1. California Department of Health Care Services Audits and Investigations, Medical Review Branch, March 2008

2. 2 To protect the fiscal integrity of California’s publicly funded health care programs. To protect the fiscal integrity of California’s publicly funded health care programs. To ensure quality health care services are delivered to Medi-Cal Beneficiaries. To ensure quality health care services are delivered to Medi-Cal Beneficiaries. Audits & Investigations Mission Statement

3. 3 Medi-Cal Fraud Medi-Cal fraud represents a complex and multi-faceted problem. Medi-Cal fraud represents a complex and multi-faceted problem. New fraudulent schemes continue to surface. New fraudulent schemes continue to surface. Unscrupulous providers are continually testing our ability to identify misuse of the Medi-Cal Program. Unscrupulous providers are continually testing our ability to identify misuse of the Medi-Cal Program.

4. 4  Improper use of beneficiary IDs  Providers rendering services that vary from norms  Providers billing for services not rendered  Providers exploiting vulnerable populations for economic gain  Improper use of provider IDs  Providing services that are not medically necessary  Payment of “kickbacks” to beneficiaries (capping) in order to bill Medi-Cal for unnecessary services  Failure to disclose true ownership on Medi-Cal application (willful misrepresentation)  Up coding to obtain a higher rate of reimbursement What does fraud look like? Fraud presents itself in many forms: Fraud presents itself in many forms:

5. 5 Research confirms that fraud costs the Program a great deal. Research confirms that fraud costs the Program a great deal. Small numbers of beneficiaries can generate repetitious billings by providers for enormous sums in fraudulent payments. Small numbers of beneficiaries can generate repetitious billings by providers for enormous sums in fraudulent payments. Collusion among providers is a popular scheme utilized to defraud the Medi-Cal Program. Collusion among providers is a popular scheme utilized to defraud the Medi-Cal Program. The Cost of Fraud

6. 6 1,915 beneficiaries during a 12 month period cost the Medi-Cal program $67,000,000 in outpatient services 1,915 beneficiaries during a 12 month period cost the Medi-Cal program $67,000,000 in outpatient services Or, $34,987 per-user Or, $34,987 per-user Or, $2,916 per user-per-month Or, $2,916 per user-per-month The Cost of Fraud is Significant

7. 7 Anti-Fraud Savings As a result of Anti-Fraud efforts over $2 billion savings since 1999 As a result of Anti-Fraud efforts over $2 billion savings since 1999

8. 8 SAVINGS Re-Enrollment Re-Enrollment Withholds Withholds Temporary Suspensions Temporary Suspensions Special Claims Review Special Claims Review Provider Prior Authorization Provider Prior Authorization Field Audit Reviews/UC Field Audit Reviews/UC Audits for Recovery Audits for Recovery Lab Reviews Lab Reviews Dental Dental BIC Replacement BIC Replacement TOTAL $1,204,541,873 COST AVOIDANCE COST AVOIDANCE Pre-Enrollments Lab Enrollment Managed Care TOTAL $752,415,141 LEGAL ACTIONS Criminal Convictions Civil Judgments/Settlements TOTAL $ 138,413,550 Court Ordered Restitution TOTAL $78.9 million Cumulative Anti-Fraud Savings July 1, 1998 through June 30, 2007

9. 9 Data sharing with CMS California was the first state to partner with the Federal Centers for Medicare and Medicaid Services (CMS) in data-sharing on providers California was the first state to partner with the Federal Centers for Medicare and Medicaid Services (CMS) in data-sharing on providers Provides more detailed information on suspect providers Provides more detailed information on suspect providers

10. 10 Key Legislation AB1699 (2002) AB1699 (2002) Added Section 100185.5 to the Health and Safety Code and authorizes the Director to deny continued enrollment, suspend, or withhold payments to a Medi-Cal Provider if they duplicate fraud from one program to another or have had multiple utilization controls. SB 857 – (2004) SB 857 – (2004) Amends several sections of the Welfare and Institution Code (W&I) adding provisional provider status, providing DHCS with the ability to levy civil money penalties, collect overpayments in a more timely manner, and impose procedure code limitations when warranted. AB 530 – (2006) AB 530 – (2006) Added Section 14123.05 to the W&I Code and became effective January 2007. Gives sanctioned Medi-Cal providers the opportunity to participate in meet & confer meetings with DHCS.

