COLUMBIA — South Carolina’s Medicaid agency is reviewing dozens of private providers for possible fraud after payments for certain behavioral health services skyrocketed.
The agency says it has referred seven cases so far to the attorney general’s office for potential prosecution. A review of records suggests providers over-billed on hours, billed for services not given and provided unnecessary services.
The problems started last year after the Department of Health and Human Services eliminated a requirement for patients to get a second agency’s approval before receiving care for “rehabilitative behavioral health” services. Such services include treatment and counseling for issues including anxiety, drug abuse, and mental illness.
Agencies that were able to make the referrals included the departments of juvenile justice, mental health and social services — and the cost came out of the referring agency’s budget.
Director Christian Soura said his predecessor, Tony Keck, made the change — effective July 1, 2014 — to prevent agencies from denying treatment just to cut costs. The idea was to let more patients get the help they need.
But the exponential increase in claims was unexpected, said Soura, who took the agency’s helm last November.
More than 6,000 patients currently receive services in the specific category of care, up from 1,160 prior to July 2014.
Rep. Murrell Smith, R-Sumter, called it a well-intentioned but costly decision.
“In the end, it shows why we need a lot of controls and oversight on providers,” said Smith, who chairs the House budget-writing panel on health care.
In the fiscal year prior to the change, private providers were paid $16.3 million for the services. Those payments more than quintupled to $83 million in the fiscal year that ended June 30, according to data provided Friday by the Department of Health and Human Services.
The number of private behavioral health providers enrolled in the Medicaid network jumped from 40 in June 2014 to 140 five months later.
By then, it was evident that “not all new providers were good actors,” Soura said.
The agency has since terminated 49 providers’ ability to bill Medicaid, citing their failure to provide proof of accreditation.
In January, the agency received permission from the federal government to stop enrolling new providers. In March, the agency resumed prior authorizations, though they’re handled differently. A health care management company contracted by the Medicaid agency now assesses whether the services would help the patient.
The agency has found no evidence of patient fraud.
Agency officials say the patient numbers increased because people weren’t getting the services they needed under the prior system, and because of some misdiagnosis by unscrupulous providers.
Mark Powell, spokesman for Attorney General Alan Wilson, said Friday he could not comment on his office’s investigation into the providers, other than saying the matter is under review.
Rep. Smith said he’s disappointed by the results of the change, but he’s pleased with the agency’s response.
“This is a perfect example of waste, fraud and abuse occurring in our system,” he said. “But this was quickly recognized by the agency and they worked to control it. That’s the satisfying part of what occurred.”