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ANN KENEVAN on May 15, 2025

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MEDICAID FRAUD, NEVER! Medicaid’s Gatekeepers Fail to Catch Fraud, and Often Don’t Try Deep Dive... View MoreMEDICAID FRAUD, NEVER! Medicaid’s Gatekeepers Fail to Catch Fraud, and Often Don’t Try Deep Dive John Holland Senior Investigative Reporter March 12, 2025, Government losing billions in misspending that could be caught Top contractor denies responsibility in waste, overpayments A Rhode Island hospital kept billing for nursing home care and Medicaid kept writing checks, no questions asked. No questions about costs as high as $550,000 per patient, per year. No questions about invoices for services rarely allowed at nursing homes, including physically and chemically restraining patients. No questions about why some medical patients remained hospitalized for years with diagnoses as benign as high blood pressure. In fact, state-owned Eleanor Slater Hospital wasn’t a nursing home at all. It was a psychiatric facility where some patients remained locked up for years, and Medicaid doesn’t cover costs at psychiatric facilities with more than 16 beds. So state health officials used different billing codes. And Gainwell Technologies LLC, the contractor hired by Rhode Island to process Medicaid claims and detect fraud, kept approving the payments. By the time three hospital administrators exposed the scheme, it had gone on for more than a decade. The full scope remains unknown, but estimates of how much money taxpayers were bilked out of run into the hundreds of millions of dollars. “I could not believe that it was so blatant,” said Jennifer White, a former ESH administrator and one of the whistleblowers. As congressional leaders target what they claim to be $50 billion a year in Medicaid waste, a Bloomberg Law investigation found the federal government loses billions of dollars each year because state health departments and their Medicaid contractors routinely fail to catch, and sometimes ignore, even the most obvious fraud and misspending. The federal government relies on states and their contractors to keep Medicaid billing honest. But rather than provide checks on each other, the two parties often work to approve as many claims as possible to keep federal Medicaid dollars flowing, even if it means letting waste or improper billing go unaddressed. That brings in money for the companies as well as states: In Rhode Island, for instance, Gainwell was paid more than $100 million between 2013 and 2020. Claims-processing contractors have largely stayed under the radar amid the talk of cutting spending on Medicaid, which covers comprehensive health and long-term care for low-income populations and accounts for for one-fifth of US healthcare spending. The biggest is Gainwell, based in Irving, Texas, which operates in more than two-thirds of US states. Gainwell and its affiliates have contracts touching about 70 million of the approximately 80 million Americans enrolled in Medicaid. But its parent is also laboring under $5.8 billion in debt, the result of a series of mergers and acquisitions that gave it dominance in the market. That company has cut staff and sent hundreds of jobs overseas. Gainwell asserts in bid proposals that it has the best data collection tools in the business and “takes a multi-layered approach to identify, address and prevent fraud at all levels.” Two former Gainwell managers said that isn’t true, alleging in separate lawsuits that the company lies about its capabilities in order to win contracts and then promises more than it can deliver once the agreements are in hand. In New York, the state comptroller’s office identified “flaws” in the company’s ability to determine whether hundreds of millions of dollars in Medicaid claims should have been billed to private insurance. Bloomberg Law repeatedly offered Gainwell opportunities to respond to the findings. The company said it doesn’t discuss client relationships and legal matters. The CEO didn’t return emails. This account is based on Bloomberg Law’s review of lawsuits, financial audits, state government records, and interviews with more than a dozen people. Honor System If the federal government or Gainwell had taken even a passing look at Rhode Island’s submissions for payments, they would have flagged issues immediately, former hospital employees said in a lawsuit and in interviews. Warning signs were everywhere, said Brian Daly, one of three former top officials at Eleanor Slater who filed a federal False Claims Act lawsuit against Gainwell that was unsealed last year. Daly said he noticed problems on his first day at work in 2018 and became more disturbed the further he dug. Eleanor Slater is designated as a long-term acute-care hospital by both the state’s health department and the federal Centers for Medicare & Medicaid Services, treating patients with both medical and mental health conditions. It has never been licensed as a nursing home, but records included in the lawsuit show hospital claims were filed with Medicaid under nursing-home billing codes. The average length of stay at long-term acute care hospitals is roughly 25 days. Daly said he met a patient who had been housed at the hospital for 60 years. Gainwell should have caught this, he said. “There’s nobody who does this who couldn’t look at a sheet and say, ‘this same name of this same patient has been coming here for 18 years, and it’s an acute care hospital, that’s peculiar,’” Daly said in an interview. https://news.bloomberglaw.com/health-law-and-business/medicaids-gatekeepers-fail-to-catch-fraud-and-often-dont-try

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Medicaid’s Gatekeepers Fail to Catch Fraud, and Often Don’t Try news.bloomberglaw.com

May 15, 2025