Bills to create Medicaid Fraud Control Unit slow going

Feb. 21--North Dakota is the only state that doesn't have a Medicaid Fraud Control Unit, but lawmakers introducing bills to create a unit are finding it slow going.

Rep. Kathy Hogan, D-Fargo, introduced both House Bill 1226 to study the establishment of a Medicaid Fraud Control Unit and House Bill 1227 to create a new section in the Century Code defining the fraud and providing a penalty.

HB 1226 passed in the House on Feb. 14, but HB 1227, with a do not pass recommendation from the Human Services Committee, failed the same day.

"I think this is just part of the process," Hogan said. "I'm thrilled that one of the bills passed, and a study keeps the issue alive."

Hogan said two years ago the establishment of the unit was considered because North Dakota was the only state that didn't have one. There was bipartisan support behind the unit and a bill to study the issue was passed but the study never occurred, Hogan said.

The bills were introduced this session because the waiver that allowed North Dakota to operate without a fraud control unit was taken away, Hogan said. The U.S. Department of Health and Human Services told Gov. Doug Burgum in January that the state could no longer operate under the waiver. If the state doesn't meet the terms of the mandate that was established in 1994 it could lose Medicaid funding, Hogan said.

HB 1226 was introduced as establishing a unit in the North Dakota Office of Attorney General, but was turned into a study because the committee thought the cost-benefit analysis didn't show that the program would make enough money, Hogan said.

Rep. Craig Headland, R-Montpelier, said he would have struggled with passing the bill to create the unit because of the state's limited budget. Headland said he is supportive of the study because he doesn't think there is a good idea of how much fraud is out there.

"It's important that we have an understanding of how much fraud is occurring," Headland said.

Hogan said she doesn't think the study is going to meet federal requirements, but at least the issue is alive. Hogan said three bills were introduced because there are three different sections of law it would affect -- appropriations, human services and judiciary -- but they may be merged into one bill in the Senate.

"My hope is that the Senate committee will seriously consider implementing the unit," Hogan said.

The Medicaid fraud unit would be focused on provider fraud, not eligibility fraud, Hogan said. Provider fraud is committed by a practitioner, health facility or other entity that provides services to Medicaid recipients. Some examples of provider fraud include billing for services not performed, billing twice for the same service and billing for a more expensive service than was rendered.

Hogan said Medicaid fraud is a real issue that doesn't just affect the federal government, but also the state, which funds 50 percent of the program.

The 2010 Medicaid Provider and Recipient Fraud and Abuse performance audit said the Department of Human Services doesn't put enough emphasis on detecting Medicaid fraud, and suggested establishing a fraud control unit.

The January 2015 Centers for Medicaid and Medicaid Services review of North Dakota's Medicaid program found a number of risks with the program's integrity unit, including not conducting enough proactive measures to detect provider fraud.

Attorney General Wayne Stenehjem asked for the unit to be created two years ago, but it was cut from his budget, Hogan said. Stenehjem is committed to the fact that the state needs the unit, but it was not included in the budget this year because agencies were asked not to include any new programs, Hogan said.

Hogan said there are two reasons establishing a Medicaid Fraud Control Unit is a good idea.

"It's a good financial return on an investment. The unit will collect more money than we spend on starting it," Hogan said. "Starting the unit is also an accountability and integrity issue, if we think there is fraud or abuse, I think we should aggressively go after it."

Hogan said she understands that people don't want to start a new program because the state is on a tight budget, but the unit will be a good investment.

Sen. John Grabinger, D-Jamestown, co-sponsored the bills and said the unit's purpose is to stop fraud, which is a good thing. Grabinger said he doesn't think there is a huge fraud problem in the state, but the unit would find out for sure and prevent a problem.

Grabinger said he doesn't anticipate the Senate changing the bill back from a study. "At least then we will have the discussion, which is what needs to happen, and decide whether it's going to be valuable or not," Grabinger said. "It's a good thing to look at."

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