TRENTON — An HMO that earned $1.7 billion from 2009 to 2010 by providing Medicaid coverage to 350,000 low-income and disabled New Jerseyans didn’t try very hard to detect fraudulent billing — identifying only $1.6 million, or one-tenth of one percent in improper payouts, according to a report the Office of the State Comptroller released today.
UnitedHealthcare Community Plan of New Jersey failed to hire enough investigators and train them properly, in violation of the managed care company’s contract with the state, according to the report.
“With billions of tax dollars flowing through New Jersey’s Medicaid program, our state relies on its Medicaid HMOs to fulfill their oversight responsibilities in an aggressive manner,” State Comptroller Matthew Boxer said in a statement. “This is another audit that shows an HMO failing to live up to requirements designed to combat fraud and lower state Medicaid costs.”
In 2011, the comptroller found similar shortcomings when the office examined the fraud investigative efforts of Horizon Blue Cross Blue Shield of New Jersey, the largest Medicaid provider in the state. Horizon challenged many of the comptroller’s findings.
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The HMOs in the Medicaid program are required to dedicate one investigator for every 60,000 Medicaid clients. At that ratio, United’s special investigations unit should have been comprised of about six employees whose sole focus is to detect fraud and abuse by medical providers and patients.
Instead, United reported it had dedicated the equivalent of two investigators during the two-year study period based on the amount of hours devoted to the unit. Upon scrutiny, the comptroller found United “overstated” its staffing levels; the unit had one investigator, the report said.
The comptroller also faulted United for not requiring its special investigations unit to focus on fraud detection. The unit’s “quality assurance auditors” are also expected to “identify claims for procedural and financial accuracy,” according to the report.
United’s contract with the state also requires dentists, pharmacies, doctors and other medical providers refer suspected causes of fraud and waste to the HMO, but the comptroller said United had not received a single referral throughout the two-year period, the report said.
United’s Vice President for investigations Richard Munson responded to the audit in writing, saying the company had made or was in the process of making many of the changes Boxer’s office had suggested.
“All investigative activities will be conducted by trained SUI (special investigations unit) investigators,” Munson’s letter said, which was included in the comptroller’s report.
Medical providers will be reminded to make referrals when suspicious activity arises, the letter said.
Munson’s June 5 letter also noted that United’s handling of its investigative unit had been been approved by “the regulator” of the Medicaid program. The state Department of Human Services oversees and administers Medicaid, which serves 1.3 million people in New Jersey.
A Human Services spokeswoman said the department would not comment on the report.
United “has been working closely with the Office of the State Comptroller on these matters from 2009 and 2010, and has implemented or is implementing the OSC’s recommendations,” company spokeswoman Mary McElrath-Jones said.
The comptroller’s office has overseen Medicaid fraud investigations for the state since 2010.
Date: July 31, 2013