Scammers Exploit Medicaid Coverage Losses for Illinois Residents

Fraudsters take advantage of the Medicaid redeterminations to defraud one of the most vulnerable groups into paying for their health benefits.

In exchange for federal funding during the COVID-19 epidemic, states paused their process of removing people who were not eligible from their Medicaid rolls. According to the Kaiser Family Foundation, this led to Medicaid enrollment reaching a record high of 97 million recipients. Congress gave the states 14 months to finish the process of removing ineligible people from Medicaid. As the state starts to reduce its Medicaid enrollment, many people are expected to lose their coverage.


States are investing in technology, and working with to manage this process. Scammers bet that states’ efforts will not suffice and call and text Medicaid enrollees to tell them they’ll lose their coverage if they don’t pay $500. Lindsey Browning is the director of Medicaid Programming at the National Association of Medicaid Directors which represents state officials.

Browning stated that the situation is “really unfortunate” because Medicaid was trying to send out a clear message about what people needed to do (and when) and this has made it more difficult.

She said that most state Medicaid agencies refer individuals who are scammed to the office of their Attorney General.

A spokesperson for the Centers for Medicare & Medicaid Services stated in an email that Medicaid members who have been victims of telephone scams are encouraged to contact their local police or report their experiences to the Federal Trade Commission. The FTC declined to respond to an interview request.

According to a report by the Urban Institute, the of adults who are enrolled in Medicaid plans do not know that the process of redetermination is underway. According to the Health and Human Services Department, up to 7 millions of those who lose coverage due redeterminations are dropped because they do not have current contact information.

Joe Records, counsel with Crowell & Moring where he represents primarily managed care companies, explained that fraudsters also take advantage of the lack of experience of the states and federal government in investigating phone scams which target Medicaid beneficiaries. These agencies charge individuals or groups that bill Medicaid agencies improperly.

Records stated that “[State or federal regulatory offices] were not designed to handle something as complex as consumer protection.” They’re designed at their core as a tool to ensure program integrity and that Medicaid is not being leached from.

Although some states have set up healthcare-specific bureaus within their Consumer Financial Protection Bureaus, phone scammers are difficult to track down.

Records stated that “These are whack a mole types of propositions where it is hard to pinpoint where the scam originates and difficult to shut it down.”

Caleb Smith, the marketing director of Enroll Wyoming, an organization that connects people with health insurance and focuses on connecting them to nonprofit organizations, said they began hearing about Medicaid fraudsters in late March, who were calling Medicaid beneficiaries, demanding money for coverage. According to an estimate, 17,000 Wyoming residents could lose Medicaid coverage once the state has completed its eligibility checks.

Smith said, “I believe everyone should do more.” “A scam which makes money will be copied or adapted. This is what will happen.”

Smith stated that scammers had previously impersonated Enroll Wyoming staffers to sell short-term insurance policies or fake coverage. Smith said that he had never before seen scammers demanding money to maintain Medicaid benefits. Smith, the nonprofit’s director, said that it is trying to spread the word by posting alerts and notifying people on its website, Facebook accounts, and newsletter.

He said, “We are still in the early stages and we don’t know what impact it will have.”

According to Kristen Challacombe of the Arizona Health Care Cost Containment System, the Arizona Health Care Cost Containment System’s deputy director for business operations, the website was updated to include information on the Wyoming scam, and to make it clear how people can report fraud to the agency. She said that the Office of Inspector General of Arizona does not have any experience in investigating schemes which threaten individual Medicaid members.

Challacombe explained that the Office of the Inspector General was set up to investigate referrals from members and providers who commit fraud. “I don’t think we’ve examined the angle of member fraud because I don’t believe it has been prevalent until recent activity.”

Challacombe stated that Arizona will text all Medicaid recipients to let them know officials will contact them via text or robocall to inform about redeterminations, but they will never request payment. Challacombe added that the state has also extended its $121.3-million contract with Accenture in order to allow two-way texting via its Medicaid enrollment technology system. State representatives will be able to respond to each individual query.

Arizona Medicaid has found that texting is the most effective way to reach enrollees. Challacombe reported that last year, officials sent robocalls to Medicaid members, as well as physical letters, to remind them to update contact information. Text messages received the highest response rates. According to Modern Healthcare, more than 504,000 Arizonans are likely to lose their coverage when redeterminations take place.

Challacombe stated that this is the area where they will be looking to build a trust and understanding among members.

is a writer for Crain’s sister magazine.