Hearing Wrap Up: Rampant Fraud in Medicaid Waiver Program

WASHINGTON-The Task Force on Defending Constitutional Rights and Exposing Institutional Abuses held its first hearing today titled "Universal Basic Fraud: Vulnerabilities in Medicaid Waiver Programs." During the hearing, members examined fraud in Ohio's Medicaid Home and Community-Based Services (HCBS) waiver program that pays people to visit beneficiaries to perform personal care services such as cooking, cleaning, and other household chores.

Key Takeaways:

There is significant fraud in Medicaid personal care services programs authorized by Home and Community-Based Services (HCBS) waivers.

• Luke Rosiak, an investigative reporter at The Daily Wire, testified that "The federal government built a program so easy to gain that a convicted fraudster can get approved to send unsupervised and untrained workers into elderly Americans homes, and a refugee family can collect $90,000 a year simply by having one family member claim to be the other's caregiver with no verification and little oversight. Medicaid calls this personal services, home healthcare, and my investigation found millionaire tax cheats, almost all of them foreign-born, ripping off taxpayers at a scale that threatens to bankrupt America."
  
• Ohio Auditor of State Keith Faber testified that "Since taking office, my administration has worked aggressively to identify fraud, waste and abuse and control failures. To date, we've identified more than $9 billion in unsupported or fraudulent public expenditures, with Medicaid and unemployment programs representing the two largest areas of concern…And this year's single state audit, which is a rigorous, comprehensive financial compliance audit, we identified potentially up to $4.4 billion in fraud related exposure connected to ineligible recipients in Ohio's Medicaid program programs. Our testing found an ineligible rate of 15.6%."
  

Shell companies operating out of empty offices billed taxpayers for personal care services never rendered, and the Ohio state agency responsible for stopping it looked the other way.

• Mr. Rosiak also testified that "The data immediately pointed me to Columbus, Ohio. And it turns out you can drive down the street in parts of northeast Columbus, and every single building is basically a home healthcare provider. One building had 94 businesses inside that build a combined $66 million to taxpayers. I began looking up these companies in public records, and what I found was really shocking. Many of the owners, maybe most of them, had other full-time jobs. This was a side hustle for them to get a couple million bucks, sometimes a year, sometimes a month from Medicaid."
  
• Auditor Faber also stated that "Our audit found that approximately 56 percent of home care home care services were not processed through the system, representing an estimated 1.1 billion of a nearly 2 billion in paid claims that were not matched with EVV visits."
  
• Ohio State Representative Michael Dovilla testified that "One vendor reported its asset verification tool had reviewed a portion of Ohio's Medicaid population and identified a significant number of individuals whose assets appeared to exceed the eligibility limits. To be clear, a data flag is not a final eligibility determination. Some assets may be exempt, and every individual deserves a proper review. But the obvious next question was what did the Ohio department of Medicaid do with those flags? That is where oversight deficiencies became clear. When my office pressed ODM, the answers were unsatisfactory. The department pointed to county level determinations and the role of the social security administration. Those factors are real, but they do not relieve the state of its obligation to know whether taxpayer dollars are being spent properly. At a minimum, the state should be able to track what happens when its own eligibility systems or vendors identify potential ineligibility."

The House Oversight Committee launched the Task Force on Defending Constitutional Rights and Exposing Institutional Abuses to go after those undermining essential institutions in this country so they can no longer abuse the American people without consequence.

Member Highlights :

Task Force Chairman Brandon Gill (R-Texas) asked if there were any parallels between Medicaid fraud in Ohio and the rampant fraud in Minnesota.

Task Force Chairman Gill: "We did a lot of work previously this year on Medicaid fraud in Minnesota. There seemed to be a lot of similarities here. Can you can you tell us in your investigation, have you found any connections between Ohio Medicaid fraud and the Somali fraud that we saw in Minnesota?"

Mr. Rosiak: "Yeah, it's the same people. They all have relatives in both places, and they move back and forth. First of all, I think there was $130 million in cash that transferred from the Columbus airport to the Minnesota airport and then to Somalia. And so, they're moving basically pallet briefcases of cash. And the same, there's one guy that had, basically he racked up $30,000 in tax debts in Columbus running this daycare center and not paying his taxes. So then he started a home healthcare company in Minnesota, billed $35,000 in one month, and then dissolved the company."

Task Force Chairman Gill: "So I just want to be clear-your testimony is that there is a large interstate criminal enterprise of Somali fraudsters that are defrauding the federal government in multiple states of potentially billions of dollars. Is that your testimony?"

Mr. Rosiak: "Correct."

Task Force Chairman Gill: "And can you give us a sense of the scale of this fraud? We saw it in Minnesota. We're seeing it here. But have you seen it in other places, or can you give us a sense for either dollar values or the number of people involved, in your opinion?"

Mr. Rosiak: "There's thousands of people involved. I would say the majority of Bhutanese people are either on Medicaid, home healthcare, or are providing Medicaid, home healthcare services. They had recently 15,000 people. This nonprofit group, this advocacy group, which is tied to-actually funded-by a guy founded by a home healthcare guy. They had 15,000 Bhutanese people come to this party in Ohio and they bussed in all the participants on their Medicaid vans because everybody there has their own Medicaid company. And so I think Bhutanese people are systematically using Medicaid, not only in Ohio, but also in Pennsylvania and Kentucky and New York and in other states where they perceive that they will pay the family member and they will pay for non-nursing services. And those are the two big vulnerabilities."

House Committee on Oversight and Government Reform Chairman James Comer (R-Ky.) inquired about fraudulent shell companies' rapid and unusual growth and why Ohio Medicaid waiver programs are susceptible to fraud.

