Combating Fraud, Waste and Abuse in New Jersey Medicaid: 5 Key Questions

Combating Fraud, Waste and Abuse in New Jersey Medicaid: 5 Key Questions

Learn how the Office of the State Comptroller works to detect and prevent fraud, waste, and abuse in New Jersey Medicaid.

One of the Office of the State Comptroller's most important responsibilities is to protect the integrity of the New Jersey Medicaid program. Approximately 1.8 million New Jersey residents-or about one in five-receive Medicaid coverage. Through investigations, audits, and reviews, OSC's Medicaid Fraud Division uncovers fraud, waste, and abuse and makes recoveries when improper payments are found. Last fiscal year alone, OSC recovered about $119 million in improper payments.

What makes a payment "improper"? What kinds of fraud, waste and abuse does OSC find? Here we address five common questions about Medicaid fraud and OSC's work.

Are improper payments the same as fraud?

No, the concepts are related but not equivalent. An improper payment is any payment that does not comply with state or federal regulations and should not have been made or was made in an incorrect amount. Fraud involves an intention to deceive for financial gain. Sometimes, improper payments may be the result of careless mistakes, insufficient documentation, or miscalculations, rather than an intent to defraud Medicaid. When OSC finds a credible allegation of fraud, it makes referrals to appropriate agencies, such as the Office of the Attorney General's Medicaid Fraud Control Unit (MFCU) for further investigation. In fiscal 2024, OSC referred 29 cases to MFCU and 143 cases to other civil and criminal enforcement entities.

What types of practices result in improper payments?

By law, Medicaid is supposed to be the payer of last resort. Frequently, OSC finds cases where Medicaid has been inappropriately billed and paid for claims that should have been covered by other insurers. A significant amount of the state's Medicaid recoveries are the result of OSC's efforts to obtain repayments for services wrongfully charged to Medicaid when a third-party insurer was responsible.

Additionally, OSC at times finds providers have:

• Billed for services never provided
• Billed for unnecessary services
• Billed for more expensive services than actually delivered
• Ordered and billed for unnecessary medical tests
• Billed for services without adequate documentation
• Billed for services provided by a provider that lacked the credentials to provide the service
• Provided kickbacks, such as offering payments for referrals of business

How does OSC uncover these cases?

OSC's Medicaid Fraud Division has a team of lawyers, data analysts, accountants and investigators. The team uses data analytics to detect suspicious billing patterns and then launches in-depth investigations, audits, and reviews. OSC also welcomes tips. Last fiscal year, OSC received 2,022 Medicaid-related complaints and tips. Every one of them resulted in some type of action, up to and including opening an investigation and publishing a report.

What sectors are at the highest risk for improper billing?

OSC has issued reports on a wide range of providers, including mental health providers, adult day care centers, pharmacies, nursing homes, labs, and transportation services. OSC has found fraud, waste or abuse in all of them.

Sometimes the waste is staggering. For instance, OSC has found some clinical laboratories have made millions of dollars in profit by routinely overcharging Medicaid-charging Medicaid for tests they haven't provided or charging Medicaid as much as $180 for the same tests that other payers paid less than $10.

Most troubling, OSC also has found a direct relationship between fraud, waste, and abuse and poor quality nursing homes. OSC's reports have found that New Jersey routinely spends more than $100 million a year on nursing homes that consistently are among the lowest-rated facilities in New Jersey. OSC's investigation of South Jersey Extended Care, a Bridgeton, NJ-based nursing home, found the owners and operators improperly funneled millions of dollars out of the facility into their own businesses and personal charities, leaving residents to live in a dismal, understaffed and under-resourced facility.

Anyone who wants to understand how to improve nursing home care in New Jersey and reduce Medicaid fraud, waste and abuse should read that report and OSC's recommendations.

What does OSC do to prevent fraud, waste and abuse?

First, OSC issues public reports to hold entities accountable and serve as a deterrent to others. These reports also contain recommendations on how to fix any systemic issues our investigations uncover.

Additionally, OSC holds trainings to educate Medicaid providers about how to comply with regulations and properly document claims.

Finally, OSC actively works to bar bad actors from participating in New Jersey Medicaid. With the approval of the Attorney General, OSC regularly suspends and excludes providers for a variety of reasons, including a criminal indictment, conviction or professional licensure issues. Last fiscal year, OSC excluded 277 providers.

Do you have a tip? You can submit it here.