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December 12, 2018/For Immediate Release


To conduct a survey of operations at the Michigan Department of Health & Human Services (“MDHHS”) specifically regarding the Home Help Program, a multi-million-dollar operation1 designed to deliver non-medical Medicaid-paid services to individuals in need of hands-on care related to activities of daily living.


Using documents obtained through the Freedom of Information Act (FOIA) and other sources, we have identified three blatant acts of fraud carried out by the MDHHS bureaucracy that took place during the terms of outgoing Governor Rick Snyder. The frauds may have resulted in millions of dollars in misspent taxpayer money and likely denied proper care to countless members of Michigan’s elderly population, causing untold suffering and dooming many to being prematurely warehoused in institutional care at great human, medical and fiscal cost. Our findings may be the tip of the iceberg regarding an out-of-control state bureaucracy with a $25 billion budget2, driven by civil servants and political appointees more interested in protecting their fiefdoms than in delivering top quality health care to the state’s most vulnerable residents.

This is a slow-motion human crisis unrecognized by most officials, medical professionals and residents.


Our findings should be considered through the lens of the Flint Water crisis that left at least 12 people dead of Legionnaires’ Disease3, scores seriously injured and countless children suffering from the long-term consequences of lead poisoning.

MDHHS Director Nick Lyon has been indicted on two counts of involuntary manslaughter and official misconduct for his mishandling and cover-up of the Flint situation. In August 2018, a District Court Judge found that Lyon was “corrupt” in his handling of the Flint-area Legionnaires’ disease outbreak. The judge ruled that Lyon “willfully and neglectfully refused” to protect the lives of two Flint area men who died from Legionnaires’ disease, by failing to notify the public of the outbreak after the Flint drinking water crisis went public4. Somehow, he remains in office, free on bail, with taxpayers footing well-over $1.6 million in his legal defense bills5. It was on Lyon’s watch that these three acts of fraud occurred, crimes that have so far been ignored, with the known perpetrators still on the payroll and others, still unnamed, likely continuing to collect paychecks and continuing to inflict harm.

Like the victims of Flint, the victims of these frauds are a very vulnerable group – elderly, frail and disabled people who require help with daily living skills.

And like in Flint, Lyon and the rest of his MDHHS crew are looking to avoid responsibility by laying blame elsewhere, in this case making false accusations of one of the state’s largest home help providers, a family-run, respected-business that has been delivering home health service to Michigan residents for the past 18 years.

MDHHS personnel disabled a federally approved computer program that was designed to monitor home health programs to guide delivery of the proper services to the right patients while also preventing fraud. The program was intentionally disabled in 2010 by MDHHS insiders to “to ease the burden on claims processing staff.”

The questionable, perhaps illegal act, went unnoticed for seven years.

In 2010, MDHHS officials were rolling out new computer programs as part of ongoing-implementation of CHAMPS (Community Health Administrative Management System). The system was designed to streamline billing, payment, and oversight of tens of millions of dollars a year in annual home health services for people requiring assistance with daily living skills including bathing, eating, dressing, toileting, mobility, and other Medicaid approved non-medical services.

Home Help is a growing phenomenon across the country designed to allow patients, especially seniors, to avoid institutionalized care for as long as possible6. The program has proven medical and humanitarian benefits and results in massive cost savings. A review of typical billings by ███ for services delivered at home indicates that Medicaid frequently paid for only two hours of service per day – an average of $1,120 per month, as compared to $7,900 per month in fees in a nursing home.

The computer program is called as “Edit 1221.” It was designed to screen vouchers for home help reimbursements to ensure that patients were getting proper home health services and that providers were submitting proper verification backup with their bills.
In other words, it was designed to help patients and to identify fraud.

When it was first deployed in 2010, MDHHS workers said Edit 1221 was creating a burdensome number of false positives. Instead of simply fixing the glitch, a bureaucrat decided to disable the software in June 2010, according to emails from MDHHS provided under FOIA. This allowed home health aide payments to be made without review, with checks automatically created and sent out while the case files slipped down a dark hole without a determination if appropriate care had been provided.

