Legislature(2003 - 2004)

05/12/2003 03:25 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 41 - MEDICAID COSTS AND CRIMES                                                                                             
Number 1640                                                                                                                     
CHAIR McGUIRE announced that the  next order of business would be                                                               
CS FOR  SPONSOR SUBSTITUTE FOR  SENATE BILL NO. 41(FIN),  "An Act                                                               
relating to  medical care  and crimes  relating to  medical care,                                                               
including  medical  care  and  crimes  relating  to  the  medical                                                               
assistance program, catastrophic  illness assistance, and medical                                                               
assistance for chronic and acute medical conditions."                                                                           
Number 1667                                                                                                                     
SENATOR LYDA GREEN, Alaska  State Legislature, sponsor, indicated                                                               
that  after the  sponsor statement  for SSSB  41 was  prepared, a                                                               
"Medicaid  audit" was  conducted by  the Division  of Legislative                                                               
Audit.  She  relayed that one of the  audit's recommendations was                                                               
that the  director of  the Division  of Medical  Assistance (DMA)                                                               
should provide  for a full-time,  ongoing service  provider audit                                                               
function.   Another of the  audit's recommendations was  that the                                                               
legislature should  consider adopting specific  criminal statutes                                                               
related to Medicaid  fraud in order to  enhance the effectiveness                                                               
of the Medicaid  Fraud Control Unit (MFCU).  She  said that these                                                               
two points  of that audit  are encompassed  in SSSB 41,  and that                                                               
SSSB  41  has been  included  in  the governor's  "crime  package                                                               
SENATOR  GREEN said  that the  cost  of the  Medicaid program  in                                                               
Alaska  has increased  an average  of 20  percent per  year since                                                               
1999,  growing the  program from  $396 million  in 1999,  to $936                                                               
million in  2004 -  a total  increase of  $540 million  over five                                                               
years.   Were this increase  due only  to an increase  in clients                                                               
that  qualify   for  Medicaid  and/or  an   increase  in  federal                                                               
requirements, it  would be [acceptable].   However,  according to                                                               
research, there is a 7-percent  waste factor in Alaska's Medicaid                                                               
program.    Additionally,  she   relayed,  there  are  nationwide                                                               
estimates  of  5  to  20  percent  fraud  in  both  Medicaid  and                                                               
Medicare.   With regard to  Alaska's Medicaid program,  she said,                                                               
even a 5, 6, or 7 percent fraud  rate can translate into 10 to 20                                                               
percent of nearly a $1 billion budget.                                                                                          
SENATOR GREEN suggested that that  money would be better spent on                                                               
the  people  who actually  need  medical  assistance.   She  made                                                               
mention of a letter dated  May 12, 2003, from Steve Branchflower,                                                               
current  director of  the  Office of  Victims'  Rights (OVR)  and                                                               
former director of  the Alaska Medicaid Fraud Control  Unit.  She                                                               
relayed that on  page [2] of that letter,  Mr. Branchflower wrote                                                               
[original punctuation provided]:                                                                                                
     Alaska is  the only state  that has no  specific health                                                                    
     care  criminal  theft statutes  on  the  books.   As  a                                                                    
     result,  prosecutors  must  use  non-specific  criminal                                                                    
     statutes  to  prosecute  healthcare  professionals  who                                                                    
     operate in  a highly  technical field  and are  able to                                                                    
     mount   expensive   and    well-financed   (and   often                                                                    
     successful) defenses.   Consequently, the  record shows                                                                    
     that  there have  been very  few prosecutions-far  less                                                                    
     than one would expect-given  the hundreds of million of                                                                    
     dollars  which flow  through Alaska's  Medicaid program                                                                    
     each year  to less  than 10,000  participating Medicaid                                                                    
Number 1863                                                                                                                     
SENATOR GREEN  recommended that members  read the  entire letter,                                                               
adding that  it contains a  lot of great information  that points                                                               
out the need  for some major reforms.   Included in SSSB  41 is a                                                               
requirement  that the  Department of  Health and  Social Services                                                               
(DHSS) hire  an outside  auditor who will  begin doing  a regular                                                               
audit process on billings and  claims that come into the Medicaid                                                               
program.  There are also requirements  that the DHSS follow up on                                                               
those  claims that  are not  prosecuted  in court,  and that  the                                                               
"entire  system be  much more  aggressive  and in  tune with  the                                                               
purpose of  the program, [which]  is to provide the  most medical                                                               
assistance possible to the people who need it," she added.                                                                      
SENATOR GREEN went on to say:                                                                                                   
     While we  were doing the  earlier writing of  the bill,                                                                    
     we  found  that  the  language  actually  pertained  to                                                                    
     providers;  we'd unknowingly  left out  the recipients.                                                                    
     And  the recipient  group was  meeting here  in Juneau,                                                                    
     and  they went  to the  department and  they said,  "We                                                                    
