September 1999

State Attorney General Asks CPAs to Help Fight Medicaid Fraud

By Lillie Balinova

New York State Attorney General Eliot Spitzer called on CPAs to help uncover Medicaid fraud. He pointed out that accountants have helped save many millions of Medicaid dollars.

"Let's face it, health care is a serious issue in the United States. As we prepare ourselves for the next millennium, my office will need to rely even more extensively on members of your profession," Spitzer said, speaking at the Foundation for Accounting Education's Health Care Conference in August.

He discussed how professionals need to work together to uncover fraud, and he described how his office works.

"My Medicaid fraud control unit is, in fact, the model upon which the national fraud effort is based. We were the first to utilize the 'team concept' that united attorneys, investigators, and accountants to fight healthcare fraud."

Spitzer also offered insight into common unethical practices in the health care community, including fraud at managed care entities.

"Our auditors look for groups of recipients who are not assigned to a primary care physician, particularly for significant periods of time," he said. "A managed care entity may deliberately not assign a primary care physician in order to maximize its Medicaid revenue, thus eliminating the need to pay that primary care physician."

Another area that the attorney general said accountants in his office scrutinize is disenrollment fraud.

"Let's say a family no longer needs to utilize Medicaid and they inform their managed care entity," Spitzer said. "Any unnecessary delay--even one month--allows the entity to receive an additional capitation payment to which it may not be entitled."

He pointed out that his office also looks for enrollment fraud, citing examples of attempts to enroll recipients without their knowledge to obtain payment, signature alternations, and inordinate numbers of enrollment from a given managed care provider.

Spitzer also discussed the certified cost reports that nursing homes file with the New York State Department of Health. He emphasized that it is important that CPAs who work in the health care industry or have health care clients have a sound knowledge of Medicaid regulations and their impact on reimbursement to help insure that legitimate expenditures by these providers find their way into cost reports.

According to Spitzer, the United States is expected to spend 15 percent of the gross national product this year--one trillion dollars--on health care, and he attempted to frame the cost of fraud within these parameters.

"Given these figures, it is not surprising that our health care delivery system has proven ripe for fraudulent activity," he said. "It is estimated that fraud abuse accounts for ten percent of health care costs, which currently exceeds eight hundred billion dollars. While there may not be a way to establish a precise figure, we are certainly talking about many hundreds of millions of dollars of fraud and abuse in the Medicaid program alone."