11. 11 The Investigations Branch (IB) is charged with the responsibility to protect the fiscal integrity of the California’s publicly funded health care programs. The Investigations Branch (IB) is charged with the responsibility to protect the fiscal integrity of the California’s publicly funded health care programs. IB Fraud Investigators are sworn law enforcement officers who conduct criminal and civil investigations into various Medi-Cal program fraud, both beneficiary and providers. IB Fraud Investigators are sworn law enforcement officers who conduct criminal and civil investigations into various Medi-Cal program fraud, both beneficiary and providers. Medi-Cal Beneficiary Fraud: Medi-Cal Beneficiary Fraud: Early Fraud Detection Program (EFDP) Early Fraud Detection Program (EFDP) Income Verification Eligibility Verification System (IEVS) Income Verification Eligibility Verification System (IEVS) Failure to Report Other Insurance Coverage Failure to Report Other Insurance Coverage Drug Utilization Enforcement (DUE) Drug Utilization Enforcement (DUE) Social Security – Cooperative Disability Investigations Social Security – Cooperative Disability Investigations In Home Support Services In Home Support Services Women, Infants and Children Program (WIC) Women, Infants and Children Program (WIC) Vital Statistics Investigations Vital Statistics Investigations Investigations Branch Investigations, Reviews and Techniques

12. 12 IB Fraud Investigators work with numerous allied agencies, including: IB Fraud Investigators work with numerous allied agencies, including: The county welfare departments, eligibility workers, social workers, the special investigative units (Welfare Fraud Investigators) and the county Auditor Controllers Office The county welfare departments, eligibility workers, social workers, the special investigative units (Welfare Fraud Investigators) and the county Auditor Controllers Office Federal Agencies: Federal Agencies: The FBI, Health and Human Services, the Social Security Administration, Federal Courts, Housing Utilization and Development (HUB) and the Drug Enforcement Administration The FBI, Health and Human Services, the Social Security Administration, Federal Courts, Housing Utilization and Development (HUB) and the Drug Enforcement Administration State Departments: State Departments: The State Controllers Office, Franchise Tax Board, Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse, the Bureau of Narcotics Enforcement, State Department of Social Services, Adult Programs and Fraud Bureau, the California Welfare Fraud Investigators Association, the California Department of Consumer Affairs, Department of Mental Health, Alcohol and Drug Program, Department of Development Disabled and the Highway Patrol The State Controllers Office, Franchise Tax Board, Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse, the Bureau of Narcotics Enforcement, State Department of Social Services, Adult Programs and Fraud Bureau, the California Welfare Fraud Investigators Association, the California Department of Consumer Affairs, Department of Mental Health, Alcohol and Drug Program, Department of Development Disabled and the Highway Patrol City and Local Departments: City and Local Departments: Police and sheriff, county grand juries and county counsel Police and sheriff, county grand juries and county counsel Allied Agencies

13. 13 The Centers for Medicare & Medicaid Services (CMS) implemented the PERM program to measure improper payments in the Medicaid program and the State Children's Health Insurance Program (SCHIP). The Centers for Medicare & Medicaid Services (CMS) implemented the PERM program to measure improper payments in the Medicaid program and the State Children's Health Insurance Program (SCHIP). PERM is designed to comply with the Improper Payments Information Act of 2002 (IPIA; Public Law 107-300), which requires a report to Congress. PERM is designed to comply with the Improper Payments Information Act of 2002 (IPIA; Public Law 107-300), which requires a report to Congress. Three contractors perform statistical calculations, medical records collection, claims review and medical/data processing review of selected State Medicaid and SCHIP fee-for-service (FFS) and managed care claims. Three contractors perform statistical calculations, medical records collection, claims review and medical/data processing review of selected State Medicaid and SCHIP fee-for-service (FFS) and managed care claims. 2007 Payment Error Rate Measurement (PERM)

14. 14 In FY 2006, CMS reviewed only fee-for-service Medicaid claims. In FY 2006, CMS reviewed only fee-for-service Medicaid claims. In FY 2007, PERM was expanded to include reviews of fee-for-service and managed care claims, as well as beneficiary eligibility, in both the Medicaid and SCHIP programs. In FY 2007, PERM was expanded to include reviews of fee-for-service and managed care claims, as well as beneficiary eligibility, in both the Medicaid and SCHIP programs. Each state participates in the PERM program once every 3 years (17 states per year) on a rotational basis. All 50 states are reviewed every 3 years. Each state participates in the PERM program once every 3 years (17 states per year) on a rotational basis. All 50 states are reviewed every 3 years. California is a year 2 state (2007, 2010, 2013…). California is a year 2 state (2007, 2010, 2013…). 2007 Payment Error Rate Measurement (PERM)

