Social Day Care Centers Are Ripping Off Medicaid

Social day care centers, community facilities that cater to the elderly, are being accused of abusing Medicaid, according to a report in the New York Times.

Under a new law enacted by Governor Andrew Cuomo, managed care, the type of service offered at the centers, became mandatory for people receiving home services. The hope was that New York, which has the largest Medicaid budget in the country at $54 billion, could steer the costs away from expensive long-term home care like nursing homes to less expensive and safer community friendly centers.

The centers, which have ballooned from eight programs to 192 in just two years, are supposed to treat patients with severe disabilities and medical problems. The Times described the scenes at centers meant to cater to the frail:

Scores of elderly Russian immigrants played bingo under the chandeliers of a former funeral parlor in Brooklyn on a recent Monday, with a free dinner and door-to-door transportation from anywhere in the city.

Nearby, older people speaking Chinese filled a supermarket-size storefront with vigorous games of table tennis, billiards and mah-jongg, and ordered free lunch from a takeout menu featuring minced pork, beef and salty fish.In Bensonhurst, Brooklyn, at the new R & G Social Adult Day Care Center, known locally among elderly immigrants for luring clients with cash and grocery vouchers, most people there for lunch did not stay to eat. Instead, many walked briskly toward the subway carrying bags stuffed with takeout containers, and two elderly men rode away on bicycles with the free food.

If something seems out of whack in this picture it’s because the financial rewards for the centers are huge. These new social day care centers are taking in seemingly healthy, active elderly people because, in New York City, Medicaid reimburses these centers per member to the tune of $3,800 each, per session, compared to the statewide average reimbursement of $93 per member.

Right now, there is little oversight or regulation. As a result, there has been an aggressive push by the centers to recruit elderly members no matter how healthy they might be. The Times described how the centers tempt elderly with financial incentives:

At Mr. [Warren] Chan’s Asian Senior Day Care center on 18th Avenue, around the corner from R & G, Liang Mei King, 77, was one of several clients who said they were offered financial inducements to join R & G.

“I went once to see,” she said through an interpreter, interrupting her mah-jongg game. “If you get someone else, they give you $50. And each week, there’s a certain amount of money. One day there’s $5, a $10 grocery coupon, or an unlimited MetroCard. If you don’t want the MetroCard, they offer $125 in cash.”

Mr. Chan said other centers were resorting to the same tactics, and elderly immigrants who did not know better accused him of pocketing benefits himself.

While the redesign of the state’s Medicaid system was enacted to curb costs, the loopholes have costs spinning out of control. Part of the problem is that Medicaid is not overseeing the centers, and instead leaves oversight to the managed care plans that pay out to the centers. That, however, is a shoddy system, since there’s little incentive for managed care plans to crack down on centers, since the managed care plan gets a cut of the payment.

Valerie Bogart, a lawyer for the New York Legal Assistance Group explained the problem to the Times:

“The whole thing is going to end up costing the state much more money. It’s really up to the managed care plans to be the watchdogs now, and it’s like the fox watching the chicken coop, because they have an incentive to make money from these centers, too,” Bogart said.