27 June 37 States Targeting Elder Abuse June 27, 2017By Jon Coss - Blog Manager General, government fraud prevention Medicaid, MFCU 0 Regular readers of our blog know that Pondera has strong feelings about the need to protect the elderly from abuses while they are being cared for in facilities and their homes. In fact, in April of this year we wrote about the devastating abuses in nursing homes that continue to plague the elderly. Now, a number of states are stepping up the pressure on the federal government to allow them to more effectively fight the problem.In a letter dated May 11th, 37 states’ attorney generals requested that the U.S. Department of Health and Human Services eliminate several restrictions on the use of Medicaid Fraud Control Unit (MFCU) funds. In the letter, they point out that 10% of elderly Medicaid recipients who receive care in their homes will be abused. They also cite a report that indicates that only 1 in 24 incidents are ever reported.Specifically, the states asked for the ability to use the funds to “investigate and prosecute abuse and neglect of Medicaid beneficiaries in non-institutional settings” and to “screen complaints or reports alleging potential abuse or neglect”. In effect, this would allow the states to close “loopholes” in the use of MFCU funds that were previously only available to investigate abuses in facilities. And they point out that Medicaid currently covers over 6.4 million people over the age of 65.At Pondera, we are pleased to see this increased attention by the MFCU. In addition to physical abuse, we also see other types of in-home abuses including identity theft (often strong-armed) that leads to theft from other government programs. We applaud the states’ continuing efforts to address this heinous problem and hope their progress is dramatic and expedient. Related Posts Disturbing Reports of Nursing Home Abuse Last month CNN published a horrifying report on sexual abuse in America’s nursing homes and assisted living facilities. The report provided details on dozens of assaults, rapes, and other incidents that, quite frankly, were extremely difficult to read. In my opinion, however, this level of detail is probably necessary to shock people into taking action against what CNN rightly labelled “an unchecked epidemic”.The numbers themselves are devastating. Approximately one million senior citizens are currently residing in 15,000 government-regulated long term care facilities. Since 2000, it appears that over 16,000 cases of sexual abuse have been reported, but the number is probably higher because of complex reporting systems and processes. And it’s impossible to determine the number of unreported cases.Between 2013 – 2016, CNN found that 1,000 government-regulated facilities had been cited for mishandling or failing to prevent sexual assaults. 100 of the facilities had been cited numerous times. And despite this, only 226 facilities were fined just $9 million. Only 16 of the facilities were cut off from Medicaid and Medicare!What is equally disturbing to the actual cases of abuse is the blatant disregard of safeguards and even the intentional impeding of investigations. Consider a case here in California where the employer allowed a nurse to continue working for weeks after reports of him kissing and fondling a female resident. This crime, by the way, resulted in only a $27,000 fine.At Pondera, we often say that fraud and abuse is most prevalent at the intersection of large amounts of money and vulnerable populations. This makes nursing homes “ground zero” for abuse because it is here that the escalating costs of long term care combine with dementia and other health issues that can make senior citizens problematic witnesses.Among several recommendations made by CNN was a call for improved reporting systems. We agree that this is an important piece of the solution. It will provide greater transparency and help regulators identify trends and clusters of abuse. But clearly, stricter oversite and enforcement are needed. So too is the type of no-nonsense reporting that CNN did for this report. Fraud, Waste, and Abuse Standards One of my colleagues recently returned from a conference on government program integrity with an interesting anecdote. He recounted a vendor presentation where the speaker was touting a 52% accuracy rate in their fraud lead generation system. So… nearly half of the system’s leads generated false positives. Not so sure I’d brag about that.High false positive rates lead to wasted investigative time and money and unwarranted intrusions into the lives of legitimate program beneficiaries and service providers. Ultimately, they lead to a lack of confidence in the system itself and investigators revert back to more manual detection methods. When one considers all the important services governments deliver and the immense political pressure they endure, this is obviously not acceptable.Shortly after hearing this story, we were asked to respond to a question about false positive rates and any existing industry standards or even benchmarks. While every vendor, including Pondera, makes claims about our system efficacy, very few standards actually exist. Conversely, our clients (the government program administrators) generally are subject to improper payment standards placed on them by the federal government.I think there is a great opportunity, even responsibility, for governments to create these standards. Fraud detection standards would challenge the vendor community to “put up or shut up”, leading to more innovation. They could also be adjusted as the standards are met and surpassed leading to constant improvement. And they would provide governments with a uniform method for measuring vendor performance.It is true that fraud detection systems still rely on quality program data and can suffer from the old adage "garbage in, garbage out”. So government would still share in the responsibility of meeting any new standards. But clearly, there is more we can do. And this would benefit all parties involved… except, of course, the fraudsters. Does the Mylan EpiPen Settlement Send the Wrong Message to Fraudsters? The United States government and several states recently announced that they had settled a $465 million lawsuit against Mylan Inc., the maker of the EpiPen. The Department of Justice stated that Mylan had “knowingly” misidentified the EpiPens as generic to reduce the number of rebates it owed to state Medicaid programs. All drug manufacturers, including Mylan, must agree to the rebate program to be eligible to supply drugs through Medicaid.Those of you that follow these types of stories may recall that Mylan was accused of price gouging last year when they increased the price for a 2-pack of EpiPens to $600—a 400% increase over 6 years. In addition to the price gouging accusations, Mylan was also forced to settle a separate Medicaid billing complaint in 2009.EpiPens, for those of you unfamiliar with them, are self-injectable medical devices used to offset often life-threatening allergic reactions to bee stings, foods, and medications. As a parent of two EpiPen-carrying children, I can certainly attest to the importance of the device. I suppose that’s part of the reason Mylan felt comfortable increasing their prices so dramatically.What really bothers me about this case is the fact that the settlement represents only 134% of the total amount of damages incurred. This 