Chairman Comer: "You also reported companies with rapid and unusual growth. Should state oversight authorities have been alarmed by these trends?"

Mr. Rosiak: "Yes. I mean, for example, there was a janitor who renamed her LLC to be mental health and started billing Medicaid [$100,000] in the first month later, up to $650,000 in one month. And then she left the country. And so, if you were to start a roofing business, you it takes time to build clients. How do you get $100,000 in business the first month? That's something people could ask."

[…]

Chairman Comer: "Thank you for your great work, Auditor Faber. You've been investigating Medicaid fraud in Ohio for years. It sounds like the recent reporting is not the first time that you've tried to bring these issues to the public's attention. What's going on in Ohio with these waiver programs, and why are they so susceptible to fraud?"

Auditor Faber: "Thank you, Mr. Chairman. The short answer is, is that whenever we have a big government program, we essentially historically have predicated these on this trust concept. You sign up, you say you're eligible, we'll believe you. But the backside of that is, is we need to be less trusting and more verifying. And so we started identifying in 2019 weaknesses in the program where we were seeing systemic failures in the verification side. And we have now issued a number of five, six, seven reports where we keep identifying that you're not going out and checking to see that the people who you've got on the program are truly eligible and truly beneficiaries. You know, in the office what we always say, we look for control weaknesses. I don't go out and look to see whether Joe Smith is supposed to be on Medicaid or not. That is the department's responsibility. It's the agency's responsibility to do those verifications. And what we find is historically, these verification programs are just not robust and aren't being done efficiently."

Rep. Jim Jordan (R-Ohio) asked about a member of the Ohio State Legislature who may be involved in Medicaid fraud.

Rep. Jordan: "Mr. Rosiak, who's Ismail Mohamed?"

Mr. Rosiak: "Ismail Mohamed is a state legislator."

Rep. Jordan: "Representative in Ohio, currently serving, right?"

Mr. Rosiak: "Correct."

Rep. Jordan: "And is he of Somali-American descent?"

Mr. Rosiak: "Yes, he is."

Rep. Jordan: "Okay. Do you know what his, in addition to serving in the legislature, what is his profession? Do you know?"

Mr. Rosiak: "A lawyer?"

Rep. Jordan: "He's a lawyer. You don't happen to know where his law office is?"

Mr. Rosiak: "Yeah. When I was going through these buildings that were entirely populated by home healthcare firms, I noticed one thing, one business. I turned to my colleague and I said, 'we finally found something that isn't a home healthcare business. It's a law office.' And we didn't think anything of it. I later learned that was the Ismail law office, which is also the campaign head."

[…]

Mr. Rosiak: "I wrote about another candidate that owned a home healthcare business and ran for office. And his campaign was funded largely by fellow home healthcare owners."

Rep. Jordan: "And that guy gave contributions to Mr. Mohamed too, right? The guy you looked into who got campaign contributions from these LLCs, 35 of them in the same building where the state rep. has his law office. That guy you just talked gave contributions to Mr. Ismail Mohamed, but we did look it up, and he received thousands of dollars from these companies in his building that he may or may not have set up, but you're going to check that out as a good journalist, right? You're going to find out if that's the case."

Rep. Andy Biggs (R-Ariz.) asked about the State of Ohio ignoring obvious Medicaid fraud in multiple states and how a significant amount of fraud has occurred in one location.

Rep. Biggs: "You mentioned in your statement that in March of 2024, you found that there were 124,000 individuals who were enrolled in Ohio's Medicaid program and at least one other state. And that you said, "Ohio paid managed care organizations more than $1 billion associated with these enrollees." Is that an accurate statement? Are we talking $1 billion for 124,000 people that are multiple enrolled?"

Auditor Faber: "Correct. What happens is somebody, for whatever reason, is enrolled in multiple states. This is not a new problem. It is something the federal government and CMS knows about. It is a problem that Ohio has known about. We've identified it on at least two or three different occasions. And at one point, our former Medicaid director, who candidly did a lot to take down controls in the system and create some of the problems, essentially downplayed it. And despite us saying, 'okay, are these Medicaid managed care organizations somehow going to be held accountable for this? Let's get the money back,' the answer historically has been 'we're aware of the problem and nothing to see here.'"

Rep. Biggs: "Mr. Rosiak, so when you say the largest billing code is personal services for DHS, that's $140 billion. Over how long a period of time for that?"

Mr. Rosiak: "Dating back to 2019-ish."

Rep. Biggs: "Okay, so five, six years, including COVID time?"

Mr. Rosiak: "Correct."

Rep. Biggs: "Okay. And please tell us about one building that had 94 companies billing Medicaid, more than $66 million. Tell us about that one building and what you found."

Mr. Rosiak: "I think that the best way to encapsulate it [is], the auditor actually found 15 percent of all spending, home healthcare spending in the state of Ohio, went to two zip codes. And so when you're talking about all these buildings in one place and all these recipients in two zip codes, what it makes you think is how is it that the residents of northeast Columbus are so sick, more than anybody else in Ohio. Ohio is a big state, and they've got people from all kinds of walks of life, you would assume that they would be encountering debilitating illnesses in their old age at roughly similar rates. And so, the issue is when you see buildings with these concentrations and 15 percent in two zip codes is crazy, and it gets to the idea that there are certain subcommunities in Ohio that are feigning illness or claiming to be eligible for this program that was intended to be for old ladies that are on the verge of death, and they're actually middle aged and they're perfectly healthy."

Click here to watch the hearing.