Detecting and Mitigating Fraud in Participant Direction Detecting an… · Detecting and Mitigating...

Detecting and Mitigating Fraud

in Participant Direction

FMS Conference

November 14, 2011

Today’s Speakers

• Molly Hurt Morris, NRCPDS

• Carol Bohnet, Allied Community Resources

• Karen Hansen, Allied Community Resources

• David Horvath, Public Partnerships

• James Steadman, Public Partnerships

Financial Management Services

Agencies and States need to

address fraud to fulfill federal

funding and fiduciary

responsibilities.

Why Do FMS Providers and States

Need to Think about Fraud?

Financial Management Services

Agencies may also need to address

fraud to fulfill contractual

responsibilities.

Does your organization/agency have any type of organized process or plan for fraud education,

prevention or intervention?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS – YES

2. FMS - NO

3. FMS - UNSURE

4. Program - YES

5. Program - NO

6. Program - UNSURE

Fraud is defined as the “intentional

misrepresentation of information

for personal gain or benefit”

There is usually some connection

to obtaining money.

Fraud is a crime !!

What is Fraud ?

Fraud Prevention, Detection

and Intervention

• Education

• Monitoring Data

• Internal Controls

• Reporting, and

• Investigation Support

Utilizing a spectrum of

activities will aid in the

prevention, detection,

reporting and

elimination of fraud

from self-directed

programs.

ALLIED COMMUNITY RESOURCES

What steps can an organization take to

prevent fraud?

1. EDUCATION

2. ESTABLISHED COMMUNICATION PATHS

3. WELL DEFINED PROGRAM PARAMETERS

4. MONITORING & INTERNAL CONTROLS

Prevention


Education

Program Participants FMS & State Agency

Staff Providers


Does your organization/agency provide educational materials and/or information about

fraud prevention to the following?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS & State Agency Staff

2. Program Participants

3. Providers

4. Two or more of the above

5. None of the above

6. I’m not sure

Educating Program Participants

& Providers

Topics

• Program Rules

• Employer & Employee actions

that constitute fraud

• Consequences

• Identity Theft Prevention

• Correct Methods for Timesheet

Completion

• Reporting Problems

Information Distribution

• Enrollment Documents

• Employer Training

• Guides & Manuals

• Newsletter Articles

• Payroll Inserts

• Website Information


Educating Staff

• Orientation Training

– Fraud Awareness

– Procedures

• Policies & Procedures

• Newsletters

• Program Parameters

• Laws & Regulations

– False Claims Act

– Privacy Laws


Program Parameters

• Programmatic, Government and Legal Requirements

• Incorporated into Procedures & Processes

• Incorporated into Payroll Systems & Database

Controls


• Segregation of Internal Processing Activity

- Restricted by positions

- Separation of functions

• Internal Controls written into procedures

- Verification of Caller Identification

- Written Identity Confirmation and Signatures

• Technology Controls

• Reviews – Checks and Balances


Internal Controls

Background Check Requirements in

Participant-Directed Programs

FMS Conference

November, 2011 David Horvath & James Steadman

www.publicpartnerships.com

Agenda

• FMS Roles and Responsibilities

• Program Requirements for Background Checks

- Office of Inspector General (OIG) List of Excluded Individuals and Entities

- Fraud and Abuse Registries/Directories

- Criminal Background Checks

• Inventory of Program Requirements

• Implications and Discussion

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Do all Medicaid programs you serve require checks of the Office of Inspector General (OIG) List of Excluded Individuals and Entities (LEIE) for both employees and

agencies/vendors?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS - YES

2. FMS - NO

3. FMS - UNSURE

4. Program - YES

5. Program - NO

6. Program - UNSURE

Do all programs you serve require pre and post employment criminal background

checks of all employees?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS - YES

2. FMS - NO

3. FMS - UNSURE

4. Program - YES

5. Program - NO

6. Program - UNSURE

Do any programs you serve permit applicants/employees to begin working pending

the results of a criminal background check?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS - YES

2. FMS - NO

3. FMS - UNSURE

4. Program - YES

5. Program - NO

6. Program - UNSURE

Financial Management Services Types:

Fiscal/Employer Agent (Government F/EA or Vendor F/EA)

The entity is the agent to the common law employer who is either the participant or his/her representative.

