More changes could be coming to North Carolina’s Medicaid program, with an eye toward fighting fraud and waste in the multibillion-dollar health insurance plan.
More than 3 million North Carolinians are on Medicaid, but as many as 250,000 of them could be kicked off next year, as part of President Donald Trump’s plan to cut $1 trillion from Medicaid nationally to pay for tax cuts and immigration enforcement.
But kicking people out isn’t the only way to save taxpayer dollars. There has been fraud in Medicaid for years, and while many fraudsters do get caught, North Carolina politicians believe there’s probably more fraud that’s going undetected.
State lawmakers previously hauled in Dev Sangvai, the head of the North Carolina Department of Health and Human Services, as well as state Attorney General Jeff Jackson, for testimony on what they’re doing about Medicaid fraud. Sangvai oversees the program on the whole, and Jackson’s office is in charge of investigating possible civil or criminal violations.
The state Senate is now pressing forward with a bill that could make it easier to spot fraud. The bill has bipartisan support; it’s championed by Republican senators but was crafted with heavy input from DHHS, a part of Democratic Gov. Josh Stein’s administration.
“Most of these provisions are requested by the Department of Health and Human Services, with regard to things that they’re seeing in the course of their evaluation of the Medicaid program for integrity and compliance,” Sen. Benton Sawrey, R-Johnston, said Thursday.
The bill doesn’t contain what Jackson told lawmakers his office needs: Funding for one extra employee to beef up a new strategy he’s developing using artificial intelligence to analyze healthcare billing documents and flag possible fraud. But it’s possible that might wind up in the new state budget, which legislative leaders have said they’ll make public later this summer.
The new version of House Bill 34 rolled out in a Senate Health Committee hearing Thursday contains policy changes aimed at making it easier for state investigators to track down Medicaid fraud, but no extra funding for it. Jackson previously defended increased funding as a good investment, telling lawmakers that for $1 spent on enforcement, he wins back $6.28 from fraudsters.
The bill was in committee Thursday for discussion only, with a vote likely to be scheduled next week. Other than Sawry, no other lawmakers had any comments or questions about the proposal, and nobody from the public spoke for or against it.
The bill includes proposals such as making healthcare providers stop letting every single employee use the same login information, so that when something suspicious happens, it would be easier to trace it in the company’s internal systems to a specific employee.
It also would require more transparency around which data companies the health providers use to store their digital records.
“That’s something that’s important for investigations,” Sawrey said. “If the law enforcement agency or [attorney general’s office] is looking at a fraud or waste or abuse issue, they’re going to look for where the records are stored. They need to know where to actually look.”
It would also beef up background checks for people running the companies receiving Medicaid payments. Currently state law requires a criminal background check for healthcare providers; this bill would also require them for the owners and other managers. Sawrey said that’s a direct reaction to recent media reporting on Medicaid fraud.
Autism fraud concerns
The bill would also close the market for autism behavioral analysis, or ABA, therapy companies to receive Medicaid funding in North Carolina. Sawrey and other lawmakers have said that while some ABA providers do good work, they believe fraud is rampant in the industry.
Spending on ABA therapy, by North Carolina Medicaid alone, was $121 million in 2022 but is on track to exceed more than $1 billion by next year, WRAL has reported.
Many of the providers in the industry are owned by private equity firms. Some have faced scrutiny over their business practices, including in a recent New York Times article that quoted former employees voicing concerns about one particular company with dozens of North Carolina locations, Compleat Kidz. A spokesperson for the company told the paper it denied putting profits ahead of children’s needs.
The bill would allow existing ABA companies to keep operating but would block new ones. Citing data compiled by a Brown University health economist, the New York Times report noted that North Carolina has 409 autism therapy providers operating this year, up from 61 in 2019.
“We’re proposing to close the networks for ABA services, peer support services, and community support services,” Sawrey said, adding: “DHHS will have to undertake to make sure there’s adequate services in the state of North Carolina. But in light of what these particular services are going through, in the state of North Carolina, I think it’s particularly important that we take this step.”
