A 94-year-old nursing home resident was held in a "hammerlock" position so she could not move while a Medicaid provider forced her to give an impression for dentures. She had been without teeth for 50 years and didn't want them. When she left the exam room, her face, neck and dress were covered with impression plaster.

That anecdote is buried in the nearly 300-page report from the State of Michigan's Auditor General released last month. The report cited many problems it found in its bi-annual review of the Department of Community Health.

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Scott Strong, a spokesman for the Auditor General, said the Department of Community Health had been warned during two previous years and didn't sanction that problematic provider, breaking state and federal laws by not doing so.

In fact, Strong said despite a "significant history" of health, safety, welfare and billing violations that go back as far as 1994, the provider was still allowed to be enrolled in Medicaid. Strong said this provider collected more than $2 million after the Department of Community Health was warned.

He also said that the Department of Community Health's Medical Services Administration violated the law by not sanctioning the provider. And because there are no sanctions, the provider could be back in business and re-enroll with Medicaid after it's done serving a one-year suspension in February.

The state wouldn't release the name of the troubled provider, citing privacy laws. The Department of Community Health would only state that though it is "technically possible" for that provider to re-enroll, the Medicaid program uses "numerous criteria" to determine eligibility.

State Rep. Dave Agema, R-Grandville, said that is just one more example of misconduct on the part of the Department of Community Health and he wants administrators fired.

"When you see it two or three times, it is dereliction of duty," Agema said. "If this was a civilian job ... somebody's head would roll. But it is a government job. And then they say, 'We disagree with the Auditor General's findings.'

Agema called for the next governor to "clean house" and for the Auditor General to have more authority.

The latest Auditor General's report devoted three pages to the troubled provider and gave several examples of problems.

The audit found the provider to be a "threat to the beneficiaries' health, safety and welfare." Also, DCH's analysts were unable to tell from records which beneficiaries received medical services. And the provider billed Medicaid and another source for the same service.

State law requires the DCH director to sanction providers that double bill, but that never occurred.

The provider agreed to charges that it wrote prescriptions to employees for controlled substances without a controlled substance license.

Additional charges included billing for services not provided.

The Auditor General had singled out the provider two years earlier, but DCH continued to allow the provider to participate in Medicaid and paid that provider $2.4 million from Oct. 1, 2007 through Sept. 30, 2009, according to Strong.

In the many layers of Medicaid bureaucracy at that state level, there was some punitive action taken against the provider.

In January 2005, the DCH's Bureau of Health Professions issued a cease and desist order that required the provider to stop having unqualified dental assistants take on radiography duties.

In January 2006, the provider was given one year's probation, community service and fines.

In February 2010, the Bureau of Health Professions suspended the provider's license for a year.

According to the audit, the DCH said that it reported the provider to the Department of Attorney General's Medicaid Fraud Control Unit. DCH stated that it did not sanction the provider because the Medicaid Fraud Control Unit did not file criminal charges against the provider and the provider was appealing the state's findings. However, state law stated the provider had to be sanctioned by DCH.

Janet Olszewski, director of the Michigan Department of Community Health, submitted a letter to Michigan Capitol Confidential about the overall Auditor General report.

"The OAG identified some significant issues and MDCH is committed to fixing them," Olszewski wrote. "These problems are primarily related to documentation, recordkeeping, and the implementation of new automated systems.  They are not fraud, waste, abuse, or mismanagement."

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See also:

Auditor General Sees Dead People ... Getting Paid

Dept. of Community Health Refutes Report Showing Dead People Getting Paid