HealthLawProf Blog

Editor: Katharine Van Tassel
Case Western Reserve University School of Law

Monday, July 18, 2005

Medicaid Fraud in New York

Today's article on Medicaid fraud is the culmination of a year's worth of FOIA requests for data, stakeouts, and computer analyses by The New York Times.  The article doesn't attempt to estimate the cost to the program (except to say it is "billions" per year, but repeats past estimates that 10% of payments may bethe result of fraud and abuse and up to 40% may go for claims that are "questionable."  New York's annual Medicaid budget, at $44.5 billion, "is by far the most expensive and most generous in the nation. It spends far more . . . than that of any other state, even California, whose Medicaid program covers about 55 percent more people. New York's Medicaid budget is larger than most states' entire budgets, and it spends nearly twice the national average - roughly $10,600, more than any other state - on each of its 4.2 million recipients, one in every five New Yorkers."

Some examples:

  • In September 2003, [a dentist] charged Medicaid roughly $725,000 for 9,500 individual dental procedures, many of them expensive and complicated, such as filling cavities that had rotted away much of the tooth. On a single day that month, she billed for 991 procedures, or more than 100 an hour in a typical workday.
  • An overweight woman who did not have AIDS obtained a prescription for a synthetic growth hormone intended to treat wasting syndrome, which she did not have.  The drug cost $6,400 per month and is highly sought after by body-builders. The physician who prescribed the drug is No. 1 in the state for such scripts, outpacing prominent AIDS specialists with large practices: "From 2000 to 2003, [he] prescribed 12 percent of all the Serostim purchased by New York Medicaid, costing the program $11.5 million, according to the Times analysis of Medicaid billings."
  • Despite extensive public transportation, taxis, and car services to transport patients to medical appointments, New York paid $316 million in 2003 for ambulettes, which typically charge $25-31 each way. "The largest chunk of the $316 million spent on transportation went to some 450 ambulette services, about a fifth of which are clustered in Brooklyn. And much of that spending appears to be entirely unnecessary:"

That was clear on a recent afternoon in southern Brooklyn, when an elderly woman strolled out of a doctor's office and clambered into the front seat of a van owned by M. J. Trans Corporation, a medical transport company that billed Medicaid for more than $2 million last year. After a 25-minute ride across the borough, she got out in front of her apartment, again without help, and walked inside.

The van is called an ambulette, and Medicaid is supposed to pay for it only when a patient cannot walk without help or requires a wheelchair. In fact, the state refers to the service as an "invalid coach." But on three days spent following M. J. vans over several months, a Times reporter found that almost all of the company's passengers walked easily, without assistance. The pattern was repeated as recently as last month.

  • "School officials around the state have enrolled tens of thousands of low-income students in speech therapy without the required evaluation, garnering more than $1 billion in questionable Medicaid payments for their districts. One Buffalo school official sent 4,434 students into speech therapy in a single day without talking to them or reviewing their records, according to federal investigators."
  • "Among the biggest beneficiaries of the Medicaid program have been executives of the state's nursing homes and clinics, many of whom earn substantial salaries and profits from the program.  According to records obtained from the Health Department under the Freedom of Information Law, 70 executives of nursing homes and clinics personally made more than $500,000 in 2002, the last year for which figures are available. Twenty-five executives made more than $1 million."  In addition to unconscionably high salaries, some of the nursining home and clinic executives are also participating in fraudulent billing schemes to further enrich themselves and their businesses.  One example:

In 2002, the two owners of the AllCity Family Healthcare clinics in Brooklyn collected a total of $1.4 million in salaries, according to state records. Last year, the company was forced to return $6 million to the state, and one of its owners, Rossia Pokh, pleaded guilty to grand larceny in a case brought by the attorney general.  At the AllCity clinics, it turns out, thousands upon thousands of the Medicaid claims were fraudulent.

The article alludes to inadequate policing of claims and other practices, despite a doubling of the fraud enforcement budget in recent years, and offers an explanation for it:

The lax regulation of the program did not come about by chance. Doctors, hospitals, health care unions and drug companies have long resisted attempts to increase the policing of Medicaid. The pharmaceutical industry, which has spent millions of dollars annually on political contributions and lobbying in Albany, has defeated several attempts to limit the drugs covered by Medicaid; other states have saved hundreds of millions of dollars annually with such restrictions.

CMS has a good Medicaid Fraud Statutes Web Site with links to all states' anti-fraud laws. [tm]

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