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Bill would seek to cut Medicaid fraud

March 14, 2006
By: John Amick
State Capital Bureau
Links: SB 1210

JEFFERSON CITY - After cutting Medicaid benefits last year, Missouri's legislature now is looking at cutting Medicaid fraud.

Five senators who served on the Special Committee to Investigate Medicaid Fraud have sponsored a bill in an attempt to root out waste, fraud abuse within Missouri's Medicaid system. The bill follows extensive informational hearings held by the special committee in the last two months.

"At least three and a half percent, or about $200 million, of Missouri's Medicaid money evaportates through fraud abuse," said Sen. Chris Koster, R-Harrisonville, chairman of the special committee.

The bill allows individuals to sue providers for Medicaid fraud. It also includes numerous revisions to current law relating to the reporting and investigating of system fraud.

Under current law, those who act in reckless disregard of the truth regarding Medicaid fraud law are guilty of a Class D felony after their first offense. Under the proposed legislation, the first offense would jump to a Class C felony, punishable for up to seven years in prison. The second conviction of fraud would receive between five and fifteen years in prison.

"If one is indicated for conviction of Medicaid fraud, that person is excluded from Missouri Medicaid qualification for life," Koster said, adding to the list of new penalties included in his bill.

Koster said that if passed, the bill would install the 85% Rule to Medicaid fraud. The 85% Rule is a provision attached to certain crimes in Missouri requiring the convicted party to serve 85% of their sentence before they are allowed parole. The rule is currently associated with seven serious crimes, such as murder, kidnapping and forcible rape.

Koster said this would be the first time the 85% Rule would be applied to a white collar crime.

"Medicaid fraud is getting serious enough for this type of measure."

Compensating whistleblowers was another point of contention the committee sought to address. There currently are no financial incentives promised to whistleblowers of Medicaid fraud in Missouri. The federal compensation rate is 15 to 25 percent, depending on the case. Koster's bill would award primary indicators of fraud anywhere from 20 to 35 percent of the proceeds won in a lawsuit. Secondary sources could be awarded up to 15 percent.

"Frequently, these people lose their jobs," Koster said. "This legislation would protect employee status."

Currently, for every dollar Missouri recoops from Medicaid fraud, the state has to send 60 cents of that dollar to the federal government. If Missouri adopts language from the Federal False Claims Act, only 50 cents of every dollar would be sent to the federal government.

The bill was not without opposition. Harvey Tettlebaum, a representative for the Missouri Health Care Association, was not in agreement with certain language of the legislation.

Tettlebaum said that the proposed legislation could create a type of lottery where people could file cases with an attorney just to try to win money, despite no knowledge of any kind of Medicaid fraud existing.

"Providers that have been sued would possibly have to settle because the penalty is so terrible," Tettlebaum said. "It doesn't matter how righteously innocent they believe they are, they might have to settle, because the other option is to go out of business if convicted."

Committee members countered saying that if a provider is innocent, they have nothing to fear and should go to trial. Tettlebaum said, in some instances, it was not automatic for an innocent provider to be found clear of any wrongdoing.

When asked why the United States Congress had passed the Federal False Claims Act and approved it for states to use, Tettlebaum said the act was passed and approved in order to be a tool for federal government income.

"It is a method to supplement the federal budget," Tettlebaum said. "Once you taste the 'heroin' of easy money, the government begins to live on the money. This could happen within state government."

Koster said he believes this bill is among one of the most important pieces of legislation to be heard this session.

Similar legislation dealing with Medicaid fraud has been filed by Sen. John Loudon, R-Ballwin, and Sen. Chuck Graham, D-Columbia.

The General Laws committee chairman Sen. Jason Crowell, R-Cape Giradeau, said he intends to hopefully weld these bills together for future consideration.