Medicaid to subject providers to criminal background checks starting Aug. 1

Starting Aug. 1, providers considered at “high risk” for defrauding state Medicaid programs will undergo a criminal background check that includes fingerprinting. 

 

By March 2016, all of a states' Medicaid and CHIP providers must be ranked as having a limited, moderate or high risk of defrauding the program, the CMS says in a letter sent Tuesday to state Medicaid directors (PDF). States must repeat this process at least once every five years.

 

States will need to use their discretion to rank providers. Only those that pose a high risk will be required to undergo fingerprinting and background checks. The guidance comes roughly four years after the agency released a final rule on the screening, which is one of several provisions in the Affordable Care Act giving HHS new tools to crack down on Medicare and Medicaid fraud. The CMS began conducting fingerprint-based background checks for Medicare providers in August 2014.

 

Republican lawmakers have remained concerned about the CMS' apparently slow response to Medicaid fraud. 

 

Last year, Medicaid provided medical services for approximately 60 million people at a cost of $310 billion. But during that same year, the CMS estimated that the improper-payment rate was 6.7% or $17.5 billion. This is an increase of almost 1%, or over $3 billion from the previous year.

 

“This is a troubling trend, especially as the program continues to expand,” Rep. Tim Murphy (R-Pa.), chair of the House Energy and Commerce Committee's Oversight and Investigations Subcommittee, said at a hearing Tuesday.

 

During that hearing, the CMS provided no explanation why it is just now providing guidance to states on the background checks. 

 

“Strengthening and improving upon programs that provide vital services like Medicaid to millions of Americans is a continuous process, and at CMS we take seriously our responsibilities to taxpayers and beneficiaries,” said Dr. Shantanu Agrawal, director of the CMS' Center for Program Integrity.

 

However, in the past, an agency spokesperson tied the delay to the agency simply not being ready to implement that section of the ACA.

 

The guidance gives states discretion in determining which providers are high risk, but added the criteria must include executives who have at least 5% direct or indirect ownership of newly enrolled home healthcare agencies and durable medical equipment agencies. Those businesses have been significant and persistent sources of fraud in both Medicare and Medicaid. 

 

In addition, the CMS adjusts a provider's screening level to “high” if they have been subject to a payment suspension or have had billing privileges revoked in the last 10 years. State Medicaid agencies must terminate or deny enrollment of a high-risk provider if that provider fails to submit their fingerprints within 30 days of the Medicaid agency's request, fails to submit them in the form and manner requested by the Medicaid agency, or has been convicted of a criminal offense related to that person's involvement with Medicare, Medicaid or CHIP within the last decade. Felony charges for crimes such as murder, rape, extortion, embezzlement or tax evasion will also lead to a provider being axed from a state's Medicaid program.

 

To avoid unnecessary cost and burden, a state Medicaid agency does not have to perform a background and fingerprint check on someone who just went through the process for Medicare, or another state's Medicaid agency. States may also require a high-risk provider to pay the costs associated with obtaining fingerprints.