Medicaid Program Integrity Initiative Saves $86 Million over 3 Years

  Medicaid Program Integrity Initiative Saves $86 Million over 3 Years

  *Iowa Medicaid Enterprise (IME) says initiative exceeds savings targets by
    $18.5 million over three years
  *Innovative program targets fraud, abuse, errors across Medicaid programs,
    including personal care providers, in-home respite care, Medicaid-funded
    lawn-mowing and snow-removal abuses, inappropriate hospital charges,
    Medicaid/Medicare dual-eligible billing errors

Business Wire

DES MOINES, Iowa -- October 21, 2013

Gov. Terry E. Branstad announced today that an Iowa Medicaid initiative saved
taxpayers $41 million in fiscal year 2013. That brings the total three-year
savings of the program integrity effort to more than $86 million.

“The savings are six times greater than the overall cost of the program
integrity contract, and $18.5 million above the savings target. That’s very
good news for taxpayers,” said Branstad. “These savings help us provide better
care for 400,000 Iowans in need, without reducing provider rates or trimming

The savings were achieved through a three-year, $14 million program integrity
contract awarded to Optum of Eden Prairie, Minn. Optum, which manages most of
the program integrity work for Iowa Medicaid Enterprise, will continue its
program integrity efforts for FY 2014 in the first of two performance-based
option years under the contract.

Iowa Medicaid Enterprise Director Jennifer Vermeer said savings under the
program integrity contract include both “cost avoidance,” which is money not
spent because claims errors or fraudulent activities are caught in advance,
and “recoveries,” which refers to funds inappropriately billed to Medicaid
that providers must repay.

A strong emphasis on avoidance is especially beneficial to Medicaid programs,
since it is less costly than “chasing” inappropriately paid claims in an
effort to recover funds. Optum discovered inappropriate behavior by both
providers and beneficiaries.

“We are pleased with the innovative approaches Optum has instituted,” Vermeer
said. “We’ve put those who deliberately seek to defraud the system on notice
that we’re using some very sophisticated techniques to thwart their efforts.
For those who make mistakes or are misinformed, there’s an educational
component to the program that our Medicaid providers have found helpful.”

The majority of the approximately 20,000 Medicaid providers bill appropriately
and understand how the program works. But, Vermeer said the few who are
fraudulent can cost taxpayers millions.

Some examples of potential fraud or inappropriate claims and payments that
Optum analysts found include:

  *Questionable In-home Respite Care Claims: Iowa Medicaid pays for some
    in-home non-medical services to families with disabled children, who can’t
    be left alone, to give parents an opportunity to shop or run errands.
    Program integrity analysts found that some of these companies were billing
    for services not provided, submitting bills that show they were at two
    different households at the same time, or inflating the time they were at
    a household. In addition, parents sometimes had siblings or other
    relatives establish a “storefront day care center,” and would bill
    Medicaid for in-home respite care through the company. Optum’s work has
    resulted in a change in the law that now prevents billing through a day
    care center.
  *Questionable Chore Claims: People who are eligible for Medicaid-paid
    nursing home care can sometimes remain in their homes with the help of
    various services, including chores such as lawn mowing and snow removal.
    Program integrity analysts found that some chore providers billed for snow
    removal on days it did not snow, or billed excessively for mild snowfall.
    In addition, analysts compared plot plans with lawn-mowing claims and
    discovered that often, providers would bill for far more hours than it
    would take to mow a small lawn. In one case, analysts found that one
    provider was submitting bills of $700 per month for lawn care at one
    single-family address.
  *Questionable Durable Medical Equipment Claims: Generally, durable medical
    equipment, which includes items such as oxygen tank dispensers, home
    hospital beds, wheelchairs, etc. – are either purchased outright or rented
    by Medicaid, whichever is more cost-effective. In some cases, for example,
    a patient may require a wheelchair or a nebulizer for only a short period
    of time, and renting is more cost-effective than buying. Program integrity
    analysts found many instances of companies submitting rental claims long
    past when purchasing the item would be less expensive. In other cases,
    companies would submit rental claims even after Medicaid had already
    purchased the item from them, meaning they were receiving double payments.
  *Questionable “Swing Bed” Claims: Critical access hospitals – defined as
    smaller, rural hospitals – at times keep injured or very sick patients in
    more expensive “swing bed” units, which can cost $4,000 per day, rather
    than moving them to lesser expensive care settings in the same hospital or
    to different facilities. For example, in several rehab cases, the level of
    care required could have been handled just as well in a nursing home
    setting, which costs Medicaid about $250 per day. Program integrity
    analysts focused on cases where patients were kept in “swing beds” for
    more than a year – generating up to $1.5 million in Medicaid bills – and
    found many cases of inappropriate billing by hospitals. The program’s
    efforts resulted in a legislative change that now requires some prior
    authorization before patients are placed in swing beds.

In addition, Vermeer said there were other Medicaid fraud areas in which IME
is collaborating with law enforcement officials, who are investigating based
on information from Optum analysts. Steve Larsen, executive vice president of
Optum Government Solutions, said Iowa’s Medicaid program has become a national
model in program integrity.

“The state shares our philosophy about payment accuracy – every taxpayer
dollar must be properly spent, and every provider must be properly paid for
the critical work they do,” Larsen said.

For more information:
Amy Lorentzen McCoy
Iowa Department of Human Services

For more information on Optum:
Steve Puleo
Optum Corporate Communications

About Iowa Medicaid Enterprise (IME)
IME, a combination of state employees and commercial vendors, is responsible
for managing a Medicaid program that covers nearly 450,000 beneficiaries and
38,000 care providers. IME unites state staff and “best of breed” contractors
into a performance-based model for administration of the Medicaid program.

About Optum
Optum ( is a leading information and technology-enabled health
services business dedicated to helping make the health system work better for
everyone. Optum comprises three companies – OptumHealth, OptumInsight and
OptumRx – representing more than 35,000 employees worldwide who collaborate to
deliver integrated, intelligent solutions that work to modernize the health
system and improve overall population health.

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State of Iowa
Tim Albrecht, 515-281-5211
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