Wednesday, September 8, 2010

Anatomy of Child Welfare Fraud: Targeted Case Management

Part One: Medicaid Targeted Case Management


Most people have heard of Medicare fraud, and the campaign to stop it, but nobody knows about Medicaid fraud in child welfare.

Contrary to popular belief, the largest federal funding source in foster care is not Title IV-E, Title IV-A Emergency Assistance or Title XX of the federal Social Security Act, it is Title XIX (Medicaid) and the area that we are addressing is Targeted Case Management.

Medicaid Targeted Case Management Report to Congress 2008

Targeted Case Management (TCM) is considered a “pay-as-you-go” program. This means, whenever there is a bill in child welfare, it will be paid, in full by the feds. Unlike Medicaid Federal Financial Participation (FFP), TCM in foster care and adoption is 100% covered which means the states do not pay any portion. Then, a portion of these funds was set aside to suspend regulation, called a moratoria, on TCM.

So, now we have a basic formula for the child welfare fraud:


TRANSLATION: It becomes financially beneficial for states to place children and keep them in foster care than to provide community-based services because there is no regulation of the legitimacy of TCM costs.

TCM funds, well, exactly what it says, the management of cases from targeted populations. So what are targeted populations?

Targeted populations are children who are considered as “at-risk”, meaning the likelihood of them being in need of child welfare services is substantial because they meet the following criteria:

At or below the Federal Poverty Level
Single parent homes (this includes divorced and widowed)
Sibling groups
Living in low-income neighborhoods
Special needs (education, medical, psychological)
Disabilities (caregivers and/or children)
Lack of medical coverage

To first properly understand Medicaid fraud in child welfare, we must conduct a forensic autopsy, meaning, it may only be examined after the billing has been submitted and costs reimbursed. We now identify what the U.S. Department of Justice identifies as “revenue-maximizing fraud schemes”:


Single Parent goes and applies for Food Assistance Program and Medicaid

Child is in need of medical resources and receives Social Supplemental Income (SSI)

Single Parent has more than one child

These are only the basic factors that qualify a child for immediate unnecessary and improper removals but are the first stages of the TCM fraud scheme, a fully federally funded program.

1. Child is place in foster home and not with relatives.

2. Child is sent to unnecessary medical and psychological services.

3. Child is billed for non-existent services.

4. Child is sent to medical and psychological services where the physicians have financial stakes in the child-placing agency.

5. Psychologist/Child-placing agency recommends Termination of Parental Rights to the court.

6. Judge has financial interest in the child-placing agency.

7. Parental Rights are Terminated and child is adopted.

8. States continue to receive the child’s SSI monthly payment during the TCM payment period (Double-billing).

9. Once the child is adopted, the child is issued a new Social Security Number (SSN) along with a new name. States continue to receive SSI funding under the old SSN

This is only one identified example of Targeted Case Management fraud schemes in child welfare. The complexity of TCM child welfare fraud varies from state to state, and from child placing agency to child placing agency, but they exist, in a multitude of shapes and forms.

Concerns of the pervasiveness of these revenue-maximizing schemes have been federally expressed, but ignored by Congress.

If you know, or suspect Medicaid fraud in child welfare, report it.


This is the first is a series of identified state revenue-maximization schemes to stop fraud in child welfare.