     think recipients  ought to be included;  we know people                                                                    
     who  are   abusing  the  system,   and  we   want  them                                                                    
     included."  And although that  dollar cost is far less,                                                                    
     the  integrity of  the  program, as  far  as they  were                                                                    
     concerned,  was  jeopardized  ....    And  so  we  have                                                                    
     [added]  the language  to  include  recipients as  well                                                                    
     And  ..., based  on  the  amount of  harm  done by  the                                                                    
     illegal  claim,   the  incorrect  process,   there's  a                                                                    
     penalty that's  invoked ... If  you look on to  page 4,                                                                    
     ... line 23, ... it talks  about the class B felony, if                                                                    
     [the claim]  pertains to anything over  $25,000, and it                                                                    
     goes on  through the different steps  and it replicates                                                                    
     ...  similar  penalties  for  other  actions  that  are                                                                    
     comparable. ...  One of  the things  that also  came of                                                                    
     this  is   ...  language  that  says   the  legislature                                                                    
     requires the department to do  the annual audit, and it                                                                    
     is at a percentage that  is .75 percent of all enrolled                                                                    
     providers with  there being no  less than an  annual 75                                                                    
     audits   being  done   regularly,  which   [is]  fairly                                                                    
     aggressive ....                                                                                                            
Number 2001                                                                                                                     
SENATOR GREEN continued:                                                                                                        
     There  are many  providers  on the  books  who are  not                                                                    
     large users of  Medicaid, so the total  number could be                                                                    
     somewhat  misleading, but  this would  keep it  in [an]                                                                    
     area where  ... we would  have a good cross  section of                                                                    
     all providers  who would  be subject  to audit  and ...                                                                    
     who would be being checked.  ... There's quite a bit of                                                                    
     recovery  after a  successful lawsuit.    You may  have                                                                    
     read about the one in  Anchorage last year [and/or] the                                                                    
     one in  Fairbanks last  year.   And there  were several                                                                    
     hundred  thousand dollars  recovered  from those,  from                                                                    
     [doctors] who  were doing some illegal  prescribing and                                                                    
     assisting patients in ... selling  drugs on the street.                                                                    
     And they  were sort of  bringing the money back  in and                                                                    
     getting new  prescriptions and going  back and  kind of                                                                    
     had a pretty good deal going, actually.                                                                                    
     And  [this is]  very harmful  to our  system.   But the                                                                    
     unfortunate  part  [is  that they]  were  not  able  to                                                                    
     prosecute  on Medicaid  fraud;  they  had to  prosecute                                                                    
     based  on  the  crime  they were  committing  that  was                                                                    
     parallel or  coincidental to the  Medicaid fraud.   And                                                                    
     certainly Steve  Branchflower in  his letter  lays that                                                                    
     out very  clearly and far better  than I.  But  the ...                                                                    
     money  that would  be brought  in under  ... successful                                                                    
     prosecutions,  ...  [if  SSSB  41 is  approved  by  the                                                                    
     legislature],  will go  back into  funding the  audits.                                                                    
     ... The  department as well  ... [as] myself  have been                                                                    
     concerned  with some  comments that  these audits  take                                                                    
     too  long [and]  people don't  get back  to the  person                                                                    
     being  audited,  and  [so]  we  have  fully  funded  an                                                                    
     additional audit position in  our operating budget this                                                                    
Number 2073                                                                                                                     
SENATOR GREEN concluded:                                                                                                        
     The  audit  firm  being  hired  is  going  to  have  an                                                                    
     additional function from this  point forward; they will                                                                    
     not only  do the initial  audit and find  the suspected                                                                    
     files,  they  will  begin the  investigation  as  well,                                                                    
     freeing  up our  Medicaid auditors  to do  more of  the                                                                    
     prosecutorial work.  And so  we're saying that we think                                                                    
     it's  appropriate for  this money  to be  available for                                                                    
     appropriation to  fund that function, and  to certainly                                                                    
     not keep anyone being audited  in a delay status or ...                                                                    
     [have  it go]  on  in an  unprofessional  manner.   The                                                                    
     department has  agreed that this  is a concern  to them                                                                    
     and they intend to see these go more quickly.                                                                              
     There are always, I assume,  ... going to be people who                                                                    
     choose to  do things other  than [by] the book,  and we                                                                    
     have complaints about people who  will say, "This audit                                                                    
     impacted  me unfairly,"  but I  find it  very difficult                                                                    
