Fraud Crackdown in DHS Reports Another Year of Tremendous Success

Report details $51 million in overpayments and future savings in 2016, result of Walker program to cut down on waste, fraud, and abuse in Department of Health Services

MacIver News Service | July 20, 2017

By Chris Rochester

[Madison, Wis…] An effort to crack down on waste, fraud, and abuse in the Department of Health Services found $51 million in overpayments and future savings in 2016 alone, according to a new annual report by the Walker administration.

The second annual report by the Office of the Inspector General (OIG) of the Department of Health Services (DHS) released on Thursday identified $32.6 million in overpayments and $18.5 million in “cost avoidance” savings – taxpayer money saved by averting future fraud – last year from the state’s Medicaid and FoodShare programs.

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“Since the creation of OIG, we have saved taxpayers well over $150 million with our fraud prevention and detection efforts, including savings and overpayments established of more than $51 million in 2016 alone,” states the OIG in a letter to DHS Secretary Linda Seemeyer.

Waste, fraud, and abuse in Wisconsin’s Department of Health Services has been significantly curtailed since Walker created the OIG in 2011. In its first five years the inspector’s office has identified $38 million in overpayments to Medicaid and FoodShare recipients, increased the number of audits of Medicaid providers to 2,000 per year, and collected almost $90 million in national settlements, the report states.

A fraud reporting tip line and online portal was among the OIG’s first creations, and 2016 was a record year for the system. The tip line received 3,846 complaints in 2016 – 2,599 online and 1,247 phone calls.

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The return on the investment has been increasing for taxpayers. The $21 million in overpayments found in 2016 is up 74 percent from the previous year’s report, and the $17.5 million in cost avoidance savings is up 21 percent over the $14.5 million found in the year prior. The OIG also conducted 16,870 Medicaid and FoodShare investigations in 2016, up 58 percent from 2015.

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In one case in 2016, OIG investigators found that one family was claiming a child for benefits in Wisconsin, but the child actually lived in Texas. The family also failed to report the income received by both adults. The OIG determined the family was overpaid $127,000 in benefits and is taking steps to recoup that money.

The OIG also avoids and identifies fraud using the federal Public Assistance Reporting Information System (PARIS), which allows the OIG to identify individuals fraudulently receiving public aid from more than one state, which can result in them being barred from receiving further assistance. Through this system, the OIG identified nearly $1.8 million in overpayments and $980,464 in cost avoidance savings in 2016.

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For example, the OIG used PARIS to identify a man who was claiming his grandchild was living with him in Wisconsin, but the child actually lived in Nevada, resulting in the overpayment of benefits to the tune of $37,000.

The OIG has also been successful cutting waste, fraud, and abuse in the state’s FoodShare program, including tracking down illegal trafficking of FoodShare benefits by pursuing tips received through the tip lines and monitoring social media.

Through the office’s efforts, 1,382 recipients were suspended from the benefit program in 2016 – up from 1,313 last year – because of intentional fraudulent activity. Federal law requires the suspension of anyone found to have intentionally violated FoodShare rules.

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In one case, the OIG identified a Milwaukee County FoodShare recipient who failed to report that her husband and father of her children lived with her, resulting in $58,500 in FoodShare benefit overpayments.

In another case, the inspector’s office discovered that the operator of a food cart in Milwaukee was using trafficked FoodShare benefits to buy fryer oil and french fries for her business. The woman has agreed to repay $14,000.

The report also states OIG continues to investigate violations by retailers in the Women, Infants, and Children (WIC) program, resulting in the disqualification of 10 WIC vendors engaged in trafficking of benefits and providing alcohol and tobacco in exchange for WIC benefits.

“Wisconsin was the only state in the Midwest region to disqualify vendors for trafficking, alcohol, or tobacco violations during Fiscal Year 2016,” the report states.

The OIG also works with county governments to identify fraud, providing $1 million annually to boost local anti-fraud programs. A consortium including Brown, Door, Marinette, Oconto, and Shawano Counties found nearly $7 million in savings from investigations into FoodShare and Medicaid fraud since 2012.

A similar consortium of Kenosha and Racine Counties has saved nearly $10 million since 2012. Eau Claire County has saved more than $4.3 million, and a consortium of Barron, Burnett, Chippewa, Douglas, Dunn, Eau Claire, Pierce, Polk, St. Croix, and Washburn counties has collectively saved nearly $10 million.

Gov. Scott Walker created the OIG in 2011, consolidating staff and resources that had been previously dispersed, lacking coordination and communication, according to the OIG’s inaugural report last year.

“When Governor Walker first took office in 2011, FoodShare benefits issued for Wisconsin alone topped $1 billion every year. And yet, Wisconsin had only one person at the state investigating claims of recipient fraud,” the new report states.

The reorganized OIG increased the number of staff dedicated to preventing waste, fraud, and abuse within DHS from one to 23. It also implemented a variety of measures to identify and prevent fraud and recoup fraudulently collected payments.

“Public assistance programs are an important safety net for those who need them,” Walker said in a statement. “The fraud prevention and detection work done by the Office of the Inspector General, along with strong partners at the local level, ensures the integrity of these programs and protects taxpayer dollars.”