34% “penalty”, on top of what was already owed, isn’t much of a deterrent against improper billings, as evidenced by the fact that Mylan has been busted twice in just eight years. Consider that this is a company with over $11 billion of revenue in 2016. Also consider that Mylan’s stock price increased 1% on the news of the settlement, no doubt reflecting the fact that investors expected a larger settlement. In my opinion, this settlement sends the wrong message to unscrupulous businesses. They may look at these numbers and figure that "intelligent cheating" could be quite profitable, encouraging them to simply write off lawsuits as a cost of doing business. This is despite the fact that they would be violating the federal False Claims Act which addresses contractors who defraud the government. Jackpotting Comes to the U.S. We’ve written several times about skimmers, devices that thieves place into gas pumps, ATMs, and other machines to steal personal and financial information from unsuspecting patrons. Now, it seems that a form of skimming, called “jackpotting” is making its way from Europe and Asia to the states.The aptly named jackpotting, like skimming, uses a device inserted into ATM machines to take control of the CPU and dispense large amounts of cash to the fraudsters. The thieves often dress as ATM technicians and use an endoscope to view the inside of the machine and attach their system to the ATM. They can then control the system remotely and dispense as many as 120 bills per minute to “jackpotting mules” who collect the money.The Secret Service is now issuing warnings about the spread of jackpotting, and organized criminal gangs are targeting stand-alone ATMs in pharmacies, big box retailers and drive-thru ATMs. And, of course, thanks to the anonymity of the dark web, criminals can easily purchase the software and equipment necessary to pull off the schemes.While still in its infancy here in the states-- in a recent week there were six attacks that stole just over $1 million-- jackpotting is quickly establishing itself as one more fraud tactic that businesses and citizens will have to watch out for. The good news in this case is that the ATMs, when hacked, appear as out-of-order to consumers. At least we won’t insert our cards and we won’t lose our data. The bad news is that institutional losses often get passed to us in the form of higher fees and more complex processes. As usual, we all pay in the end. Identity Theft: Steal Once, Use Often A recent arrest in New York City illustrates a common fraud method that Pondera has been talking about for years: falsifying an identity (of an individual or business) and using it across multiple states, or in this particular case, across multiple subsidy programs within a state.In February of this year, the New York State Attorney announced the arrest of several individuals allegedly involved with a fraudulent medical supply company. The company’s owner operated under a false social security number and billed the State Medicaid system for an expensive nutritional formula required by patients with feeding tubes. In actuality, when they delivered the service at all, they dispensed lower-priced Pediasure to dramatically increase their profits—apparently ignoring the health consequences to the patient.But, as is often the case with bad actors, they didn’t stop there. In addition to their fraudulently obtained Medicaid profits, the fraudsters also used their fake socials and claimed income of less than $800 per month in order to qualify for Welfare payments. This despite the fact their medical “business” incomes were over $180,000 per year. It would not surprise me to learn that these same people were operating in other subsidy programs or in neighboring states.This is a disturbing, but somewhat logical, pattern that we see again and again. When someone goes to the trouble of creating a fake identity or business, they use it to generate as much income as possible. They “fly below the radar” of each individual program (or state) to avoid detection, but the fraud can be very lucrative in aggregate.The obvious solution to this is increased cooperation and data sharing across programs within a state and across states. The federal government has made significant efforts to support data sharing including the List of Excluded Individuals and Entities (LEIE), the Death Master File, and the Prisoner Update Processing System (PUPS) which can help identify claims that are fraudulently made by ineligible, deceased, or incarcerated identities.Our hope is that these efforts expand, including at the state level, where multiple agencies cooperate to identify cross-program fraud schemes. It is not enough to detect and then stop individual incidents of fraud. Many of these incidents are too small, when viewed as discrete occurrences, to warrant prosecution. Knowing this, enterprising fraudsters “sprinkle” their claims across multiple jurisdictions to avoid attention.Unfortunately, as was the case in New York, even these smaller, distributed fraud efforts can have an impact on patient health. The good news is that New York detected and put an end to this incident. But we all know there are thousands of similar cases each year. Online access to groceries for SNAP recipients The USDA recently announced a pilot program, starting this August, to offer online access to groceries for Supplemental Nutrition Assistance Program (SNAP) recipients in seven states. Groceries will be delivered to the recipients’ homes by seven participating retailers including familiar names such as Amazon, Safeway, and Shoprite.For many SNAP participants, this is both a tremendous convenience (saving them time) and a potential necessity (providing access to healthy foods in rural and urban “food deserts”). In fact, America’s poor have higher access to the Internet than they do to cars: 88% to 79.6%. And no one can argue that time spent with family, working, or seeking work is more valuable than time spent commuting to and shopping in grocery stores.Of course, online transactions often lead to more opportunities for fraud. And for their part, the USDA is mandating stricter controls than those required for non-SNAP transactions, including the use of a secure PIN number on all SNAP transactions. They have also provided funding in recent years to help states address benefit card trafficking problems.It is also known that when large sums of money are distributed through online transactions, bad actors will innovate new ways to defraud the system. In 2014, while the improper payment rate in SNAP was relatively low at 3.66%, this still represented over $2.5 billion. Perhaps more concerning is that for 2015, after the USDA worked with all 50 states to assess their payment accuracy rates, they were not able to provide an overall improper payment rate for the SNAP program because data from 42 of the 53 reporting agencies could not be validated.In many ways, this situation encapsulates the challenges facing government organizations. While their main directive is to provide important services to citizens – which I believe includes online access to nutritious foods—they also must protect the taxpayers’ money and make sure benefits go to those who are qualified to receive them. We wish the USDA luck with this new pilot and stand ready to assist our state government clients in their program integrity efforts. Comment (0) Comments are closed.