     that  anyone could  sit here  and say  that they  think                                                                    
     it's not  appropriate for  us to  criminalize something                                                                    
     that is so [incredibly expensive]  for this state.  And                                                                    
     we  ...  - [along  with]  the  Department of  Law,  the                                                                    
     Department  of Health  and Social  Services, and  Steve                                                                    
     Branchflower with  the Office of Victims'  Rights - ...                                                                    
     worked many, many, many hours  on bringing this to this                                                                    
     condition; all have agreed that  this will work for the                                                                    
     purposes  of each  of the  departments concerned.   And                                                                    
     with that, I welcome any questions.                                                                                        
CHAIR McGUIRE turned attention to  a document entitled "DMA notes                                                               
on ASMA SB  41 comments," and indicated that  this document makes                                                               
reference to letters  that were sent by the  Alaska State Medical                                                               
Association (ASMA).  She said  that she has heard complaints from                                                               
doctors  who still  treat Medicaid  patients  that audits  invade                                                               
patients' privacy.  She posited  that some could argue that since                                                               
Medicaid patients are receiving  a state-funded service, there is                                                               
a  compelling state  interest to  access these  records during  a                                                               
fraud investigation.   However, there  is a concern that  in some                                                               
of these  audits, the  information that  has been  requested goes                                                               
above and beyond that Medicaid  patient's record and into his/her                                                               
family members' records and into  the records of other, similarly                                                               
situated patients.   She surmised, though, that  the latter might                                                               
be done to  determine whether a specific treatment  is the normal                                                               
way to  treat a  patient with  a like  condition.   Chair McGuire                                                               
said she  had concerns about  this issue and asked  Senator Green                                                               
whether  anyone  has  yet  addressed the  legal  aspects  of  it,                                                               
particularly  in light  of Alaskans'  constitutionally guaranteed                                                               
right of privacy.                                                                                                               
Number 2273                                                                                                                     
SENATOR GREEN indicated that the  department might be better able                                                               
to address that issue.  She  added that issues of privacy change,                                                               
both for providers  and for recipients, when  someone arranges to                                                               
have another entity pay for  services, although this doesn't mean                                                               
that it  would be proper  to make  such records available  to the                                                               
public.   She  opined  that  the state  does  have  the right  to                                                               
validate claims and  charges.  And although she has  never seen a                                                               
Medicaid  audit  conducted, she  said,  one  of the  things  that                                                               
happens often  is that in  a class  of provider, the  auditors do                                                               
look  for similar  irregularities, for  example, pertaining  to a                                                               
particular  [doctor],  a  particular   clinic,  or  a  particular                                                               
[patient].   She  remarked that  it is  understandable that  once                                                               
some person  or entity comes  under suspicion,  the investigation                                                               
would ramp  up and, thus,  the scope of information  being sought                                                               
would be expanded.                                                                                                              
CHAIR McGUIRE  indicated that she  still has concerns  about this                                                               
issue.   She  pointed out  that in  some cases,  at issue  is the                                                               
conduct of the  physician, rather than that of the  patient.  She                                                               
then noted that another issue that  has been raised by the Alaska                                                               
State  Medical  Association  is that  when  there  are  questions                                                               
regarding which  treatment codes to use,  Medicaid officials have                                                               
been less than helpful.  She  remarked that the DMA's response to                                                               
this  concern, located  in the  aforementioned document,  is very                                                               
convoluted.  So to hold  someone criminally liable for legitimate                                                               
errors in coding is unfair,  especially considering that Medicaid                                                               
officials do not provide adequate responses to questions.                                                                       
TAPE 03-60, SIDE B                                                                                                            
Number 2385                                                                                                                     
CHAIR McGUIRE  continued, "If  we're going to  raise the  bar and                                                               
apply  criminal sanctions,  I think  we  ought to  be giving  the                                                               
medical community  as many  tools as  we possibly  can to  make a                                                               
good-faith  effort to  follow the  rules and  treat the  patients                                                               
SENATOR  GREEN mentioned  that she  thought  there are  currently                                                               
some  changes  to the  coding  system  occurring at  the  federal                                                               
level,  adding  that these  changes  may  alleviate some  of  the                                                               
ASMA's  concerns.    She  noted,   however,  that  DMA's  written                                                               
response to this concern includes  the statement, "It is expected                                                               
that providers deliver  and bill for services in  the same manner                                                               
as they serve  the general public."  Therefore,  she opined, they                                                               
should be  using the  same code  for both  types of  patients; it                                                               