Agency with Choice

The entity is the common law employer. The participant is the managing employer in a co-employer relationship

“While their main purpose is to facilitate participant direction of services, these supports also provide important protections and safeguards for participants who direct their own waiver services.”

CMS Instructions to States

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Roles of the FMS

Perform payroll and tax services

Perform accounts payable services

Adjudicate service claims and submit to third-party payers

Provide service and expenditure reports

Prevent and report fraud and abuse

Roles of FMS vary widely based on applicable state laws and

regulations, program features, and contractual obligations.

FMS Conference

Background Check Requirements

Office of Inspector General (OIG) List of Excluded

Individuals and Entities (LEIE) in all Medicaid Programs

State Fraud or Abuse Registry

State and Federal Criminal Background Check

The nature, timing, cost, interpretation and use of records

and results varies significantly across programs.

FMS Conference

Office of Inspector General

List of Excluded Individuals and Entities

State Medicaid Director Letter (SMDL#09-001)

• Sets forth the Centers for Medicare & Medicaid Services’ (CMS) policy with respect to States’ responsibility to communicate to providers their obligation to screen employees and contractors for excluded individuals and entities both prior to hiring or contracting and on a periodic basis.

• Identifies the List of Excluded Individuals/Entities (LEIE) as a resource providers may utilize to determine whether any of their employees and contractors has been excluded.

Available on-line at: https://www.cms.gov/SMDL/downloads/SMD011609.pdf

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https://www.cms.gov/SMDL/downloads/SMD011609.pdf

Office of Inspector General

List of Excluded Individuals and Entities

States should:

• Advise providers of obligation to screen all employees

and contractors;

• Require providers to agree to comply with this obligation

as a condition of enrollment.

• Inform providers that they can search the OIG website by

the names of any individual or entity.

• Require providers to search the OIG website monthly to

capture exclusions and reinstatements that have occurred

since the last search.

• Require that providers immediately report to them any

exclusion information discovered.

FMS Conference

Inventory of Requirements in

Programs Served

Areas of Interest

•OIG List of Excluded Individuals and Entities (all Medicaid)

•State Fraud and Abuse Registry Checks

•Criminal Background Checks - Pre-Employment - Post-Employment - Fingerprinting - Use of Prior Results - Provision of Services Pending Results - Responsibility for Cost - Interpretation of Results - Exclusions on Hiring - Negotiated Risk Agreements

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Inventory of Programs with

Employer Authority (N=27)

27 Programs in 15 states and District of Columbia

18 Medicaid funded

6 State-funded

2 VD-HCBS funded

1 Federally funded

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4

16

7

0

2

4

6

8

10

12

14

16

18

Children Adults Both

Type of Popuation Served

Fraud / Abuse Registry Checks

Is pre-employment check of state fraud or abuse registry required?

9 programs (33%) require pre-employment check

17 programs (63%) do not require pre-employment check

Is post-employment check of state fraud or abuse registry required?

1 program (4%) requires post-employment check

FMS Conference

Criminal Background Checks

Pre and Post-Employment

Is a pre-employment criminal background check required?

24 programs (89%) require pre-employment check

Is a post employment criminal background check required?

3 programs (11%) require both pre and post-employment check

FMS Conference


State and Federal

Is a state check required?

26 programs (96%) require state checks

Is a federal check required?

14 programs (56%) require both state and federal checks

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Web-Based vs. Fingerprinting

What type of background check is required?

19 programs (70%) permit Web-based (on-line) checks

8 programs (32%) require fingerprint check

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32%

70% Fingerprints

On-line check permitted


Costs and Payment

Who pays for background checks?

13 (48%) State

7 (26%) FMS

5 (19%) Applicant/Employee

2 (7%) Employer/Participant

Range High: $76.00

Low: $6.85

Median Median $35.18

11 programs (44%) require FMS to finance cost, pending reimbursement

2 programs (8%) permit the participant to use individual budget funds to pay

FMS Conference


Responsibility and Availability

Who provides or obtains the criminal background check?

