Fraud: The silent budget killer

Story and photo by ROBERT CALLISTER

Utah legislators have been making the number one budget consumer, Medicaid, their number one priority in 2011. Last year, lawmakers had to fund the state’s $540 million in Medicaid contributions and are now looking for ways to reduce health care costs by addressing fraud, waste and abuse in the system.

Lawmakers debate on the House floor during the 2011 legislative session.

Severe budget cuts are sweeping the state and Utah does not have a dime to waste in any sector. There is mandatory spending for every state, but it can always be adjusted and modified. Medicaid consumes over 25 percent of state funding. It is growing at three times the rate of Utah’s budget.

Lawmakers convene daily in subcommittee meetings to address the unsustainable future of Utah’s health care system. And with the federal government socializing healthcare, it seems as if there will probably be further spikes in Medicaid, says Utah House Minority Leader Michael Litvack.

He estimates there will be an additional 100,000 people on Medicaid in Utah by the year 2014. There are currently 213,000 Utahns who are on the low-income health plan.

Rep. Litvack is on the state’s Social Service Subcommittee that deals with budget cuts. He feels one way to cut superfluous spending for the program is to address fraud in the system.

“I think that Utah is very prone to fraud,” Litvack said. “Perception of the state and instinct would almost have you think otherwise.”

But perception aside, the state faces the reality of a population that does not mind manipulating its government. A recent study conducted by the Federal Bureau of Investigation ranked Utah in the top five states for Medicaid fraud, costing millions of dollars every year.

Reports show the majority of fraud comes from people reporting procedures that don’t occur, falsely claiming disability, misrepresenting identification and medical centers billing for imaginary patients.

Sen. Allen M. Christensen, R-North Ogden, is the chairman of the Social Services Subcommittee. He worries that many people seem detached from their government and are indifferent to manipulating it.

“Generally, human nature makes people feel bad about taking advantage of one another,” Christensen said. “Unfortunately, this same guilt does not apply in taking advantage of the government.”

Rep. Litvack recognizes that aspects unique to Utah’s culture make it particularly prone to fraud.

“For whatever reason, whether it is the trusting culture that we have or whatever, it does seem that we have a big problem with affinity fraud,” he said.

Affinity fraud is known to be rampant in societies with high-levels of trust and admiration. Fraudsters will prey upon members of identifiable groups, such as religious communities. In Utah, research shows that 71 percent of the state’s population belong to the Church of Jesus Christ of Latter-Day Saints.

The combination between lack of respect for the government and willingness to take advantage of trust has turned Utah into a boiling pot of fraud. However, this year’s 45-day legislative session is addressing the situation from various angles.

Lawmakers are currently considering numerous bills regarding Medicaid reform. House bill 174 would require the Department of Health to issue reports to the Legislature before awarding Medicaid contracts. This would serve as an oversight program to monitor credibility of potential health care clients.

Rep. Litvack said the last legislative session appropriated millions of dollars to the Department of Health to create a program to prevent fraud, waste and abuse. The department will select a vendor to look at Medicaid claims on “the front end.”

“The purpose is to tease out as claims come in for payment, which ones represent fraud, abuse and mistakes,” he said. “So we are focusing on cost avoidance rather than cutting budgets.”

Rep. Ronda Menlove, R-Garland, is sponsoring a bill that would direct the Utah Health Department to pilot a program requiring some Medicaid recipients to do community service in exchange for health benefits. She recognized the need to push legislation to “combat a growing entitlement culture in this state.”

Last year there were legislative audits conducted against the Department of Health and Medicaid with strict focus on fraud.

Rep. Litvack sees fraud in a more broad sense and as something that needs to receive constant attention.

“We need to look at this issue in terms of Medicaid broadly,” he said. “Often times we need to think of fraud in terms of the intent of manipulating by billing for procedures that don’t happen or to even bill for patients that we haven’t seen.”

Legislators vary in opinion on certain amendments and bills, but they all recognize the importance of tracking money that goes in and out of the health care system.

Audits will continue to monitor the Department of Health and state Medicaid, said Litvack. Bills will be passed in attempt to reduce manipulation of the system. But legislators such as Sen. Christenson would exhort people to recognize that when they steal from the government, they are really stealing from their neighbor.