should not have to be a puzzle that has to be figured out.                                                                      
CHAIR McGUIRE  offered that  even as far  as serving  the general                                                               
public, the  coding system  is currently quite  a quagmire.   She                                                               
added,  "A good  physician will  try to  assign the  billing code                                                               
that will offer their patient the  best mode of treatment and the                                                               
best possibility  of coverage,  all within  the realm  of truth."                                                               
For  example, a  physical  examination can  be [coded]  different                                                               
REPRESENTATIVE SAMUELS  asked what  happens to the  privacy issue                                                               
when audits  are performed by  private entities; for  example, an                                                               
audit performed by an insurance company.                                                                                        
CHAIR  McGUIRE  said  her   concerns  pertain  to  doctor-patient                                                               
confidentiality in general.                                                                                                     
SENATOR  GREEN said  that the  forms which  providers are  having                                                               
patients  sign  allow information  to  be  shared with  insurance                                                               
companies -  those entities that are  being asked to pay  for the                                                               
service.   She said she assumes  that this is also  the case with                                                               
Medicaid; the  payor has the right  to know that the  service has                                                               
been provided  and that it  is the  appropriate service.   Once a                                                               
patient has  asked a third  party to pay for  all or part  of the                                                               
service, the patient is in a different category.                                                                                
Number 2247                                                                                                                     
CHAIR  McGUIRE said  she did  not disagree  with that  point, but                                                               
     Where my questions  on the privacy issue go  to are the                                                                    
     ancillary  folks that  get involved  when  an audit  is                                                                    
     conducted.  And those  are the patient's relatives that                                                                    
     may be  treated by  the same  practitioner -  ... these                                                                    
     are experiences that come from  the medical community -                                                                    
     or possibly even an unrelated  patient ... [who] is not                                                                    
     a  Medicaid recipient  that is  receiving care  under a                                                                    
     similar  category.     So  those  are   the  folks  I'm                                                                    
     concerned about.                                                                                                           
REPRESENTATIVE GARA said that he  likes the bill and the concept,                                                               
and he understands the motivation behind  the bill.  He said that                                                               
he wanted to be  sure that the cost of the  extra audits is going                                                               
to be justified  by extra recoveries.  He then  broached the idea                                                               
of letting  the attorney  general's office bring  a civil  case -                                                               
somewhat akin  to what is  done under the unfair  trade practices                                                               
Act -  such that if there  is Medicaid fraud, the  state would be                                                               
entitled  to recover  the overcharge,  it's investigation  costs,                                                               
it's [attorney]  fees, and  a penalty.   Because there  are proof                                                               
problems in  criminal cases  that don't apply  in civil  cases, a                                                               
conceptual  amendment  that  provides  for a  very  simple  cost-                                                               
recovery action by the attorney  general's office might be a good                                                               
idea, he suggested.                                                                                                             
Number 2147                                                                                                                     
SENATOR  GREEN   said  that   in  the   audit  process,   as  the                                                               
[independent]  audit firm  checks the  Medicaid records  and goes                                                               
through  claims and  billings, if  something raises  a red  flag,                                                               
those with the  biggest red flags are  prosecutable whereas those                                                               
with smaller red flags or yellow  flags go back to the department                                                               
to deal with.  The  department then goes through an "interoffice"                                                               
process of  reevaluating the case,  asking for  more information,                                                               
substantiating billings,  and speaking  to the  parties involved.                                                               
She posited  that this  latter process  probably takes  place all                                                               
the time.                                                                                                                       
SENATOR  GREEN  predicted  that   doing  as  Representative  Gara                                                               
suggested wouldn't  be necessary, because under  what is proposed                                                               
via  SSSB  41,  the  DOL  and   the  DHSS  will  be  required  to                                                               
communicate   with   each   other   regarding   potential   fraud                                                               
situations.  She noted that those  who are found to have violated                                                               
the  provisions of  the Medicaid  program are  removed from  that                                                               
program  for  a period  of  time.    She recommended  asking  the                                                               
departments  for  their   view  regarding  Representative  Gara's                                                               
suggestion of providing for a civil remedy.                                                                                     
Number 2046                                                                                                                     
DONALD R. KITCHEN, Assistant  Attorney General, Medicaid Provider                                                               
Fraud,  Office  of  Special   Prosecutions  &  Appeals,  Criminal                                                               
Division, Department of Law (DOL), on that issue, said:                                                                         
     I think what [Representative  Gara is] talking about is                                                                    
     essentially  a   civil  false-claims  action   that  is                                                                    