15. 15 Based upon the error rate, states must return their Federal share of overpayments within 60 days. Based upon the error rate, states must return their Federal share of overpayments within 60 days. CMS published the final rule for PERM on August 31, 2007, which sets forth State requirements for submitting claims and policies to the CMS Federal contractors for purposes of conducting fee-for- service and managed care reviews. This final rule also sets forth the State requirements for conducting eligibility reviews and estimating case and payment error rates due to errors in eligibility determinations. CMS published the final rule for PERM on August 31, 2007, which sets forth State requirements for submitting claims and policies to the CMS Federal contractors for purposes of conducting fee-for- service and managed care reviews. This final rule also sets forth the State requirements for conducting eligibility reviews and estimating case and payment error rates due to errors in eligibility determinations. The California MPES is the equivalent to the PERM. The California MPES is the equivalent to the PERM. 2007 Payment Error Rate Measurement (PERM)

16. 16 The first MPES was conducted in 2004. DHCS is currently conducting the fourth annual MPES. The first MPES was conducted in 2004. DHCS is currently conducting the fourth annual MPES. The MPES has been conducted yearly. After this year, MPES will be conducted every two years. The MPES has been conducted yearly. After this year, MPES will be conducted every two years. This study allows the State to measure the error rate of payments for Medi-Cal services and will enhance the system used to assure proper payment for services rendered to Medi-Cal beneficiaries. This study allows the State to measure the error rate of payments for Medi-Cal services and will enhance the system used to assure proper payment for services rendered to Medi-Cal beneficiaries. Medi-Cal Payment Error Study (MPES)

17. 17 The 2007 MPES is a review of a sample of claims that were paid between April 1, 2007 and June 30, 2007 to determine if the documentation of service supports the claims submitted for Medi- Cal reimbursement. The 2007 MPES is a review of a sample of claims that were paid between April 1, 2007 and June 30, 2007 to determine if the documentation of service supports the claims submitted for Medi- Cal reimbursement. The MPES develops an estimate of dollar loss due to potential fraud, identifies and quantifies program vulnerabilities, and identifies how best to deploy Medi-Cal antifraud resources. The MPES develops an estimate of dollar loss due to potential fraud, identifies and quantifies program vulnerabilities, and identifies how best to deploy Medi-Cal antifraud resources. Medi-Cal Payment Error Study (MPES)

18. 18 Evaluation Activities Audits for Recovery Audits for Recovery Enrollment Reviews Enrollment Reviews Utilization Reviews Utilization Reviews Field Audit Reviews (Pre-Payment) Field Audit Reviews (Pre-Payment) Special Projects Special Projects

19. 19 Consequences Utilization Controls Post Service Pre Payment Audit (SCR) Post Service Pre Payment Audit (SCR) Prior Authorization Prior Authorization Civil Money Penalty (Warning Notices) Civil Money Penalty (Warning Notices)Sanctions/Suspensions Withhold Withhold Temporary Suspension Temporary Suspension Procedure Code Limitation Procedure Code Limitation Permissive Suspension Permissive Suspension Mandatory Suspension Mandatory Suspension Immediate Suspension Immediate Suspension Civil Money Penalty Civil Money Penalty (Imposition of Fines)

20. 20 Number of Sanctions Imposed Type# of Open Cases AFR46 Biller Reviews 1 Desk Audits 33 Education Reviews 1 Enrollments 54 FAR133 Referrals 8 Special Projects10

21. 21 Number of Cases Currently on Sanction Type of # of Sanction Providers PPA73 CMP - First Warning Ltr748 TS407 WH321 SCR287 PCL173 ** According to the Medi-Cal PCL list on Medi-Cal website there are only 72 providers on PCL

22. 22 Number of Cases on Which Sanctions Were Placed # of Providers 20062007 PPA03 CMP-First Warning Ltr305204 TS7063 WH6934 SCR196159 PCL79134

23. 23

24. 24 CONTACT INFORMATION The DHCS Medi-Cal Fraud Hotline telephone number: 1-800-822-6222 The DHCS Medi-Cal Fraud Hotline telephone number: 1-800-822-6222 The recorded message may be heard in English and four other languages: Spanish, Vietnamese, Cambodian, and Russian. The call is free and the caller may remain anonymous. The recorded message may be heard in English and four other languages: Spanish, Vietnamese, Cambodian, and Russian. The call is free and the caller may remain anonymous. You can also send an e-mail to: stopmedicalfraud@dhs.ca.gov You can also send an e-mail to: stopmedicalfraud@dhs.ca.gov stopmedicalfraud@dhs.ca.gov