It is not known at what level the decision was cleared, or if Washington was consulted to determine if the action took MDHHS out of federal compliance.

Internal memos obtained via Freedom of Information Act requests show the decision to disable Edit 1221 was made “to ease the burden on claims processing staff” with no reference to patient care or fiscal oversight.

Another internal document states that the glitch was repaired within six months but “for an unknown reason [it] was just never switched back.”

It remains unclear how many millions of dollars in unscreened payments that would have been blocked by Edit 1221 were actually made. Since many thousands of payments were made with the Edit 1221 review disabled, it is impossible to tell if patients were receiving appropriate services. It is also impossible to tell if the mandatory linkage between home services and nursing/therapy (see Fraud # 3 below) led families to send loved ones to nursing homes prematurely and, if so, how many patients and how much in higher charges resulted.

FRAUD # 2:
MDHHS discovered in March 2017 that Edit 1221 had been disabled seven years earlier. Instead of reporting the ongoing error to proper authorities, a small group of MDHHS bureaucrats launched a cover-up operation that included a straw horse attack on a well-respected provider to divert attention from their mismanagement. The cabal unleashed an audit of the provider by the Office of Inspector General (“OIG”), rather than asking for an outside review of their own internal errors.

A series of emails show that MDHHS personnel discovered in March 2017 that Edit 1221 had been disabled in 2010.

The emails paint a picture of bureaucrats attempting to dodge responsibility and focus on alibis rather than a deep dig into the cause and consequence of the decision to disable Edit 1221.
We have not been able to determine how far up the chain of command discussions of the discovery went. However, it seems clear that there was no intent to fully brief either the state or federal OIGs, or to contact any other law enforcement agency about possible criminality.

The scheme was hatched in the MDHHS Bureau of Medicaid Policy and Health Systems Innovation. Internal documents indicate that someone in that office was informed in February 2017 that Edit 1221 had been disabled and that potentially questionable bills “are currently flying through for payment.”

On April 19, 2017, a “policy specialist” from that office sent an official request to the OIG demanding an audit of nine years of payments to ███ Health Care LLC, one of the state’s largest providers of Home Help services. The request was based on review of three files out of the several thousand cases handled by ███ of West Bloomfield, MI. The request alleged that ███ had received more than $600,000 of questionable payments, providing scant detail about why the bills might have been deficient.

The request to the OIG did not ask for an inquiry related to the disabling of the Edit 1221 software, and did not mention that it could have been re-enabled after six months instead of seven years. The request demanded an audit of ███ because of its standing as one of the state’s largest providers.

The aforementioned policy specialist has a record of overstepping her bounds. In 1993, she appealed a demotion for a job then described as “Departmental Specialist VIII,” a job description similar to the current post. The demotion was made after a supervisor determined that the specialist “cannot be, and is not…perceived or recognized as an expert; but more approximately should be recognized as a Resource Person/Troubleshooter.”

Ironically, the Civil Service Commission found in the employee’s favor, ruling it was unreasonable to presume that an analyst might have “sole” authority to make policy decisions. The commission ruling ordering reinstatement to the higher paid position added that other people with similarly deficient qualifications had been promoted in MDHHS, so it wouldn’t be fair to hold this individual to the prescribed standards.

The OIG later asked the policy office for clarification as to whether there had been any update to rules governing restrictions regarding home health aide payments. Emails indicate the state continued to insist there had been no such update.

That was a misstatement. In February 2016, federal officials changed Medicaid regulations to allow more people to obtain home health services. It could not be determined if the information sent to the OIG was a deliberate misstatement or an error.

After weeks of cursory review, OIG investigators went to ███’s offices on June 28, 2017, demanding nine years of records for 70 patients. On Dec. 20, 2017, OIG released its findings, alleging that there were issues in 69 patient claims. The OIG demanded ███ refund the state $997,000 for services provided between July 2015 and September 2017. That is an increase of more than 50% of what the original audit request alleged. The finding did not allege fraud but rather a technical deficiency. ███ appealed. An MDHHS hearing officer reviewed the case and said it was too complicated for her to reach a decision. It is currently being scheduled for a broader internal investigation.