     permissible  in the  federal  system.   And  I did  not                                                                    
     include it  when we were working  with Mr. Branchflower                                                                    
     and other  folks in getting this  started, only because                                                                    
     I thought it  was probably a bit too  ambitious for the                                                                    
     first  time  around.     But  certainly,  investigative                                                                    
     costs,  our  costs,  and penalties  are  [appropriately                                                                    
     recovered] in the federal system  when these same kinds                                                                    
     of suits are  brought.  And it would,  I believe, cover                                                                    
     probably what's  considered a  middle ground  that does                                                                    
     not  get  moneys  recovered,  and  that  is  where  the                                                                    
     provider  gets money  they're not  entitled to  and DMA                                                                    
     doesn't  go  after   them  administratively  when  they                                                                    
     could.   So, I  think a  civil false-claims  action, as                                                                    
     requested,  is a  good idea;  I  don't know  if we  can                                                                    
     hammer  it out  this  late, but  I  would certainly  be                                                                    
     willing to try.                                                                                                            
REPRESENTATIVE  GARA  said  that  his worry  is  that  under  the                                                               
existing remedies,  if all that  can be recovered are  court rule                                                               
costs,  those don't  include  investigative costs.    Is there  a                                                               
statute that provides for the recovery of investigative costs?                                                                  
MR.  KITCHEN said  that he  had not  thought about  including the                                                               
recovery of investigative costs in  the version that's before the                                                               
REPRESENTATIVE  GARA suggested  that  Mr. Sniffen  from the  Fair                                                               
Business   Practice   Section,    Civil   Division   (Anchorage),                                                               
Department of Law,  could probably help Mr. Kitchen  draft such a                                                               
provision  in  a short  period  time.    He asked  Senator  Green                                                               
whether she would be interested in exploring such an addition.                                                                  
SENATOR GREEN  said, "I don't have  any problem with it;  I don't                                                               
know enough about  it to speak to it."   She suggested asking Mr.                                                               
Branchflower for his opinion on this issue.                                                                                     
Number 1951                                                                                                                     
STEPHEN BRANCHFLOWER, Director, Office  of Victims' Rights (OVR),                                                               
Alaska   State  Legislature,   said   that   there  are   federal                                                               
regulations that every state that  accepts federal funding to pay                                                               
for the  Medicaid program has to  agree to, and that  when he was                                                               
the  Director  of the  Medicaid  Fraud  Control Unit,  that  unit                                                               
handled both civil and criminal matters.   Most of the money that                                                               
was  recovered  during his  tenure  -  almost  $3 million  -  was                                                               
recovered  civilly, he  explained.   He opined  that the  federal                                                               
false claim  statutes are  good, but added  that he  would prefer                                                               
for the bill to go forward,  "in the interest of at least loading                                                               
the guns of the prosecutors ...  for this year," and then revisit                                                               
it at a later time.                                                                                                             
REPRESENTATIVE  GARA indicated  that  he would  ask the  attorney                                                               
general's office to  work on an amendment that  Senator Green and                                                               
other interested  parties could look  at before the bill  goes to                                                               
the House floor;  if the amendment is acceptable  to everyone, it                                                               
could then be offered on the House floor.                                                                                       
CHAIR  McGUIRE said  that although  what  Representative Gara  is                                                               
proposing seems reasonable, she did not  want to hold the bill up                                                               
too long.                                                                                                                       
MR.  KITCHEN indicated  that he  might be  able to  come up  with                                                               
appropriate language within a couple of days.                                                                                   
REPRESENTATIVE GARA  relayed that what  he is interested in  is a                                                               
provision  that  would  allow  for  the  recovery,  in  full,  of                                                               
investigation   costs,  attorney   fees   for  overcharges,   and                                                               
penalties similar  to what  is provided for  in the  unfair trade                                                               
practices Act.                                                                                                                  
SENATOR  GREEN  noted that  SSSB  41  also  has a  House  Finance                                                               
Committee referral,  and suggested  that perhaps an  amendment to                                                               
that effect could be added in that committee.                                                                                   
CHAIR McGUIRE  relayed that  in addition to  Mr. Kitchen  and Mr.                                                               
Branchflower, representatives  from the Department of  Health and                                                               
Social Services were also available to answer questions.                                                                        
Number 1721                                                                                                                     
REPRESENTATIVE  GRUENBERG  mentioned  that language  on  page  3,                                                               
lines 24-25, is  similar to language on page 7,  line 31, through                                                               
page 8,  line [2].   He  said he is  concerned that  there aren't                                                               
statutory standards for the protection  of patients' privacy, and                                                               
suggested that staff should also  work on such a language change.                                                               
He  then turned  attention to  language on  page 4,  lines 18-19,                                                               
