Yet even as it faltered, Crystal Care continued receiving payments from the state. The company has been paid more than $25 million over the last decade, most of it through federal-state Medicaid grants for the poor and infirm.
The episode was symptomatic of problems that have emerged during a decade of explosive growth in the industry. In Minnesota, public spending on personal care assistants in clients’ homes has soared from $117 million in 2003 to $618 million last year, and more than 36,000 Minnesotans now receive such care. Nationally, Medicaid payments to home health care companies nearly tripled in the past decade, eclipsing $12 billion in 2011.
In the midst of that growth, billing irregularities and fraud have become chronic. Nationwide, 20 percent of all Medicaid claims submitted by personal care service providers were found to be faulty — either because providers had no record that the services were actually provided or the caregivers lacked proper qualifications, according to a 2010 survey by the U.S. Department of Health and Human Services (HHS). In a single year, wrongful payments totaled more than $700 million, the department found.
Across the country, state regulators who investigate Medicaid fraud have more than 1,000 open cases involving personal care assistance services — more than any other health service covered by Medicaid, according to a 2012 report by the HHS Office of the Inspector General.
Just last week, Michigan’s auditor general reported that the state improperly paid $160 million in a 29-month period for home care services under a state Medicaid program. The auditor blamed shoddy paperwork and poor oversight and noted that 3,786 caregivers in Michigan had felony criminal records, including convictions for homicide and sexual assault.
In 2010, Ometta Vent Care Services of Plymouth quietly shut its doors after state investigators uncovered extensive fraud, including evidence that the firm had billed the state for thousands of hours of nursing services that were never provided. Sick patients, including people on ventilators who required 24-hour care, also complained of inadequate care.
In Minnesota, personal care assistance services account for less than 10 percent of total Medicaid spending, but alleged personal care fraud accounts for 37 percent of state fraud investigators’ time, according to Minnesota’s Department of Human Services. Personal care fraud also accounts for more than half of the state attorney general’s Medicaid investigations.
“The fraud is a reflection of the extreme lack of state attention and resources devoted to this exploding industry,” said Hollis Turnham, the Midwest director of the Paraprofessional Healthcare Institute, a health care advocacy group.
‘Sitting here, rotting’
Luverne Nelson is gasping for breath, his face a mixture of pain and fatigue as he struggles to take off his pants and shirt.
Nelson, 84, suffers from chronic obstructive pulmonary disease. The mere act of undressing for a shower can cause him to collapse on his bed from exhaustion.
“Some days, I get to huffing and puffing so bad you can hear me across the street,” he said one day recently.
And that’s on good days, when Nelson has a personal care assistant to help him.
For two months last year, Nelson had no such help. One day in September, Nelson’s longtime personal care assistant at Crystal Care failed to show up at his apartment in North Branch.
Nelson, a Korean War veteran who calls himself “fiercely independent,” thought he could fend well enough on his own until another aide arrived.
Days slipped by without a caregiver showing up. Then weeks. Then months. Nelson stopped taking a shower. He stopped washing his clothes and changing his bedsheets. And he frequently forgot to take the small pink pills, kept in a plastic tray above his kitchen sink, that help prevent the buildup of fluid in his lungs.
Like other former patients, Nelson said he was afraid to call public officials for help, fearing they might discover his frail state and send him to a nursing home. His condition worsened to the point where he could barely bend down and pull on his socks without wheezing uncontrollably.
“I was just sitting here, rotting,” he said.