NCPA - National Center for Policy Analysis


July 21, 2005

The New York Medicaid program has been misspending billions of dollars annually because of fraud, waste and profiteering, according to a year-long investigation by the New York Times.

The size and scope of problem is alarming:

  • New York spends $44.5 billion annually on Medicaid, which is far more than any other state including California -- whose Medicaid program covers about 55 percent more people.
  • New York's Medicaid budget is larger than most states' entire budgets, and costs nearly twice the national average -- roughly $10,600 for each of its 4.2 million recipients (one in every five New Yorkers).
  • The Government Accountability Office (GAO) estimates 10 percent of all health care spending nationally is lost to fraud and abuse; but in New York, a former chief state investigator of Medicaid fraud and abuse believes 40 percent of all claims in New York are questionable, an amount approaching $18 billion a year.

In interviews, state health officials denied that Medicaid was easily cheated, saying they were doing an excellent job of overseeing the program. But investigators say many doctors, clinics, pharmacists and other providers routinely exaggerate their billings, often claiming to do more work than they really performed, or substituting an expensive procedure for a minor one. Others invent visits that never occurred.

The Times says despite the debate, and the enormous sums at stake, the state has never formally studied how much of the huge government investment in Medicaid is lost to criminal activity and abuse.

Source: Clifford J. Levy and Michael Luo, "New York Medicaid Fraud May Reach Into Billions," New York Times, July 18, 2005.

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