which  would make  it  a  crime to  knowingly  destroy a  medical                                                               
assistance record.   He suggested  that it would  be unreasonable                                                               
to expect  providers to keep  all such records  indefinitely and,                                                               
therefore,  there ought  to be  a stipulation  that such  records                                                               
could be destroyed after a certain period of time.                                                                              
MR. BRANCHFLOWER, on the issue of patients' privacy, said:                                                                      
     Keep in  mind that ... the  Medicaid program reimburses                                                                    
     [providers] before  and, in most cases,  in the absence                                                                    
     of  any proof  by  the provider  that  the service  has                                                                    
     actually been  rendered.   And so  it's only  after the                                                                    
     fact,  through audits,  and sometimes  many months  and                                                                    
     even years  after the fact,  that an effort is  made to                                                                    
     reconcile the  billings with the  medical charts.   And                                                                    
     that, of course, gets into the question of privacy.                                                                        
     Now, on the  provider's side, ... when  a doctor wishes                                                                    
     to  become involved  with Medicaid,  they have  to fill                                                                    
     out  a form  that's  called a  ... provider  enrollment                                                                    
     form.  And essentially that  form is a contract between                                                                    
     the provider  and the  state, and one  of the  terms in                                                                    
     this contract is that the  provider has to abide by all                                                                    
     the federal regulations; the  whole Medicaid program is                                                                    
     driven  largely by  federal regulations.    And one  of                                                                    
     those provisions  is to open the  person's records, the                                                                    
     provider's records, to auditors ....                                                                                       
     On the  other side  of the  equation, on  the patient's                                                                    
     side,  all of  the people,  all of  the recipients  for                                                                    
     Medicaid benefits,  are eligible  as a result  of their                                                                    
     indigency.   And what happens  is, when a  person wants                                                                    
     to  obtain  Medicaid  benefits, they  go  down  to  the                                                                    
     public assistance  office and they fill  out the forms,                                                                    
     and   ...  the   forms   address   not  only   Medicaid                                                                    
     eligibility,   but   also    eligibility   for   public                                                                    
     assistance, food stamps, and so  forth.  And there is a                                                                    
     waiver there,  [a] prospective  waiver, that  they sign                                                                    
     as a condition of eligibility.                                                                                             
Number 1527                                                                                                                     
     So, between the provider  enrollment agreement form and                                                                    
     the   recipient's  prospective   waiver,  all   of  the                                                                    
     concerns  that you  have expressed  are taken  care of.                                                                    
     Essentially, they specifically agree  in writing to ...                                                                    
     waive the  doctor-patient privilege.   And in  terms of                                                                    
     third  persons'   getting  swept  up,   sometimes  what                                                                    
     happens  is that  - and  I  would say  it happens  more                                                                    
     frequently  than  not  -  when  a  case  comes  to  the                                                                    
     attention  of the  Medicaid  Fraud  [Control] Unit  and                                                                    
     there is  reason to believe that  there's some criminal                                                                    
     conduct that  may have transpired, ...  the prosecutors                                                                    
     will take  their evidence before  a judge and  seek the                                                                    
     issuance of the search  warrant; [a] search warrant, of                                                                    
     course, is  only issued upon  probable cause,  so there                                                                    
     has to be evidence ... sufficient for the issuance.                                                                        
MR. BRANCHFLOWER continued:                                                                                                     
     And  they typically  go into  a  provider's office  and                                                                    
     they will seize the  entire patient population in terms                                                                    
     of  the  files,  and  usually   this  is  hundreds  and                                                                    
     hundreds  of  files.   And  what  happens is  that  the                                                                    
     auditor that works within  the Medicaid Fraud [Control]                                                                    
     Unit  will  take  each  patient  file  and  attempt  to                                                                    
     reconcile  the billings  for  that  provider, not  only                                                                    
     with the  ... Medicaid  billings but also  [with regard                                                                    
     to] the  private payor, the  cash payor,  the insurance                                                                    
     payors, and so forth.                                                                                                      
     The  reason   [for  doing  this]   is  that   there  is                                                                    
     essentially a  law that says  that the  provider cannot                                                                    
     charge the  State of  Alaska more  money than  ... non-                                                                    
     Medicaid  patients.     And   so  these  are   all  ...                                                                    
     circumstantial threads of fraud  that can be ultimately                                                                    
     incorporated into a  charging document.  So  even as to                                                                    
     third persons, even as  to non-Medicaid patients, those                                                                    
     records  are  only  obtained after  some  judge  passes                                                                    