To this date there is no indication that OIG has reviewed any of the underlying issues related to Edit 1221, and is continuing to pursue ███.

More than two years after federal officials mandated changes to state programs that would deliver more home services to patients, the MDHHS providers’ manual continues to use the outdated requirements. It is unclear how many elderly Michigan patients are not receiving services to which they are entitled. It is also unclear how many Michigan patients have been forced into institutional settings because of the failure to update the manual. And it is also unclear how many millions of dollars have been wasted.

The third fraud is ongoing and should be immediately rectified by the incoming administration in Lansing.

When Medicaid was launched in 1965, it was designed to provide medical services for the elderly and disabled, the most vulnerable residents in our nation. The nature of care and service models have evolved over the years. In the 1960s, the model focused on institutional care. Over the past decade, medical professionals and advocates recognized the benefits of keeping people in their own homes and out of institutions7. Remaining at home brings seniors a better quality of life. And it saves taxpayers money. According to a review of ███ bills, Medicaid reimburses home health services at a greatly discounted rate – paying far less for most patients who remain at home instead of being sent to a nursing home. every dollar that would have been spent in-patient reimbursement for institutional care.

The order for home help services comes from the patient’s doctor (or physician’s assistant) and is given to registered Medicaid providers who employ the aides. The provider bills the state monthly on a fixed per-hour fee for services provided.

Originally, home help services were only provided to patients receiving skilled nursing and physical therapy. That model was good for patients suffering short-term difficulties like broken bones or sprains or even short-term illnesses from which they were expected to recover. During the recovery period, Medicaid pays for aides to assist patients who have trouble with daily living skills – dressing, getting in and out of bed, toileting, bathing etc.

The original computer model – Edit 1221 – was designed to make sure that every home health bill had attached documentation of ongoing nursing and/or therapy service.

Over the years, advocates claimed that many elderly people had different needs. Many aging patients require assistance with daily living skills, because of aging-driven problems that cannot be addressed with therapy. The required link [to skilled nursing and physical therapy] made no sense, advocates said.

While the debate about adopting a new model was underway in Washington, Lansing decided it was easier to stick with the old model – ignoring the possible medical and financial benefits of unlinked home and health services. It is not clear just how many Michigan residents were forced into nursing homes because of this outdated thinking.

On Feb. 2, 2016, Washington issued new guidelines: No longer were Home Health aide services linked to nursing and therapy. They would from that day forward be made available to a larger population of folks facing the vagaries of old age.

MDHHS ignored the directive for at least two years. After the March 2017 discovery that Edit 1221 had been disabled, policy staff insisted in emails to superiors that no such update had been issued by Washington.

In March 2018, the OIG again asked the policy office if aide payments required linkage to nursing/therapy. A policy analyst said it did, even though that same person was preparing a bulletin announcing the belated Washington-ordered change. At the time the analyst was facing serious charges by the state board of nurses relating to alleged failure to report serious injury to a nursing home patient. Although those charges were later dismissed, they were very much alive at a time the cover-up was being hatched.

On May 25, 2018, the state’s policy office issued a “Clarification” bulletin to home health aide providers saying:

“Home health aide services cannot be contingent upon the beneficiary needing nursing or therapy services.”

Despite that “clarification” and a subsequent similar bulletin issued in August 2018, the current version of Michigan’s provider handbook, published in October 2018, still insists on compliance with the now-outdated regulation8. It states: “Home health aide services are covered only when ordered by the attending physician and performed in conjunction with direct, ongoing skilled nursing care and/or PT.”

We suggest an immediate appeal to Governor-Elect Gretchen Whitmer and the Office of Inspector General of the federal department of Health & Human Services to launch investigations into the detailed acts of fraud committed by MDHHS.

We believe the incoming administration could move quickly to bring MDHHS into compliance with federal regulations and afford a broader range of service to Michigan seniors. We believe a federal review is called for, given the system-wide dysfunction of MDHHS.

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