The Gavin-Newsom-fraud-fest spectacular continued last week as reporting from the City Journal revealed the massive scope of potential fraud within the In-Home Supportive Services Program, a California state program funded by Medicaid that allows people with no meaningful medical training to bill taxpayers for performing basic household tasks, or “homecare” for the elderly or disabled. It’s important for people to realize, though, that California is far from the only state with a homecare fraud problem. It’s almost certainly happening in your state too, and at a scale that will boggle your mind. The problem is so widespread, in fact, that I find myself compelled to do the unthinkable: defend Gavin Newsom.
To be clear, and to prevent him from running off with this headline, I am not even slightly vindicating Gavin Newsom. California’s fraud problem is massive and almost entirely Newsom’s fault…but not entirely. The same industrial-scale homecare fraud networks making headlines in California also exist, to a lesser extent, in every other state.
There are slight variations in laws and procedures between states, but the scam has worked essentially the same way nationwide for over a decade. Here’s how it usually works.
First, to provide homecare you need to create a company and submit the proper paperwork to Medicaid, which makes sure you meet the requirements, but nobody seems to be checking this paperwork closely. Fraudsters in Georgia, Florida, and Missouri have been busted running their companies under stolen identities and nursing licenses for years.
Next, you need patients. To get patients, they usually must get a doctor’s referral certifying that they need homecare because of some disability or injury. This is an easily overcome obstacle. High-profile busts in Louisiana, California, Florida, Illinois, Oklahoma, and Michigan, just to name a few, have found that scammers bribe doctors with kickbacks to write unnecessary referrals.
Now that the patient has their doctor’s note, they can choose a homecare company themselves or be assigned one by the state’s relevant authorities or medical professionals. Patients of scammers are often paid kickbacks. Many pick their family members or spouses to provide the homecare. In one particularly massive scheme, residents of Washington, D.C. got their entire extended family together to bilk Medicaid of $80 million, spending it on mansions and sports cars. If it’s not a family business, though, you can always bribe “patient marketers” for clients, buy a roster of existing patients from another recently busted fraudster, or get a list of stolen identities on the homecare black market.
Bribery is a theme. In a government marketplace with fixed prices, as always, the only way to compete in homecare is by doing it under the table.
Now that you have patients, you just need qualified people to provide the care and patients’ signatures to verify it. This step of the process is basically a joke. In Virginia, a company was caught trading cash for stacks of blank, signed patient certification forms. In Alaska, a woman pretended her whole family was working for her homecare company and billed fake hours for each of them. In Utah, workers were instructed to sit in their cars outside the house after jobs to maximize billing hours. Some homecare scammers have been caught because they’re working full-time jobs while supposedly doing homecare work, as in Montana and Nebraska. Others have been busted for brazenly requesting payment for more than 24 hours of work in a single day, as in Illinois and New Mexico. Not only were they paid the full amount for these requests, but it also took years for anyone to notice.
Every step of the homecare process can be, and is, easily defrauded, and while California is one of the worst, they’re far from alone.
You’d be hard-pressed to find any state where a quick look through Medicaid spending data doesn’t reveal at least one seedy office building hosting a dozen homecare companies billing taxpayers tens of thousands of dollars per month to do basic household tasks for a suspiciously small number of patients. And, as with the Armenians in California and the Somalis in Minnesota, the companies in these Medicaid clusters are usually owned almost exclusively by immigrants from one or two countries in East Asia, the Middle East, or Africa.
Gavin Newsom is doing nothing to put out the fire (double entendre intended) but he didn’t start it, and nearly every other state has a little homecare-fraud fire of its own that our institutions, built around a high-trust society, simply aren’t equipped to handle.
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Parker Thayer is an investigative researcher at Capital Research Center.
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