     judgment on the existence of  probable cause.  And so I                                                                    
     think there  is already  in place  a system  to protect                                                                    
     the privacy of  all of the parties who  are involved in                                                                    
     this issue.                                                                                                                
Number 1428                                                                                                                     
CHAIR McGUIRE asked Mr. Branchflower to describe exactly what                                                                   
purportedly guarantees the privacy of [non-Medicaid] patients.                                                                  
REPRESENTATIVE GRUENBERG asked whether a search warrant has to                                                                  
be obtained in all cases.                                                                                                       
MR. BRANCHFLOWER replied:                                                                                                       
         Unless there is a specific waiver from the non-                                                                        
     Medicaid patient, yes.   I don't know of  any other way                                                                    
     of  obtaining  a  medical  charge  for  a  non-Medicaid                                                                    
     patient  ...  unless  the person  agrees  to  ...  them                                                                    
     obtaining  it. ...  The doctor-patient  privilege, with                                                                    
     respect to non-Medicaid patients,  is something that is                                                                    
     already  a  matter of  law  in  the [Alaska]  Rules  of                                                                    
     Evidence.   Plus there  are provisions  for maintaining                                                                    
     the  confidentiality  of  the   persons  who  are  non-                                                                    
     Medicaid  patients.   And it's  been my  experience ...                                                                    
     that  when we  file charging  documents, which  ... are                                                                    
     public  records, we  ... preserve  the identity  of the                                                                    
     patients by using their initials  in very much the same                                                                    
     way we do with sexual assault victims ....                                                                                 
     And of  course the facts  that give rise to  the charge                                                                    
     are stated in those  pleadings, but there's usually, in                                                                    
     my  experience, nothing  about the  statement of  facts                                                                    
     that  would  disclose  the  identity  of  the  patients                                                                    
     themselves.  Now, it may come  to pass that as the case                                                                    
     moves through  a trial,  that it  will be  necessary to                                                                    
     subpoena  patients who  are not  Medicaid patients;  in                                                                    
     that case,  appropriate steps can be  taken to preserve                                                                    
     that  person's privacy,  and  that will  be  up to  the                                                                    
     trial judge.  There are rules  in place to take care of                                                                    
REPRESENTATIVE GRUENBERG asked what privacy right the patient,                                                                  
whether Medicaid or non-Medicaid, has from the investigator.                                                                    
Number 1278                                                                                                                     
MR. BRANCHFLOWER reiterated that the Medicaid patient has                                                                       
prospectively waived his/her right to privacy, adding that most                                                                 
of  the  investigator's  work  focuses  on  the  conduct  of  the                                                               
provider  rather  than the  recipient,  although  there are  many                                                               
examples of recipient  fraud.  Because of  the resources required                                                               
to  investigate  Medicaid  fraud cases,  however,  investigator's                                                               
choose to "get the biggest bang  for the buck" by going after the                                                               
provider's records.   So when  recipients are  being interviewed,                                                               
they  are  asked  whether  services  were  actually  rendered  as                                                               
REPRESENTATIVE GRUENBERG noted, however,  that in looking through                                                               
individual  patient  files,  investigators have  access  to  very                                                               
private information.                                                                                                            
MR. BRANCHFLOWER  acknowledged that investigators do  have access                                                               
to  medical  records and  the  information  that relates  to  the                                                               
treatment that  was claimed  to have been  provided.   He argued,                                                               
however,  that auditors,  even when  just looking  at information                                                               
from  a   financial  standpoint,   are  also  bound   by  federal                                                               
confidentiality regulations.                                                                                                    
REPRESENTATIVE GRUENBERG  said he would feel  more comfortable if                                                               
there was language  in SSSB 41 that said due  care must be taken,                                                               
in the  course of  the investigation,  to preserve  the patient's                                                               
privacy.   He asked  that staff  work on  such language  with the                                                               
sponsor.   He then  returned to the  issue of  destroying medical                                                               
assistance records, and  asked that a provision  be included that                                                               
would allow  a provider to  destroy such records after  a certain                                                               
period of time.                                                                                                                 
MR. BRANCHFLOWER offered that the  answer to that issue lies with                                                               
the fact that  before a person can be subject  to prosecution for                                                               
any of the  actions listed on page  4, lines 18-19, it  has to be                                                               
proven that the  person acted with the  requisite culpable mental                                                               
state, which  is knowingly.   He  acknowledged that  providers do                                                               
eventually  destroy records  as a  matter of  course, and  opined                                                               
that they would be protected  from prosecution because they would                                                               
