States Respond to Hidden Camera Medicaid Investigation

Published September 20, 2011

A hidden camera investigation into the Medicaid payment practices of multiple states has resulted in the discovery of waste, fraud, and abuse of the system, sparking several state-led investigations into Medicaid employees and the consideration of further systemic reforms.

(Watch the Videos Here.)

The investigation, undertaken by Project Veritas, was conducted by volunteers who posed as drug smugglers, sometimes engaged in child prostitution, who visited several state Medicaid offices where they requested assistance for family members, themselves and illegal aliens. The undercover videos show state Medicaid office workers walking them through the application process, guiding them on how to obscure or not report income that would disqualify them from the health care plan for the poor. 

As a result of the Project Veritas video stings, several states are considering or already investigating state Medicaid employees in an attempt to curtail fraud. Maine Gov. Paul LePage (R) called for tripling the staff of fraud investigators in the state in the wake of the hidden camera reports, which resulted in the firings of four health department staffers in his state alone.

“The state of Maine has to change its culture. If you want to change, we will work with you. If you don’t want to change, sayonara,” LePage said at a press conference on the matter. “We must protect the limited resources for those who are truly in need and shut down the benefits for those abusing the system.”

Attorneys General Investigate

Medicaid is one of the largest budget line items for most states. This includes Ohio, which spends an estimated $15.4 billion a year on the program, amounting to more than 40 percent of the state budget. In 2010 alone, the Ohio Attorney General’s office recovered $103 million from failed Medicaid fraud attempts, indicting 135 and obtaining 121 convictions. Yet two Project Veritas volunteers were successful in applying for Medicaid benefits while posing as Russian drug dealers, claiming their underage sisters worked as prostitutes for drug payments, and bragging about their $800,000 sports car to state employees.

Mark Moretti, public information officer at the office of Ohio Attorney General Mike DeWine (R), says the office is looking into the matter.

“As a result of Project Veritas, we’re absolutely looking into this instance of fraud,” Moretti said. “The Ohio Dept. of Jobs and Family Services is responsible for training the employees at the state Medicaid offices. We’re looking primarily at people outside the state offices, such as people who are usually in the health care practices billing for unwanted services or prescribing drugs for off-label use,” says Moretti.

Benjamin Johnson, a spokesman for the Ohio Department of Job and Family Services, says the employees in the Project Veritas video don’t technically work for the state, but for three different counties. Medicaid eligibility is determined at the county level.

“Our agency and the state have launched an ongoing investigation. We want to know what happened on the days in questions and make recommendations for the counties to do better,” Johnson said. “As a result of the videos, we’ve revised our training to include the Project Veritas videos and will work with all 88 counties in the state for training.”

Fraud a Growing Concern

Greg Lawson, a policy analyst with the Buckeye Institute for Public Policy Solutions in Columbus, Ohio, says Medicaid fraud is a problem in every state. Even worse, he says, it’s growing dramatically every year.

“Our new governor has done a lot to mitigate the pressure fraud puts on the budget, but it’s really too early to tell what effect his policies are having. But anything that offsets fraud is a good thing. As eligibility shifts, it’s easier for fraud to happen, but we’re getting better about identifying it,” says Lawson.

Bryan Corbin, a spokesman for the Office of the Indiana Attorney General, says Medicaid fraud committed by providers is a multimillion-dollar problem in his state.

“The Indiana Attorney General’s Medicaid Fraud Control Unit (MFCU) recovers millions of dollars annually from Medicaid providers that have submitted false claims,” says Corbin.

Responsibilities Divided for Investigation

Brian Gottstein, a spokesman for Virginia Attorney General Ken Cuccinelli (R), says his office works closely with local law enforcement, senior citizens groups, and others to fight against Medicaid fraud through a partnership called Triad.

“The Medicaid Fraud Control Unit (MFCU) has begun a new effort to work with more than 200 local Triad chapters across the commonwealth to educate seniors on how to identify and report Medicaid fraud,” says Gottstein.

Gottstein says MFCU has investigated and prosecuted hundreds of Medicaid fraud offenders, recovering more than $15 million in the past fiscal year alone.

“Federal law requires suspected instances of provider fraud to be reported to the state MFCU for investigation. Recipient fraud should be reported to Department of Medical Assistance Services. The case would be referred to DMAS’ Recipient Fraud Unit for investigation. The Department of Social Services employee in the videos may be referred to MFCU for investigation,” said Gottstein.

More to Come

Project Veritas founder James O’Keefe said the investigation was designed to make the truth known about the degree of opportunity for Medicaid fraud which persists at the state level, and that there are more such projects in the works.

“The videos have already mobilized state attorneys general to launch investigations. In Virginia the State police were even called on the employees’ actions,” O’Keefe said. “We would like to see waste, fraud, and abuse eliminated in the Medicaid program. People running this program are on notice. Next time they try and take advantage of honest Americans, someone with a microphone or camera might be nearby.”



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