Unscrupulous caregivers submit millions of dollars in fraudulent home care bills to the state every year, yet only a fraction are ever prosecuted, and even fewer wind up in jail or paying substantial restitution.

Of the 425 home caregivers and agencies notified of wrongful billing practices since 2008, just one in four were ultimately convicted, according to a review of public documents by the Star Tribune. Minnesota, once considered a leader in prevention of theft and fraud in the Medicaid program, now lags many comparable states in the number of cases investigated and the sums recovered for taxpayers.

With explosive growth in the number of aging or frail Minnesotans who require help at home, state outlays for home care have more than quintupled in the last decade, to $618 million last year. Yet the number of referrals to the state's Medicaid anti-fraud enforcement unit has fallen by half since 2011, while notices of wrongful payments have stayed virtually flat.

And when home care providers do try to blow the whistle on fraud by other caregivers, they say their reports typically fall into a "black hole," with little or no follow-up by state investigators.

"It's an invitation to steal," said Jay Jones, founder of Superior Home Health Care in Lakeville and vice chairman of the Minnesota Home Care Association.

State authorities, recognizing that current enforcement is inadequate, are intensifying their efforts to protect public funds. This month, a new unit at the Minnesota Department of Human Services (DHS) began conducting surprise spot-checks on new home care providers, and in January it will begin fingerprint background checks for more than 30,000 home caregivers.

"We don't have one single bullet," said DHS inspector general Jerry Kerber. "But all these things we're doing will make it more difficult" to commit fraud.

Some industry officials, however, fault the state for taking too broad a swipe at providers, while falling short in its own duty. As far back as 2009, the state Legislative Auditor described Minnesota's publicly funded home care program as "unacceptably vulnerable to fraud and abuse," and said state investigations were inadequate. Though his report triggered tighter controls, home care providers say fraud still goes largely undetected and that penalties are often a fraction of the public moneys stolen.

In one high-profile case, a Brooklyn Park company, Ometta Vent Care Services, billed the state for more than 10,000 hours of services that were never provided, defrauding the state of $2.7 million. Yet, the owner, Barbara Ann Currin, was ordered to pay restitution of just $50,000.

In another case, the owner of Tayo Home Health Care of Eagan was ordered to pay $10,000 in restitution after stealing more than $125,000 from the Medicaid home health program.

The combination of modest penalties and lax follow-up discourages home care agencies from reporting fraud, even when there is clear evidence, industry officials say.

Providers say the vast majority of caregivers are ethical and bill the state Medicaid program only for services that are actually provided. However, some agency owners estimate that at least 10 percent of Minnesota's roughly $600 million in annual spending on home care may be wasted through improper billing and fraud.

"This absolutely has to become more of a priority," said Sen. John Hoffman, DFL-Champlin, a member of the Senate Health, Human Services and Housing Committee. "Every dollar of fraud and overpayment is a dollar that we can't spend on schools, special education and other critical public services."

No data tools

After the Legislative Auditor chided DHS for lax supervision in 2009, the agency began requiring all caregivers to enroll with the state and receive unique identifying codes to track their billings. The changes enabled DHS to detect some of the most blatant forms of fraud, such as when caregivers billed for more than 24 hours of care in a day.

Yet more routine forms of fraud, such as when caregivers collude with patients or relatives to fabricate care hours, still go largely undetected, say agency owners.

Former state investigators say Minnesota's anti-fraud effort is hampered by a scarcity of the latest data analytic tools that can detect abnormal billing patterns. In 2013, the U.S. Department of Health and Human Services gave state fraud control units unprecedented authority to analyze Medicaid claims using data-mining tools with federal funds. Six states have received federal permission to use the new tools; however, Minnesota has yet to submit an application.

In addition, at least six states now require electronic verification when a home care worker visits a home — either through a telephone system or smartphones with GPS. These systems, say caregivers, deter fraud by eliminating the need for paper timesheets that are easy to falsify. Kerber, the DHS inspector general, said he considers electronic verification "exciting," but said the state still has to study the costs.

Without the latest technology, state investigators are often reacting to complaints about individual caregivers who fail to show up for work rather than pursuing large-scale fraud, say providers and state investigators.

