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More than 200 Medicaid Providers in North Carolina Identified for Possible Medicaid Fraud, Misuse

DHHS investigators to blanket state, look into 206 providers, $191 million

For release: Immediate    May 22, 2012
Contact: Chrissy Pearson (919) 855-4835

Raleigh — North Carolina Department of Health and Human Services (DHHS) Secretary Al Delia today announced that computer software designed to root out potentially fraudulent Medicaid claims has uncovered 206 outpatient behavioral health providers across the state with unusual Medicaid billing worth up to $191 million. North Carolina is the first state in the nation to track possible fraud in this way.

Around 100 of those providers are in the greater Triangle region and more than 40 in the Charlotte region. The Wilmington area had 17 and Greenville and surrounding counties had 24. A complete regional list is below.

Ten investigations have already been completed of outpatient behavioral health, yielding a total of $6.2 million in potentially fraudulent payments. These cases have already been referred to the Medicaid Investigations Unit of the North Carolina Attorney General’s office for further investigation. This is just the first phase of DHHS’s efforts to analyze Medicaid claims for questionable activity.

Secretary Delia has dispatched special auditors and investigators to canvas the state and make unannounced visits to the providers. After spending two to three days on location, the teams will report their findings back to Department officials, and swift and appropriate action will be taken where warranted. All visits are due to be completed this summer.

DHHS will take the following actions against any provider suspected of fraud:

• Providers will be placed on “pre-payment review” – all future Medicaid claims submitted by the provider will not be paid until thoroughly reviewed and approved by state Medicaid officials.
• Prosecutable cases will be turned over to the state Attorney General’s office. His Medicaid Investigation Unit was doubled in size thanks to support in Governor Perdue’s budget.
• DHHS will begin the process to recover funds as quickly as possible.

Providers intent on defrauding Medicaid have been good at evading detection – until Governor Perdue directed DHHS to contract with IBM for a sophisticated data analysis software program. The program can detect billing behaviors that suggest fraudulent behavior, and also shows relationships among providers that could point to other providers that may be abusing the Medicaid program. North Carolina is the first state to use the IBM software to track down Medicaid fraud.

Some examples:

• For a single date, providers billed for more hours of service than there are hours in a day (i.e., 44 hours of service all provided on one date).
• Group therapy sessions have been “unbundled” – that is, billing for the group rate and then billing each individual group member separately, effectively receiving payment twice for the same service.
• Individual providers have collected hundreds of thousands – even millions – of dollars in Medicaid payments in a single year. Using an average hourly billing rate of $75, a typical yearly payment should be no more than around $140,000 for a single person.

The software searched three years of claims data during its first phase. The Department’s efforts are part of Governor Perdue’s commitment to crack down on Medicaid fraud, waste and abuse.

“North Carolina is a leader in Smarter Government initiatives. Leveraging both technical and deep human expertise, the state can enhance the standard of care delivered via the Medicaid program for all residents,” said Shaun Barry, IBM Fraud and Abuse Leader. “North Carolina’s efforts show the power of advanced analytics can be applied to multiple facets of government improving efficiency and building fairer system for everyone.”

The software identifies providers whose billing practices fall outside the norm, after a careful comparison to peer groups of similar providers, geographic areas and types of procedures. DHHS will investigate to determine whether the unusual billing behavior was intentional or if there is another explanation.

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