Virginia probes improper use of mental health crisis service

An audit of the community stabilization program revealed that a service budgeted for $12.5 million in the last fiscal year had been billed $88.5 million from providers through the state's contracts with six managed care companies. In the new fiscal year, which began July 1, the insurers already have spent $28.9 million on services authorized for $21.2 million.

The Department of Medical Assistance Services, the state Medicaid office, said it has referred the issue to the attorney general's Medicaid Fraud Control Unit, which is working with the FBI and Henrico police to investigate alleged misuse of a service designed to bridge the gap between people in crisis and community-based care.

"This is really a central Virginia problem," Tammy Whitlock, deputy director for complex care services, told the Senate Finance & Appropriations Committee on Wednesday.

Whitlock said the department is auditing the use of service and referring potential misuse to the attorney general's Medicaid fraud unit. She said it is likely to result in "financial retractions that will return the funds to the commonwealth" and to managed care companies that oversee the service.

A spokesperson for Attorney General Jason Miyares had no comment on the investigation.

The department also has instituted a new requirement, effective Sept. 1, for providers to receive authorization from managed-care companies before providing the service and billing for it. It also held a training session for 250 providers on Aug. 29 to review the new authorization requirement.

"This is definitely a problem we saw, and we need to fix it," Whitlock said.

The department said that 61 providers — or about 18% of the 348 participating providers — accounted for 80% of the cost of the service in the fiscal year that ended June 30 and the first two months of this fiscal year. Those providers billed for almost $94 million of the $117.4 million spent on the service.

Twenty-seven of those providers each billed for more than $1 million in six months, the department said.

The central Virginia area showed a "high and disproportionate density of providers and utilization, with four to five providers driving utilization," Whitlock said. The department did not name any of the providers in its presentation to the committee.

The problem was not a surprise to the insurance companies that manage the care for the state. Doug Gray, executive of the Virginia Association of Health Plans, said his companies had recommended that the state require vendors to receive prior authorization before providing the service, based on similar experiences with other community-based behavioral health services in previous years.

The state did not require prior authorization, Gray said. "The providers ran wild with it."

"The good news is, they're trying to get it under control," he said.

Whitlock said the Medicaid office became aware of the problem during an audit of the service in April. "We didn't act as quickly as I thought we should have on this," she acknowledged.

The department is reviewing all major services to spot any other unusual "utilization anomalies" by the end of the year. It also is beginning a process for reviewing new services during their implementation, including monitoring plans and thresholds "for further analysis and intervention."

The community stabilization service is part of a broader initiative, known as BRAVO, or Behavioral Health Redesign for Access, Value and Outcomes, meant to improve services provided through Medicaid for people with behavioral health needs.

Community stabilization is meant to help people after they've undergone a behavioral health crisis as a transition either to a lower level service that's not immediately available or diversion to a higher level of care.

"We want to see some growth [in the service]," Whitlock said. "There is some pent-up demand there ... but we want it to be appropriate utilization, and clearly $88 million is not appropriate."

Local and regional community services boards are not involved in the administration of the service, but they have a strong interest as providers in ensuring its viability to help people emerging from psychiatric crises.

"It's unfortunate that this has occurred ... because it has the potential to impact the availability of the service for the folks who need it," said Jennifer Faison, executive director of the Virginia Association of Community Services Boards. "It's an essential service."