14 programs (52%) require a state entity to obtain or process the

background check and furnish results to FMS

13 programs (48%) require the FMS to obtain or process the

background check

Can the FMS accept background check results from prior employer?

8 programs (30%) accept background check from prior employer

FMS Conference


Interpretation and Use

Who determines if the employee passes or fails the background

check?

13 (48%) FMS

5 (18.5%) FMS in conjunction with the State

5 (18.5%) State

4 (15%) Sub-contractor

What information is shared with the employer?

25 (93%) Share results (pass/fail) only

2 (7%) Share criminal record

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Employment Pending Results

Can the applicant be employed and begin providing services for

payment pending results of criminal background check?

20 programs (74%) prohibit employee from working pending

results

7 programs (26%) permit employee to work pending results

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Use of Results

Can participant/employer hire employee who fails background check?

12 programs (44%) permit participant/employer to hire employee who fails

criminal background check

12 of these programs require participant/employer to sign negotiated

risk agreement

None of these programs limits hiring of employee who fails to family

members

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Summary of Findings

The majority of programs:

• Rely on criminal background check rather than state fraud/abuse

registry check

• Require pre-employment criminal background check

• Do not require post-employment background check

• Pay for criminal background check (median = $40)

• Permit Web-based check

• Require the FMS provider to interpret and apply results

• Share results only (pass/fail)

• Prohibit employment pending results

• Prohibit hiring employees who fail background check

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Contacts

David Horvath

Associate Manager

[email protected]

(304) 296-1930

James Steadman

Business Analyst

[email protected]

(602) 324-5014

FMS Conference

mailto:[email protected]

mailto:[email protected]

Detection - Intervention - Results


Ways to Detect Fraud

Methods of Intervention

Results of Fraud

Does your agency have a designated focal person or department to handle fraud

related activity?

1 2 3 4 5 6

0% 0% 0%0%0%0%

1. FMS - YES

2. FMS - NO

3. FMS – UNSURE

4. State - YES

5. State - NO

6. State - UNSURE

Detection

Monitoring and Internal Controls


- Random calls to employers for Timesheet audits

- Payroll System detection of overlapping entries or high hours worked

- Payroll system blocks to prevent payment over plan or individual max

- Database system blocks preventing duplicate information like SSN or

FEIN

- Database audits to detect anomalies i.e. providers with out of state

address, over 75 years old

- Maintenance of active employee list

Detection

Information Received

• 24/7 Hotline

• Direct E-Mail Link from Website

• Unusual comments made during telephone conversations

• Incoming Calls from employers, employees or others

– Identified callers

– Anonymous callers


Intervention

Reporting

• Collect Written Allegations – Statements

• Create Summarized version of verbal statements

If no written statement received

• Reported information to State Agency contacts

• Other Reporting Actions


Intervention

Documentation Support

Supply documents to

employers, employees,

State Agencies or MFCU

– Timesheets

– Applications

– Payroll Records

– Service Plans

– Cancelled Checks


Data Analysis Comparison of invoice or

timesheet charges against

service provision

documentation

Immediate Action

Hold impending payment

Intervention

Quality Improvements


Based on problems discovered or reported determine

appropriate:

• Procedural changes

• System enhancements to better prevent and detect fraudulent

activity.

Results

Corrective Actions

• Program Parameter

Changes

• Documentation Changes


Consequences

• Disciplinary action against

Participant or provider by

program

• Legal action against

Participant or provider

• Recovery of money

Summary


– Education

– Background checks

– Detection

– Interventions

– Corrective action

Handouts available

– Real life examples of fraud

– List of resources for more information about Fraud

Contacts

Carol Bohnet

Executive Director

[email protected]

860-627-9500 ext. 107

Karen Hansen

Manager, Quality Assurance and

Compliance

[email protected]

860-627-9500 ext. 126



Fraud Prevention and Mitigation

Questions?

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