Investigation could trigger state probes, provider exclusions
After uncovering $229 million worth of allegedly fraudulent Medicare claims from community mental health centers (CMHCs) in five states, federal investigators are pushing for Congress to dump Medicare’s partial hospitalization benefit. It’s not yet clear how Medicaid funding for mental health centers will be affected, but some state officials already are in talks with the Health Care Financing Administration (HCFA) to find out.
Recently, HCFA informed twenty CMHCs that the agency intends to terminate their Medicare provider agreements, and 60 more centers are expected to face termination over the next few months, HCFA officials say. HCFA has indicated that as many as 1,000 CMHCs eventually may be kicked out of Medicare.
In addition, HCFA has informed individual states about which CMHCs received notification letters. States will have to decide for themselves whether to terminate Medicaid agreements with these providers or initiate Medicaid-based fraud investigations, says Ben Jackson, audit director, field operations for Medicare and Medicaid at the Department of Health and Human Services Office of the Inspector General (OIG).
Mr. Jackson notes that federal investigators are leaving the question of Medicaid fraud enforcement to the states because rules regarding partial hospitalization may differ among states and between Medicare and Medicaid. "The other issue obviously would be if there are [patients who are] dual-eligibles," Mr. Jackson says. In that case, HCFA wouldn’t pay for the Medicare portion of a claim submitted by a terminated provider. "States really would have to be aware of whether there are any crossover claims," he says.
John Searcy, MD, medical director at the Alabama Medicaid Agency in Montgomery, has been working recently with HCFA through the agency’s Technical Advisory Group to coordinate a state-level response to the CMHC issue. "Right now, we don’t know if there’s an impact on us directly," he says. "We’ve started trying to look at our program as compared to the Medicare program and cooperate with them on their investigation. We’re working with them to see what they have found and to see if they need any information from us." Mr. Searcy adds that Alabama could launch its own investigation of possible Medicaid fraud, but nothing’s been decided yet.
The larger issue for most states will be what impact the Medicare exclusions have on their state program provider systems. HCFA doesn’t want excluded Medicare providers in any state programs that receive federal funding. State directors can ignore the exclusions at their own risk: A HCFA audit might uncover them and make the state liable for huge reimbursements, or the press might uncover them and give the programs a black eye. Neither prospect is attractive.
Meanwhile, the OIG intends to pursue civil and criminal cases against CMHCs nationwide, says Ben St. John, an OIG spokesman. If sanctioned by the OIG, mental health centers would face exclusion not just from Medicare but from all federally funded health care programs, including Medicaid.
Mr. St. John notes that the OIG already has taken action against some CMHCs that provide partial hospitalization services. In at least one instance, a facility was hit with a monetary settlement and the imposition of a corporate integrity program. "Under those circumstances, they would avoid being sanctioned or excluded," Mr. St. John says. "But there would be a fairly close oversight through the implementation and monitoring of that integrity program to make sure there was future compliance."
Mr. St. John adds that, despite HCFA’s notification letters, the federal government recognizes "that this type of service is important and should be continued to the extent that it can be. Therefore, HCFA’s trying to terminate only the worst offenders and work with other ones who haven’t been compliant to ensure the continued availability of this kind of care in the community setting."
That’s good news to officials at the National Mental Health Association in Alexandria, VA, who worry that Congress might "throw the baby out with the bath water," according to Robert Gabriele, senior vice president of the association. "HCFA is right in weeding out fly-by-night operations posing as community mental health centers," he says. "But people need to know that the vast majority of [these centers] do a great job and help localities avoid expensive long-term hospitalization."
HCFA’s actions against CMHCs come on the heels of a recently released OIG report that scrutinized Medicare claims filed by CMHCs in five states: Florida, Texas, Colorado, Pennsylvania, and Alabama. According to the OIG, these states accounted for about 77% of all CMHC payments under the partial hospitalization program in 1996. OIG investigators reviewed 250 claims, which contained 6,736 units of partial hospitalization services and accounted for $252 million in payments. The investigators found that 92% of the claims submitted, for a total of $229 million, failed to meet Medicare reimbursement requirements. According to the report, most of the unallowable services were provided to beneficiaries who were not eligible for partial hospitalization services under Medicare.
HCFA admits that its policies in setting up eligibility requirements for the partial hospitalization program helped create the potential for massive fraud. Essentially, the agency relied "exclusively on the integrity of the applicants to certify that they comply with requirements of the Social Security Act and are in compliance with state licensure laws," according to the report. Because only 40% of states even have licensure requirements for CMHCs, "the lack of state oversight and the use of a self-attestation process permitted unscrupulous providers to participate in the Medicare program."
Indeed, Deana Stoner, senior policy analyst for the Health and Human Services Commission in Austin, TX, says none of the seven CMHCs targeted for termination in her state are real mental health facilities. "These are people who put themselves forward as CMHCs, and because of a kind of loophole in the regulation and some ambiguity at the federal level, they were put on the roster," she says. "Our state Mental Health Authority asked that Medicare quit enrolling these providers because we were concerned about oversight and quality of care."
In a second OIG study, investigators performed on-site reviews of 700 CMHCs in nine states and found that "a large number" of them failed to meet Social Security Act requirements and therefore don’t qualify to bill Medicare. (Exact figures aren’t available because the study hasn’t been completed.)
According to the report, the false Medicare claims from CMHCs fell into five main categories:
1. Beneficiaries were ineligible.
To be eligible for partial hospitalization services, patients must exhibit a severe or disabling mental condition, be able to benefit from a coordinated plan of care, have an adequate support system outside the program, have an ICD-9 diagnosis of mental illness, not be dangerous to themselves or others, and not require 24-hour care. In the majority of the false claims identified by the OIG, beneficiaries didn’t meet these criteria.
2. Services were not reasonable and necessary.
Medicare’s partial hospitalization program requires that services be reasonable and necessary for the diagnosis and treatment of the patient’s condition, and can reasonably be expected to improve the patient’s functional level. In contrast, however, OIG investigators found that many of the services provided were only "recreational or diversionary" in nature or were not tailored to the needs of specific patients.
3. Services were not authorized.
In 18 of the claims sampled, the services performed were never authorized or supervised by a physician. Further, some medical records didn’t contain physician evaluations, certifications, signed plans of care, orders for services, or physician progress notes.
4. Documentation was inadequate.
A couple of claims contained incomplete assessments, admission orders, physician certifications, treatment plans, and physician notes.
5. Providers were under investigation, suspended, or terminated.
For 10 claims, the providers in questions already were being investigated by the OIG Office of Investigations. For 28 others, providers already had been suspended or terminated from participation in the Medicare program.
In response to the OIG’s report, HCFA has released a "10-Point Action Plan" to "curb abuse and protect beneficiaries and taxpayers." The plan’s points include terminating those CMHCs the agency considers the worst offenders and increasing its scrutiny of new applicants to the partial hospitalization program.
The complete report from the Office of the Inspector General is found on the Web at: http://www.hhs.gov/progorg/oas/reports/ regiona4/49802145.pdf.