Finding fraud? Nebraska mental health pros say they’re leaving Medicaid over ‘aggressive’ audits

The envelope didn’t surprise Dru McMillan. But when she opened the letter and read the number, she felt sick.

“If you agree with the determination, please submit a draft in the amount of $21,042.73 within 30 days,” it read.

McMillan is a Lincoln therapist. She has long served a majority of patients who use Medicaid, the government-funded cheap or free insurance, to pay for mental health care. 

The letter came from an auditor working for one of three massive insurance companies the State of Nebraska is paying $4.25 billion, over six years, to oversee the state’s Medicaid program. It accused McMillan, through various technical measures, of overbilling the government for services she provided her patients.

The veteran therapist had been audited before and figured she could make this right without having to pay back nearly a quarter of her business’ annual revenue. She combed back through 13 clients’ files and sent more paperwork, believing it would show she hadn’t overbilled – that it would clear up any confusion.  

It didn’t. She appealed, lost and started negotiating a settlement. She also canceled her Medicaid contract in February – meaning she will no longer see many of her longtime patients. 

McMillan thought that would be the end of it. Then she got another letter from another company the state pays to oversee Medicaid. She was being audited again.

“I’m terrified,” McMillan said. “I don’t know exactly what they want in my notes because nothing is good enough.”

McMillan is one of 28 providers across Nebraska who told the Flatwater Free Press that they’re victims of new, ultra-aggressive Medicaid audits that conflate minor mistakes with fraud. Collectively the group of therapists and a few nurses has been ordered to repay $600,000, according to data they provided. 

Some want to see accountability. Others want out.

“If you treat people like crap and they’re scared to work with you, people leave,” said Jessyca Vandercoy, executive director of the National Association of Social Workers’ Nebraska chapter. 

Since May the organization has surveyed 126 mental health providers and found about 20% are so unhappy with the state’s Medicaid program that they plan to leave it. The bureaucracy of Medicaid is a hassle, Vandercoy said. Audit anxiety might push more away, even as Nebraska struggles with a shortage of mental health providers.

But there’s no exodus apparent in state numbers, according to data provided by the Nebraska Department of Health and Human Services.

The number of Nebraska mental health providers billing Medicaid has actually been rising in the past decade, that data shows. The state has also raised pay for Medicaid mental health services in recent years.

Audits are “important to protect taxpayer funds,” said DHHS spokesperson Jeff Powell.  He pointed to a Beatrice therapist who allegedly collected $47,000 for phony therapy sessions, which investigators discovered after talking to her supposed clients. Many providers interviewed by the Flatwater Free Press said their clients were not interviewed. 

“DHHS appreciates the dedicated work of our providers and is willing to discuss additional trainings that may help in document retention,” he wrote.

But other state leaders see potential problems with these audits.

Sen. John Fredrickson, a Democrat from Omaha and a licensed mental health provider, said he’s considering introducing legislation that would close “loopholes” and halt the practice of companies “clawing back” full payments from providers based on technicalities, when no one disputes the client received services. 

“That’s unethical,” he said.

Many providers feel the audit process has become less forgiving, turning up small mistakes that prompt giant repayment demands, said Maureen DeRyke, another audited Lincoln therapist. Many believe human review has been replaced by an automated system that strips out nuance and sometimes makes little sense.

Powell said the audit process starts with a data analysis to identify outliers. Then clinical teams review documents. State employees look over auditors’ findings before they’re mailed to providers.

The state did replace its case management system in 2020, Powell confirmed, updating it from a Microsoft Excel spreadsheet that required manual updates to one that streamlined organization and fraud detection.  

Many providers told the Flatwater Free Press they believe they’re being automatically flagged for billing sessions lasting longer than 53 minutes.

These providers say they often avoid this by billing less time than they actually work, taking less pay — pay for sessions ranging from 38 to 52 minutes can be $30 less — to limit their audit exposure. The Nebraska Association of Social Workers survey found 42% of providers feel they have to “downcode” their sessions.

The companies hired by the state are also asking for far too much documentation, providers and advocates say, pointing to a state law that caps records requests at 200 pages. 

Spring Landfried, a provider in North Platte, said her agency had to send 2,000 pages, mostly regarding her clients.

Powell, the DHHS spokesperson, said the 200-page law does not apply to the companies managing the state’s Medicaid system, which provides coverage for about 400,000 Nebraskans.

