Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — The head of the Medicaid fraud unit at the Kansas Attorney General’s Office told legislators it was easy to cheat programs that provide in-home services for the disabled and the frail elderly.

“What we have is a program that relies on honesty,” said Deputy Attorney General Loren Snell, testifying before the House Social Services Budget Committee on Tuesday. “But we don’t live in a society that’s always honest.”

Snell said his office has about 60 active cases, most of which involved case managers or attendant care workers who had figured out how to bill the state’s Medicaid program for services that weren’t provided.

Service providers, he said, rely on the people who receive services to verify that they were actually provided. But there’s little to stop them from lying in exchange for a cut of the payment.

“There’s very little administrative oversight,” Snell said.

Snell said he doubted that a recently installed electronic verification system will do much to deter fraud, noting that the system assumes that workers will call from where they’re providing services.

“Actually, they can use their cell phones to call in from anywhere,” he said. “Or, they can say they were there all day when, really, they left after a few minutes and came back.”

Snell said he’d heard of workers billing for services for people who were dead, incarcerated, or hospitalized.

He said he was sure that Medicaid fraud had cost Kansas taxpayers “hundreds of thousands of dollars,” noting that he knew of six cases where the state had been defrauded of $20,000 in a matter of a few weeks.

The committee’s chairman, Rep. David Crum, R-Augusta, said he thought that a 2011 audit that tied the Center for Independent Living in Southwest Kansas to more than $790,000 in undocumented Medicaid billings was just the “tip of the iceberg.”

The center abruptly went out of business in March. Its operations remain under investigation.

Snell said one of the suspects in the case was a known gang member who was billing for services that weren’t provided.

In Kansas, the disabled and frail elderly have the option of letting a home health agency manage their care or do the recruiting, training, hiring and firing of their caregivers themselves.

Those who choose to self-direct their care are expected to hire a “payroll agent” to keep track of the services provided and to write their workers’ paychecks.

Across the state, independent living centers often serve as payroll-agents.

Late last year, Snell’s office charged nine people – a mix of attendant-care workers and physically disabled adults – in southeast Kansas with knowingly billing Medicaid for services that weren’t provided. All nine used Southeast Kansas Independent Living (SKIL) center as their payroll agent. Their cases are pending.

SKIL Executive Director, Shari Coatney, listened to Snell’s testimony Tuesday.

“What wasn’t mentioned was the fact that we were the ones who discovered the fraud and abuse and we were the ones who reported it,” Coatney said. “They were using our provider number, so it’s our responsibility to watch out for fraud and we’ve done that. We’ve been working with the Attorney General’s Office on this for two years now.

“Is there fraud and abuse going on? Yes, there is,” she said. “But I know how much time and effort we’ve spent looking for it and can honestly say it’s less than 1 percent. It’s not as widespread as what we heard today.”

SKIL is headquartered in Parsons. Most of the alleged fraud took place in nearby Montgomery County.