From: "Mumll. Elizabem" 

Sent: 7/25/201712:12:oe PM .0500
To: 
Letter to HHS Sec Tom Prioe reviseddomr

Can you put this on agenda far tnday's call?

Sali lor General
()rriceo <April 4, 2017

Hon. Tom Price
Secretary
Department of Health & Human Services
xx
Washington, DC xx
Re: Medicaid Recipient Fraud
Dear Secretary Price:
As the top law officers and chief investigators of our states’ respective Medicaid Fraud Control Units, we are
writing to express our concerns about the ongoing impact of Medicaid recipient fraud. Medicaid recipient
fraud places tremendous strain on state budgets and continues to grow at an alarming rate. In September
2016, the Department of Health and Human Services sent out a warning that improper payments under
Medicaid have become so common that they will account for almost 12 percent of total Medicaid spending
this year, just shy of $140 billion.
A significant portion of these improper payments can be linked to fraud by beneficiaries. In May of 2015, the
United States Government Accountability Office issued a report to the United States Congress that found
200 deceased individuals and 3,600 incarcerated individuals had fraudulently received Medicaid benefits
totaling $13.4 million. This report also found 199,000 individuals with nonexistent social security numbers
and 4,400 individuals using a “virtual address” to improperly receive benefits totaling at least $468.5 million.1
With a growing number of individuals applying for Medicaid benefits, the identification, investigation, and
prosecution of individuals who intentionally falsify qualifying information on their applications will not only
save much-needed funding but also deter others from engaging in similar activity.
Attorneys General, and specifically their Medicaid Fraud Hotlines, receive numerous calls from individuals
reporting Medicaid recipient fraud. However, we are currently prohibited from following through
investigating those complaints. As a result, arrests and prosecutions of fraudulent recipients are virtually
nonexistent.
Below is a list of complaints commonly received that we are currently restrained from investigating:
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1

Recipients who submitted a false application for Medicaid approval;
Recipients who provided false or misleading information about income, assets, family members, or
resources;

United States Government Accountability Office, MEDICAID Additional Actions Needed to Help Improve
Provider and Beneficiary Fraud Controls, GAO-15-313, May 2015 at 9-10.

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Recipients who share a Medicaid eligibility card with another individual;
Persons who have sold or purchased a Medicaid card;
Recipients who have diverted for resale prescription drugs, medical supplies, and/or other benefits;
Recipients who have participated in doctor or pharmacy shopping; and/or
Recipients who obtained Medicaid benefits to which they were not entitled through other fraudulent
means.

In recent cases, investigators determined owners of Medicaid companies who were billing millions of dollars
to Medicaid each year as providers also submitted $45,000 in personal medical bills to the Medicaid
Program; and those personal bills were paid in full2. In another case, investigators prosecuted a caretaker
under the Medicaid program who was also receiving Medicaid benefits despite having more than $200,000
in his checking account at the time of arrest3. This individual was being paid twice: once by the State for
providing Medicaid services, and a second time by the State for receiving services. This gross Medicaid
recipient fraud and waste of taxpayer dollars must be stopped.
As the only statewide agency with capacity to investigate, arrest, and prosecute Medicaid fraud, 4 our
Medicaid Fraud Control Units are the logical entities to tackle fraud committed by Medicaid recipients.
However under the current interpretation of the statutory language creating state Medicaid Fraud Control
Units, as well as the regulations created as a result of that interpretation5 – state Medicaid Fraud Control
Units are prohibited from investigating and prosecuting beneficiary fraud. See, 42 CFR
1007.19(e)(5)(expressly prohibiting federal financial participation for “investigation or prosecution of cases
of suspected beneficiary fraud”). This regulation apparently arises from prior departmental interpretation of
42 U.S.C. 1396b(q)(3) of the Social Security Act which provides that, “the entity’s function is conducting a
statewide program for the investigation and prosecution of violations of all applicable state laws regarding
any and all aspects of fraud in connection with (A) any aspect of the provision of medical assistance and the
activities of providers of such assistance under the State plan under this subchapter….”
Congress plainly intended to include any and all aspects of fraud committed against the program. We
therefore write to request your agency revisit interpretation of this statutory text to evaluate whether it
supports the authority of state Medicaid Fraud Control Units to investigate and prosecute beneficiary fraud.
To the extent that it does, we request the appropriate administrative action be taken to revise the federal
regulations and remove any unnecessary and extra-statutory restrictions currently prohibiting state Medicaid
Fraud Control Units from investigating beneficiary fraud.
Our Medicaid Fraud Control Units are staffed with qualified, professional investigators and attorneys who
could immediately begin the process of correcting this serious problem. Please assist us in seeking justice
and saving taxpayer money by accomplishing our goal of detecting, investigating, and prosecuting all forms
of fraud in the Medicaid program.

2

See Louisiana v. Chanci Shaw, Docket No. 11-11-0604, 19th Judicial District Court.
Louisiana Department of Justice, Medicaid Fraud Control Unit case number 57-1594, In Re: Shonda
Augustus.
4 Under La. R.S. 14:70.1; K.S.A. 75-725 et seq.
5 See, e.g., 42 CFR 1007.19(e)(5)(expressly prohibiting federal financial participation for “investigation or
prosecution of cases of suspected beneficiary fraud”).
3

 Sincerely,

Jeff Landry Derek Schmidt
Louisiana Attorney General Kansas Attorney General