Waste of the Day: Improper School Medicaid

As a school consultant, Boston-based Public Consulting Group filed $1.6 billion worth of improper or unsupported Medicaid claims for school-based health services over the past decade, Open the Books found in a new review. 

Billing school health services to Medicaid? Not what its designers intended

Key facts: The group contracts with state governments to survey school employees and determine how much of their time is spent on health-related services that can be billed to Medicaid, according to federal auditors.

The company is paid a fee based on how much Medicaid money flows into the state, arguably giving them a financial incentive to help states collect as much federal Medicaid money as possible.

Federal audits beginning in 2016 claimed the company “improperly altered school employees’ responses” to survey questions in order to overbill Medicaid. For example, the company coded a speech-language pathologist’s work developing an English Language Arts curriculum as a Medicaid service, as well as a social worker’s routine phone calls to parents. Schools are only supposed to bill Medicaid for direct healthcare such as nurse appointments or occupational therapy. 

A 2017 audit found that New Jersey improperly billed $606.7 million under the company’s guidance. Previous New Jersey contractors had estimated that school staff spent 16% of their time on Medicaid-billable services. Once Public Consulting Group began producing the estimates, that number increased to 62%.

A 2021 audit found $439 million of Medicaid costs in New York with no supporting documentation, again submitted by the same company. A 2024 audit found $551 million in improper claims in Pennsylvania.

Hiring the fox to guard the henhouse

New York disputed the audit’s findings and hired an outside expert to supposedly prove the state had submitted proper documentation. 

The expert? Public Consulting Group, of course. The federal inspector general blithely dismissed New York’s response, writing, “PCG originally coded the moments and was therefore reviewing its own work.” 

New Jersey and Pennsylvania disputed the federal government’s findings as well. None of the three states have agreed to return the money to Washington.

Michigan agreed to repay $954,408 worth of improper payments identified in 2016.

Summary: There are dozens of steps the federal government can take to reduce improper payments, but increasing oversight of states and private companies that are frequently cited for potential errors is a common-sense measure.

This article was originally published by RealClearInvestigations and made available via RealClearWire.