Medicaid fraud law needs extension

A Medicaid anti-fraud law that helped Washington state recover some $2.8 million for state taxpayers and $6.4 million overall will expire on June 30. It needs to be extended.

The proposal from Attorney General Bob Ferguson stalled last year in the Republican-controlled Senate, but chances look much better this time around.

That is because key Republicans are on board after a study by the Joint Legislative Audit and Review Committee recommended the extension. The JLARC review found no evidence of “frivolous” lawsuits that some opponents had feared since 2012 – the year the law began. The law lets third parties, and not just the state, file lawsuits in order to claim a share of the recovery.

“The reality is we didn’t see any of that. What we did see is significant recovery (of taxpayer money). To me that makes it a natural re-up,’’ said Republican state Sen. Ann Rivers of La Center, prime sponsor of this year’s bipartisan bill.

Also signing on were Democratic Sen. Karen Keiser of Kent and other members of both Senate caucuses.

Senate Bill 6156 and companion House Bill 1067 would extend the law through June 2023.

Rivers’ bill was scheduled for a hearing today (Jan. 20) in the Senate Accountability and Reform Committee, and committee chairman Mark Miloscia, R-Federal Way, is optimistic it can move forward and into law.

Although recovery of funds has been somewhat modest under the Medicaid Fraud False Claims Act, it does give the Attorney General’s Office an extra tool in going after fraudulent claims that are not so clear-cut that criminal charges can be filed.

Medicaid is the shared state and federal health care program that provides medical coverage to low income individuals and families. It spends billions of dollars a year.

Importantly the expiring fraud law has a “qui tam” provision that lets third parties blow the whistle and share in financial recoveries. Ferguson has said that is important in encouraging whistle blowers inside medical clinics, hospitals or others that cheat the government. Whistle blowers might otherwise be too fearful of losing their jobs to come forward with complaints.

Without the law, Ferguson has said his only option is criminal prosecution, which is much harder to prove. The state also would be hampered in sharing proceeds from national settlements of fraud cases that cross state lines and include Washington.

Ferguson has cited cases with local ties that the law helped his fraud unit to prosecute. In one, Washington played a leading role in a national settlement with Delaware-based Extendicare, which operates skilled-nursing facilities in Washington including in Olympia, Shelton and Centralia. The state received about $541,871 for its share of Medicaid services deemed worthless to clients.

Miloscia says he believes hundreds of millions of dollars of additional financial recoveries can be made beyond what the fraud act can deliver.

The key, he says, is to work with the AG’s Office and state agencies to try to improve contracts and oversight of vendors who are paid by Medicaid.

Whether fraud is as rampant as Miloscia’s comments suggest, he is correct in wanting to head off wrongful payments at the front end. Ferguson and state agencies should work with him to find ways to do that without excessively encumbering law-abiding doctors and hospitals and adding to medical costs.

This story was originally published January 19, 2016 at 4:01 PM with the headline "Medicaid fraud law needs extension."