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CODY, Wyo. — Medicaid fraud has remained a steady crime over the past few years, costing programs in Wyoming and Montana tens of millions of dollars, state figures show.

Some have called Medicaid fraud a victimless crime, but with the number of Medicaid clients expected to grow in the coming years, and thousands of people already on the waiting list to receive benefits, experts say that every penny lost to fraud hurts those who need it most.

Over the past few years, Wyoming and Montana, along with the federal government, have pushed to educate the public on the signs and costs of Medicaid fraud.

Figures provided by the two states suggest that their efforts are starting to pay off, leading to an increase in the number of cases opened by the states’ attorneys general, along with the amount of money recovered from successful prosecutions.

“The educational efforts we began in 2010 helped increase our Wyoming fraud referrals in number and quality,” said Christine Stickley, director of the Wyoming Medicaid Fraud Control Unit. “As a result, we opened twice as many fraud cases in 2011 as we did in 2010, many of which will be prosecuted this year.”

Since 2007, the Wyoming Attorney General’s Office opened more than 136 Medicaid fraud cases and closed 101 of them, recovering more than $4.6 million in five years.

The number of cases closed by the Wyoming office also has increased each year for the past five years, from just eight cases in 2007 to 30 cases in 2011. In 2007, the state recovered just over $71,600. Last year, it recovered more than $1.2 million.

Since 2008, the Montana Department of Justice also opened 167 Medicaid fraud cases. It successfully closed 185 of them (including past cases), helping recover more than $5.2 million in stolen funds.

“We are seeing an increase,” said John Strandell, chief investigator with the Montana Department of Justice and its Medicaid fraud unit. “I have eight staff members who work full time just on fraud cases. We have seen increases in the past year in the number of referrals and the investigations that result.”

The crimes often go unnoticed. They typically involve fraudulent billing of Medicaid, or the financial exploitation of patients and the elderly who receive Medicaid benefits.

One Montana case involved a Hamilton couple that claimed 900 hours for trips to appointments they never made. They collected more than $10,000 in fraudulent Medicaid reimbursements from Consumer Direct Personal Care in Missoula.

The Montana Attorney General’s Office charged them with several felony counts. The couple ultimately received a deferred sentence in 2011 and was ordered to pay $10,000 in restitution.

Another recent case in Wyoming involved a Cody woman who provided rehabilitation services to developmentally disabled Medicaid recipients through her business, Achieving Independence.

The woman billed Wyoming Medicaid for a 12-month period, certifying that she had provided services for a specific patient. It turned out that the patient was actually being held in the local jail and wasn’t receiving the services.

Once prosecuted by the state and charged with felony Medicaid fraud, the woman was ordered to pay more than $22,000 in restitution.

“Usually, those closing cases are the ones we receive money from,” Stickley said. “Every penny we can return to the Medicaid program that was paid out fraudulently is extremely important, and we’re doing our best to prosecute the cases referred to us.”

Under federal regulations, providers who are convicted of a Medicaid-related offense are excluded from receiving funds from any federally funded health care program for at least five years.

Program officials say the exclusion has a greater impact on the convicted individual, along with the provider community at large, than any criminal penalties that could be assessed in the case.

But some still view Medicaid fraud as a victimless crime. Stickley said that recently, the attorney for one doctor being prosecuted for fraudulently billing Medicaid for $50,000 told the judge there weren’t any victims in the case.

The attorney argued that the only victim was a “big albatross of money sitting in Washington, D.C.” The attorney, Stickley said, couldn’t have been more wrong.

“Medicaid faces deficits every year and every penny that is paid out to someone who doesn’t deserve it takes services away from the most vulnerable people in our population,” Stickley said, generally the poor, the elderly and the disabled.

“In 2010 in Wyoming, we had almost 20,000 residents who qualified for Medicaid but were on waiting list to receive services. Do you suppose those 20,000 people waiting for services agree that there were no victims in the case?”

Baby boomers are growing older and the Affordable Care Act is expected to transfer a heavier burden to states in its effort to ensure that more Americans are covered by some form of health insurance.

By 2013, when the Affordable Care Act goes into full effect, Wyoming will be required to serve 30,000 additional Medicaid clients, a demand that could challenge the state’s financial capabilities.

The state of Montana will also see its numbers grow. According to the Montana Department of Health and Human Services, the state will see more than 28,000 new Medicaid clients by 2014, and more than 80,000 by 2019, costing the state around $75 million more than it spends now.

“If the fraud continues to be a problem, there could be a reduction in benefits,” said Strandell. “With tough economic times at the federal level, when money is paid out to fraud, it could impact the (Medicaid) program.

“There’s only so many dollars available out there. That’s taxpayers’ money being expended on Medicaid, and it hurts people who are legally using Medicaid.”

As demand for Medicaid services climbs, Stickley said, it’s likely that fraud attempts will rise with it. She estimates that between 3 to 5 percent of health care spending in Wyoming is currently lost to fraud each year, or around $15 million.

A similar number couldn’t be immediately determined for Montana, though experts believe it’s about the same or slightly more.

“Medicaid provides medical care for many of the most vulnerable segments of our population,” Stickley said. “Every dollar we can return to the Medicaid program protects the system and benefits our neediest and most vulnerable citizens.”

Contact Martin Kidston at mkidston@billingsgazette.com or 307-527-7250.

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