Louisiana Department of Health: Prepaid Hospice Claims and Federal Matching Rates

In the Louisiana Department of Health hospice settlement, the state agency agreed to pay $13,422,550 to resolve allegations that it prepaid nursing-home and hospice Medicaid claims to obtain a higher federal matching rate. The government alleged that Louisiana directed its claims contractor to prepare and pay claims before the providers had submitted them. For someone inside a Medicaid payment operation, the question is immediate: who told the contractor to pay a bill it had not yet received?

The Department of Justice announced the settlement on November 13, 2019. This hospice fraud case was brought against the agency running Louisiana’s Medicaid program. The program’s own administrator allegedly manipulated the payments it was trusted to oversee. The alleged advantage came from moving payments into an earlier quarter, when Washington would cover more of the cost.

How the Louisiana Medicaid Claims Were Prepaid

Louisiana allegedly used Molina Medical Solutions, its healthcare contractor, to generate and pay claims ahead of provider submission. The government’s account ties those instructions to scheduled reductions in the federal share of Medicaid spending.

In the payment process described by the Justice Department, the Centers for Medicare and Medicaid Services made quarterly grants covering a percentage of Louisiana’s spending on covered health care. The percentage depended on the quarter in which Louisiana paid the providers’ claims. That made the payment date part of the federal reimbursement calculation.

According to the Justice Department, nursing homes and hospices typically submitted their claims on the tenth day of the month after the month in which they provided care. Louisiana then paid the claims and sought federal reimbursement at the applicable rate.

According to the government, Louisiana knew that its federal matching rates would decrease after December 2010, March 2011, June 2011 and September 2013. It allegedly caused Molina to prepare, submit and pay claims during those months, before any provider claim for the services had arrived. The government alleged that Louisiana then sought federal reimbursement for those premature payments at the higher rates.

According to the government’s account, providers submitted their claims the following months, when the federal share was lower. The state had allegedly already obtained the more favorable reimbursement. The agency administering the payment process allegedly made the calendar serve its own finances.

Why This Was Both a Nursing-Home and Hospice Case

The settlement covered Medicaid claims for both long-term nursing-home care and hospice services.

Hospice is often delivered where a patient already lives, including a nursing facility. For billing staff in that setting, the hospice service, the facility’s care and the government payment process are connected parts of daily work. The Louisiana allegation followed that work into the state claims operation, where the state’s payment date determined which federal matching rate applied.

In a hospice billing investigation like this, the payment trail matters as much as the clinical chart. The payment history shows when the state asked federal taxpayers to cover their share.

What the Timing Meant for Federal Matching Rates

The federal taxpayers’ share grew because the state allegedly brought the payment forward. The alleged financial advantage sat in the state’s reimbursement request, where the payment date determined how much Washington would cover.

A Congressional Research Service report published in 2011 explains why the point at which a claim is checked matters. Its Medicare analysis describes the pressure on payment systems:

The report also describes private contractors reviewing medical necessity, auditing providers and referring suspected fraud to investigators. That work puts contractors between the government paying for care and the providers billing for it. The agency relies on them to examine what providers submit.

Louisiana’s Medicaid allegation puts the agency’s own instructions under scrutiny. A review of the care alone would leave the central question unanswered: why did the money move before the bill arrived, just before the federal share fell?

What Evidence Is Needed to Prove Fraud?

For this alleged payment-timing scheme, the evidence would connect the instruction to pay early with the provider’s submission, the contractor’s payment and the federal reimbursement rate. Our whistleblower experts work with insiders to establish how those events fit together and who directed the departure from the ordinary billing cycle.

The state employee, contractor employee and provider biller would approach that question from different places. Someone at the agency may know why an early payment run was ordered. Someone at the contractor may know how claims were generated and authorized. A provider’s billing staff may know when the facility actually submitted the claims. Our job is to connect those accounts across the agency, contractor and provider.

An instruction tied to a coming rate reduction would help explain the purpose of an early payment run. A payment file would show what the instruction produced. Those are the connections we would examine with you.

An insider’s knowledge of the billing process can explain why a sequence of otherwise ordinary transactions deserves attention. In the Louisiana allegations, knowledge of the impending rate decreases was central. The employee who understands the instructions behind a payment run can explain something the final reimbursement total cannot.

The Settlement Reached the State Agency

The civil settlement addressed Louisiana’s alleged use of its claims contractor to obtain inflated federal reimbursement. The Department of Health and Human Services’ Office of Inspector General also records a State Agency Compliance Agreement with Louisiana Department of Health, effective November 4, 2019.

For insiders who recognize a false-claims practice, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Payments Moved

If you saw claims paid ahead of provider submissions or instructions timed to a federal rate change, speak to one of our whistleblower experts about how the payments moved. We build your strongest Medicaid whistleblower case around the decisions, the payment sequence and the federal money. We bring in Medicaid fraud whistleblower lawyers who know state payment cases and stay beside you throughout.