Anti-Fraud Plan Would Use Rewards

Medi-Cal’s 6.4 million recipients and 70,000 healthcare providers would become potential whistle-blowers under a bill offering rewards if they help catch people defrauding the healthcare program, Atty. Gen. Bill Lockyer said Wednesday.

The proposal is part of a 10-point plan Lockyer unveiled along with lawmakers and representatives of Gov. Arnold Schwarzenegger to help stem a persistent fraud problem in the $30-billion health system for the needy.

Patients, care providers and referring physicians would receive questionnaires asking them to verify whether, in fact, the services and products billed to Medi-Cal were supplied. Anyone who reported fraudulent activity would be eligible for 10% of the money recovered, up to $1,000.

The proposed “confirmation of services” questionnaire in English and Spanish would be tailored to the individual patient. It would ask, for example, whether the named physician examined the patient, provided prescription drugs and administered a shot. And it would list a hotline to report fraud.

The reward system and questionnaire, Locker’s office said, could have prevented about 80% of the fraud cases his office prosecuted in recent years.

Angela Gilliard, legislative advocate for the Western Center on Law and Poverty, said she was concerned that the form could burden disabled beneficiaries who go to a doctor a few times a week and families with several children. To qualify for Medi-Cal, beneficiaries must not earn more than a certain amount of money. “The whole idea of the reward gets tricky,” she said. “If the beneficiary gets $1,000, is that income? Does it change their eligibility status? Do we change the income rules?”

Mark Kwong, a beneficiary who works at a Sacramento car rental agency, said he seldom needed a doctor but would cooperate to help stop fraud. “I would fill the questionnaire out, as long as I don’t have to put a stamp on it.”

Lockyer and federal authorities have filed hundreds of criminal and civil actions against fraudulent healthcare providers. But Lockyer borrowed from the governor’s budget proposals and worked with health officials and lawmakers to craft a broader strategy to deter and catch more dishonest providers. Of the 10 ideas, six would require legislation.

Kim Belshe, Schwarzenegger’s secretary of health and human services and a former state health director, said the governor supported the bipartisan effort to attack a long-standing problem.

Later, in response to a question, she said the cost of the whistle-blower program needed to be studied and added: “Do we need to notify every beneficiary after every service ... or is there a more cost-effective way to accomplish” the same results? Medi-Cal receives about 200 million claims a year.

Although experts generally put the amount of fraud and overpayments in health programs at 3% to 10%, Medi-Cal officials are only now beginning to quantify the problem. And state auditors have criticized the coordination between Lockyer’s office and the state Department of Health Services, which runs Medi-Cal.

To try to fix that, Lockyer proposed a comprehensive assessment of the scope of fraud and the creation of a clearinghouse for sharing data among a half-dozen state and federal agencies.

He said he would establish a task force of academics, technology experts and law enforcement officials to analyze the program’s anti-fraud efforts and to make recommendations for improvements. It would be headed by Greg Papadopoulos, Sun Microsystems’ chief technology officer.

In targeting one of Medi-Cal’s most costly components, one bill in the plan would require drug manufacturers to submit accurate information on what retailers pay for drugs.

The attorney general has alleged in a whistle-blower lawsuit that two major companies have provided inflated wholesale prices, causing Medi-Cal to reimburse pharmacies and other providers up to 10 times more than they paid for the products.

Locker’s office is seeking legislative authority to conduct visits and searches of doctor’s offices, labs and other healthcare facilities without a warrant.

He also wants to make it a felony for anyone who obstructs an investigation into healthcare fraud, no matter how small the amount.