Medicaid marketing fraud

June 19, 1995

Imagine having a prescription filled and being told you have to pay this time because, unknown to you, your medical care is now administered through a health maintenance organization that doesn't do business with your long-time pharmacy. Or picture yourself taking your son to the dentist and learning not only that his dentist will no longer see him, but that he has also been cut off from the physician who has long treated his asthma.

Those and other stories were told by Maryland Medicaid recipients victimized by overzealous recruiters for HMOs. The resulting indictments and plea bargains announced last week attack a widespread scheme to defraud Medicaid at the expense of state and federal taxpayers. The scandal also reveals how this kind of greed and deception can cause severe consequences on real lives. Even worse, while whole families had their medical care disrupted, the HMOs that had unlawfully added them to their rolls were reaping a profit from them.

More and more Americans are receiving health care through managed care. It is hardly surprising that expensive government programs like Medicaid are encouraging the same cost-conscious approach. In Maryland, people on Medicaid have a choice between a better benefits plan through an HMO or fewer benefits but more choice of physicians through a traditional insurance package.

But managed care is an option, not a requirement, and HMOs are vigorously vying for Medicaid recipients. It is unlawful for government agencies to release personal information about recipients but some HMO marketers, under pressure to meet quotas, resorted to bribing state workers for information and, in some cases, forging signatures of families who had no intention of signing up. The confessions of five people who pleaded guilty tell a sordid story of complicity between marketers and state workers with access to confidential files.

HMOs need to police their marketing programs more closely, making it clear to their employees that fraud and bribery are not acceptable ways to fill a quota. Meanwhile, the state needs better ways of scrutinizing HMOs. New contracts will enable the Department of Health and Mental Hygiene to impose $10,000 fines on HMOs that use fraudulent marketing practices. That's a beginning, but it should not be the end of the state's efforts to monitor highly competitive companies that play such an important role in the lives of their customers.

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