of fraud investigations in that they are presumed guilty until they can prove to investigators they are innocent. And those investigators don't always have a grasp for the clinical decisions that go into each case.
Investigators emphasize that the great majority of doctors are honest and ethical when it comes to Medicaid billing. But the computer has revealed that those who aren't are responsible for a lot more fraud than anyone suspected.
"And as we project ahead to what we can do with the computer, we're going to find a lot more fraud that traditionally has gone undetected," said Anderson.