Preparing documents for the state, and dealing with the aftermath of her audit, cost Landfried $35,000 in lost wages, she estimated.

Originally the company wanted her to pay back $32,918.47. It reduced that to $46.83 after Landfried appealed, challenging the audit’s process.

Landfried remained confused after winning her appeal. Acceptable work she’d done in the past with her clients — many of whom have severe, persistent mental illness — now seemed suddenly, inexplicably, noncompliant. 

Landfried said the only training she received from Nebraska Total Care, one of the state’s three Medicaid contractors, was a course offered on its website. The course was led by an employee of Centene, the insurance company valued at $31.7 billion that owns Nebraska Total Care. It offered only vague instructions on compliance, she said.

When she asked questions, Landfried got sent from Nebraska Total Care to Centene to DHHS and back to Nebraska Total Care. Landfried said she never got a clear answer, but in February her practice’s contract was terminated without cause. She’s still waiting to hear why.  

“All we want to do is practice,” Landfried said. “We want to know what compliance is. And I want to know why requesting that is so damn hard.”

The audits have motivated some to find new ways to advocate. DeRyke, the audited Lincoln therapist, is starting a nonprofit she says will help small mental health providers who she believes are being targeted because they have less money and power to fight back.

“I think it’s, ‘Let’s suck these people dry,’” DeRyke said. 

The state is doing more audits for lower dollar amounts compared to a decade ago, according to DHHS data, but “under no circumstances” are smaller providers targeted, Powell said. The averages may also be misleading, Powell said, because they include a rise in investigations that don’t involve money.

The system has caused confusion as some providers struggled to understand the outcomes of their audits.

An investigator told McMillan she didn’t have necessary documentation, sign notes quickly enough or use exact time stamps when recording her sessions. Other providers were dinged for making corrections without adding documentation explaining them. Some were penalized for having therapy notes that read too similarly from week to week.

“This isn’t about, ‘Oh we have concerns, correct these mistakes,’” McMillan said. “It’s, ‘We want our money back.’”

The two Medicaid companies providers accuse of aggressive audits did not respond to specific questions. UnitedHealthcare, the world’s largest health insurance company, asked for provider names, which the Flatwater Free Press declined to give. Several providers interviewed by Flatwater Free Press did not want to be named for fear of retaliation. 

Nebraska Total Care sent a statement but did not respond to additional questions.

“As a provider of government-sponsored healthcare, program integrity audits are a central function of Nebraska Total Care,” wrote CEO and Plan President Adam Proctor.  “In partnership with Nebraska’s Department of Health and Human Services, we work to balance our support for providers, care for members, and effective use of taxpayer dollars to support the health of Nebraskans.”

McMillan said she loved her clients, but began to transition them to other providers before canceling her Medicaid contracts in February.

“Saying, ‘We’re not going to pay you for that because you didn’t write well enough’ is insane,” McMillan said. “It’s demeaning, it’s humiliating and it’s not OK.”

Lawrence Gardiner is one of few Black men providing counseling services in Lincoln, he said. All his clients use Medicaid. Most are kids of color. He knows if he stopped taking Medicaid clients it would leave a void. But he’s stopped returning calls for new clients after being audited earlier this year. 

“I feel like a criminal right now,” said Gardiner, who’s appealing an order to repay $36,000.

Vandercoy with the National Association of Social Workers said she had never before seen audits like this. The group is now trying to understand how many providers have been affected, and whether it’s driving them to quit Medicaid.

“It’s the hoops, it’s the lack of transparency, it’s the process, the forms … It’s really just not set up as a collaboration,” Vandercoy said.

And audits aren’t the only concern, according to the group’s recent poll. About a third of providers say the Medicaid companies are too involved in politics — they’ve given a combined $295,465 to Nebraska candidates since 2021, according to state campaign finance records.

Centene, the largest political donor, also paid the state $29.3 million, part of a national settlement for overbilling prescription drugs.

Many providers want to work with the system and improve it, said DeRyke, the Lincoln provider starting an advocacy organization. For others, it feels like time to pull the plug. 

“The state is missing that we’re all dropping Medicaid, not because we don’t like our clients,” McMillan said, “but because we have lives and can’t afford to go through this financially and emotionally.”