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Database for tracking Medicaid frauds falls short, auditor says

Rescue workers look for victims in the mudslide near Oso, Washington March 26, 2014. REUTERS/Rick Wilking
Rescue workers look for victims in the mudslide near Oso, Washington March 26, 2014. REUTERS/Rick Wilking

By M.B. Pell

(Reuters) - A federal data-sharing system meant to prevent healthcare providers banned from one state's Medicaid program from billing another state's program isn't working as intended, according to the U.S. Department of Health and Human Services Office of the Inspector General.

Two years after its creation, the data-sharing system contained no records from 17 states or the District of Columbia of doctors, nurses or other healthcare providers who had been "terminated," or banned from billing Medicaid, for fraud or other offenses, the independent auditor said in a report to be released Thursday.

Reuters reviewed a copy of the report in advance of its release.

The report also said that the Centers for Medicare and Medicaid Services (CMS), the federal agency that maintains the data-sharing system, made no effort to require states to report banned providers, though it is legally empowered to do so, and that when states did report them, the data was often unreliable or incomplete.

CMS started operating the Medicaid and Children's Health Insurance Program State Information Sharing System in 2011, as required by the Affordable Care Act. State Medicaid administrators are encouraged to report to the database medical providers who have been convicted of major crimes, have lost their medical license or were otherwise disciplined. They can then use the system to identify providers in their own Medicaid program who were terminated in other states.

"Our findings suggest that CMS's process for sharing information on terminated providers needs improvement to make it more useful to State Medicaid agencies in identifying providers that must be terminated pursuant to Federal law," the report said.

The report did not provide any estimates of the number of providers banned in at least one state but still billing in another.

According to the inspector general's office, the data-sharing system did not contain a report of a banned provider from the following states as of June 2013: Colorado, Hawaii, Kentucky, Minnesota, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Texas, Utah, West Virginia and Wyoming. There also were no reports from the District of Columbia.

A majority of these states are expanding Medicaid under the Affordable Care Act, according to the Kaiser Family Foundation. Some of these states may have reported providers who were terminated from Medicaid and then reinstated.

The auditors found a small number of banned provider reports from most states. Four states - California, Pennsylvania, Illinois and New York - accounted for 72 percent of all records submitted. Louisiana submitted only one terminated provider in 2011. Massachusetts submitted two. Virginia submitted nine.

In a January 17 letter to the inspector general's office responding to the auditor's findings, CMS administrator Marilyn Tavenner acknowledged that the agency can require states to report terminated providers to the system. In the letter, which was included in the auditor's report, Tavenner said CMS would explore options to implement mandatory state reporting. Tavenner did not provide a timeline.

The reported information was often not useful in helping other states identify banned providers.

More than half of the 6,439 records submitted did not include a National Provider Identification number, which is critical to any state trying to identify a terminated provider, according to the inspector general's office. The Affordable Care Act requires that the CMS data system track provider numbers, but the auditor found that CMS made the provider number optional in the submissions form. The inspector general's office also said some of the reported provider numbers were incorrect.

The auditor found that one-third of providers in the database had not been terminated, but had died, retired, left the state or stopped working with Medicaid of their own accord. One-fourth of the records lacked a provider address, and one-third lacked a provider specialty.

CMS has since begun requiring that states submit termination letters for each provider entered in the shared data system and that CMS employees review each letter to ensure the provider belongs in the system, Tavenner said in her letter.

(Editing by John Blanton)

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