Audit finds possible fraud in Medicaid residential services

by Timothy McQuiston, Vermont Business Magazine Vermont Auditor Doug Hoffer today released a new audit report regarding the Choices for Care (CFC) program managed by the Department of Disabilities, Aging and Independent Living (DAIL). The auditor found several cases of possible improper payments or even possible fraud within the program. Nationally and in Vermont the use of home-based care has given rise to compliance and fraud issues. For example, Vermont’s Medicaid Fraud and Residential Abuse Unit (MFRAU) has obtained fraud convictions of attendants and/or their employers.

DAIL offers CFC recipients a consumer or surrogate-directed services option that provides personal care, companion, and respite services to individuals at home, delivered by attendants chosen by and employed by the recipient or their surrogate, and paid from program funds through a payroll provider (ARIS Solutions, Inc). ARIS, in turn, receives reimbursement from the Medicaid claims system, valued at $24.7 million, which is operated by DXC Technology under contract to the Department of Vermont Health Access (DVHA).

The auditor said in the report that his objective was to determine whether improper payments were made under Vermont’s Medicaid CFC program’s consumer or surrogate-directed home-based services option. The auditor and his staff used data analysis techniques to compare authorization, timesheet, payroll, and claims records from multiple systems, looking both for improper payments resulting from transactions that broke specific rules (such as payment for services delivered at a time when the recipient was in hospital) and for transactions that reflected suspicious patterns (such as attendants paid to work improbable hours, (eg, every hour in a single week). Auditors did not confirm the accuracy of timesheets or ARIS’s data entry into their systems.

However, they did identify about $150,000 in improper payments (most of their tests were for a 15-month period). For example, ARIS was reimbursed $48,000 for payments made on behalf of consumers who were not authorized to receive personal care services or had exceeded their budgets for this service. They also identified suspicious transactions. For example, 58 attendants were paid for 24 hours of care in a single calendar day 300 times; these included five instances of an attendant being paid for purportedly working all 168 hours in a week.

Total payments from CFC to Aris was $24.7 million during the audit period.

The auditor passed these results to MFRAU, which has opened several cases based on the auditor's analyses and plans to open other cases.

"In researching the causes of these results, we found a reliance on manual processes, flawed or absent system edits (computerized tests to detect inaccuracies in eligibility, reporting, and payment), and insufficient monitoring of transactions. For example, the State did not check whether individual consumers over- or under-utilized their authorized service levels or perform audits or investigations of claims under the CFC consumer or surrogate-directed services option," the audit report states. "We made a variety of recommendations to DAIL and DVHA intended to correct the causes of our results."

In addition, within the next couple of years, the federal government is requiring Vermont and the other states to implement an electronic visit verification system, which is intended to verify that services billed for home and community-based personal or home health care are for actual visits made.

"Taken together, we believe that these changes provide an opportunity for the State to improve controls and processes over consumer or surrogate-directed services transactions," the report states.

The response from the Agency of Human Services, led by Secretary Al Gobeille, was unemotional and thanked the auditor for looking into it and offering helpful recommendations.

But AHS did take issue with the suggestion that what the auditor found constituted significant errors within the system, pointing out the error rate (based on $150,000 of $24.7 million) was a relatively low 0.6 percent. AHS points out the error rate for the US Centers for Medicare & Medicaid Services is 12.9 percent.

The auditor countered that he was not looking at what CMS quantified as error rates.

"(AHS) Management is incorrect to represent our findings as an error rate," the auditor said in the report. "Our scope did not include substantial areas of potential improper payments, so our results are not comparable to the CMS error rates cited in the comments. Moreover, managements’ response does not take into account the many suspicious transactions that were found and referred to the MFRAU (Vermont Medicaid Fraud Residential Abuse Unit in the Office of the Attorney General). If the MFRAU’s investigations into these cases should find fraudulent or abusive actions on the part of attendants and/or employers there would be more improper payments than the $150,000 cited in this report."

REPORT July 30,