Over the past two years, DHS has referred just 28 cases of suspected home care fraud to the state's Medicaid fraud control unit, which is housed in the state Attorney General's Office. That's down from 44 referrals in 2012 and 38 in 2011, according to documents reviewed by the Star Tribune. The number of home care agencies formally notified of improper billing by DHS has stayed relatively flat since 2010, while the size of the Medicaid program has swelled by more than 50 percent.

Officials at the Department of Human Services said they don't know why fraud referrals have fallen while the Medicaid program has grown.

The lack of response means unscrupulous caregivers can jump from one agency to another, submitting false timesheets with little fear of being prosecuted or kicked out of the state Medicaid program, agency owners said.

"I'm sick of competing with crooks," said Jill Knutson-Kaske, administrator at Heartland PCA in Duluth. "You do the right thing … you fire the person and you turn them in — and then see them working for someone else. It gives us all a bad name."


In her 17 years as a home care aide, Shawntel Harry of East St. Paul has lost count of the times she witnessed fellow caregivers falsify their billing records.

The motives, she said, are usually simple. A caregiver may have fallen behind on bills and desperately needs extra hours to make ends meet, and begins padding time sheets for hours that were never worked. Elderly and frail clients often feel pressured to sign the falsified time sheets, for fear they may lose a quality worker, Harry said.

Many caregivers, Harry said, feel justified in committing occasional fraud because of their low pay and lack of fringe benefits. Nationwide, the median wage for personal care aides is just $9.57 an hour, slightly above food preparation workers and coatroom attendants, according to federal data.

"Sometimes fraud is the only way a caregiver can get a paid vacation," Harry said.

Exact estimates for the amount of home care fraud vary, but it is sizable. In Minnesota, home care comprises the largest single category of fraud in the state's $9 billion Medicaid program — outpacing fraud by doctors and drug companies. Of 880 leads received by DHS' fraud investigative unit so far this year, 411 involved home care services, state records show.

A 2010 report by the U.S. Health and Human Service Department's inspector general found that as many as 20 percent of claims for home care services under Medicaid were inappropriate, either because caregivers failed to document their qualifications or provided no record that the care was actually provided.

All too often, fraudulent schemes are discovered only when collaborators break ranks and retaliate by ratting each other out, say providers. "The oversight is extremely loose," said Knutson-Kaske of Heartland PCA. "It's a wonderful opportunity for the wrong people."

Lagging other states

For years, Minnesota was considered a leader in home care fraud prevention. Many states, for instance, had yet to even enroll home care aides, which made it impossible to track their billings.

But over the past several years, other states have intensified their anti-fraud efforts while Minnesota appears to have stood still, based on federal and state data.

For instance, Missouri, which has roughly the same Medicaid spending as Minnesota, initiated more than twice as many fraud investigations and collected nearly two and a half times more in overpayments between 2010 and 2014. Likewise, Wisconsin, which spends $2 billion less a year on Medicaid than Minnesota, initiated three and a half times more investigations and collected 50 percent more in overpayments since 2010.

Sen. Hoffman said he is "puzzled" why the state does not spend more on anti-fraud enforcement, given the high return on such investments. Last year, federal and state agencies recovered $10.90 for every $1 spent on anti-fraud operations in the Medicaid program, according to the Department of Health and Human Services.

Officials with the Minnesota Attorney General's Office cautioned against state-by-state comparisons, noting that many states focus their anti-fraud efforts on monetary recoveries. In Minnesota, they said, the Medicaid fraud control unit focuses on criminal convictions, which require more evidence than recoveries or civil settlements. Nationwide, Minnesota ranked 13th last year in the number of convictions and charges resulting from investigations of Medicaid fraud.

But while criminal prosecutions are important, Kerber argued that it is more critical for the state to invest more on the front end — to prevent criminals from gaining a toehold in the Medicaid program.

Starting this month, all new home care providers doing business with the state Medicaid program are subject to unannounced visits by state officials to ensure they have proper billing procedures and are equipped to run the business. At the same time, the state and industry in January will launch an unprecedented effort to fingerprint caregivers statewide, enabling DHS to discover automatically when one is convicted of a crime.

"There are some wonderful people out there providing necessary cares," Kerber said. "But there is always that balance between the burdens we place on legitimate [providers] to catch those who aren't. We are making headway."

Chris Serres • 612-673-4308

Glenn Howatt • 612-673-7192