not  be doing  it  with  the intent  of  advancing  fraud of  the                                                               
Medicaid  program.   He relayed  that it  would be  acceptable if                                                               
some sort  of affirmative  defense or  exclusion were  added that                                                               
would allow  for the destruction  of such  records if done  for a                                                               
legitimate reason.                                                                                                              
MR. KITCHEN noted that the  "Medicaid rules" require providers to                                                               
keep  such records  for seven  years.   He assured  the committee                                                               
that  the DOL  would never  prosecute providers  for not  keeping                                                               
records  that the  Medicaid program  no longer  required them  to                                                               
Number 0981                                                                                                                     
ANNE  CARPENETI,  Assistant   Attorney  General,  Legal  Services                                                               
Section-Juneau,  Criminal  Division,  Department  of  Law  (DOL),                                                               
after noting that the language on  page 4, lines 18-19, was taken                                                               
from  the statutes  pertaining  to the  crime  of tampering  with                                                               
public records  in the second  degree, suggested that  the phrase                                                               
"knowing that the  person lacks the authority to do  so" could be                                                               
added  after   "record"  in   order  to   address  Representative                                                               
Gruenberg's concern.                                                                                                            
REPRESENTATIVE GRUENBERG  expressed a  willingness to  offer such                                                               
language as an amendment.                                                                                                       
MR.  KITCHEN suggested,  alternatively,  that  adding the  phrase                                                               
"except as otherwise permitted by  law" would accomplish the same                                                               
thing without  creating the problem  of having to prove  who told                                                               
whom to destroy the medical assistance records.                                                                                 
REPRESENTATIVE   GRUENBERG  indicated   that  he   preferred  Mr.                                                               
Kitchen's suggestion instead.                                                                                                   
REPRESENTATIVE GARA objected, and said:                                                                                         
     Then you'll have the situation  of somebody who removes                                                                    
     or  impairs the  legibility  or the  availability of  a                                                                    
     record:   a secretary,  who doesn't  know the  law, who                                                                    
     does  so by  mistake,  or does  so  because their  boss                                                                    
     wants them just  to deal with records  somehow, and all                                                                    
     of a sudden they'll have committed a crime.                                                                                
REPRESENTATIVE HOLM said no.                                                                                                    
CHAIR McGUIRE pointed  out that knowingly is  the culpable mental                                                               
Number 0839                                                                                                                     
REPRESENTATIVE GARA argued, however:                                                                                            
     But ... when you crumble  up a record, you're knowingly                                                                    
     crumbling up the record.   The real question is, do you                                                                    
     know  that you're  breaking [the]  law or  do you  know                                                                    
     that  you're   ...  intentionally  trying   to  deprive                                                                    
     somebody  of a  record?   But just  knowingly impairing                                                                    
     the  legibility,  [well]  that's just  crumbling  up  a                                                                    
     record without  any bad  intent.   The question  is, do                                                                    
     you have  any bad  intent?  And  that part  is actually                                                                    
     throughout this ... page 4.   We're not very careful in                                                                    
     limiting these  criminal sanctions  to people  who have                                                                    
     bad  intent; we're  just limiting  them  to people  who                                                                    
     know the  physical process that they're  going through,                                                                    
     of throwing  out a record  or destroying a  record, but                                                                    
     they could just be trying to  thin out a file for their                                                                    
     boss ....  And so I've got an overall concern here.                                                                        
MR.  BRANCHFLOWER said  that  perhaps the  solution  would be  to                                                               
stipulate a specific  timeframe, for example, 10  years after the                                                               
preparation of  the document.   That way, providers  could simply                                                               
look at the date on the document.                                                                                               
REPRESENTATIVE GRUENBERG suggested that  staff work on this issue                                                               
before the bill's next hearing.                                                                                                 
CHAIR McGUIRE agreed to that  suggestion and instructed committee                                                               
staff  to  focus on  the  issues  of  patients' privacy  and  the                                                               
destruction of the medical assistance records.                                                                                  
REPRESENTATIVE HOLM  asked why  the fiscal  note did  not reflect                                                               
the potential savings.                                                                                                          
SENATOR GREEN indicated  that the fiscal notes for  SSSB 41 focus                                                               
on the cost to the state.                                                                                                       
REPRESENTATIVE GARA said  that he wants SSSB 41 to  be limited to                                                               
intentionally fraudulent conduct.                                                                                               
MR. BRANCHFLOWER  posited that  all of  the issues  the committee                                                               
has  concerns with  could  be  resolved by  working  on the  bill                                                               
[SSSB 41 was held over.]                                                                                                        

Document Name Date/Time Subjects