NCPA - National Center for Policy Analysis

Government Triples Money Recovered from Medicaid Scams

October 25, 2011

Records show that the federal government has more than tripled the amount of money it has recovered through efforts to stop Medicaid fraud in the past six years.  In that time, the federal government has ramped up spending on measures to reduce fraud, including increased funding for Medicaid Fraud Control Units (MFCUs).  While this might seem counterproductive to money-saving goals, returns from discovered fraudulence have far outpaced increased spending, says USA Today.

  • In 2010, the government gained $1.85 billion through Medicaid fraud prosecutions, compared with $573 million in 2004.
  • During that same period, grant money to state MFCUs saw a 57 percent increase, from $131 million to $205.5 million.
  • This increase in funding for antifraud agencies has also been accompanied by augmented federal regulation to make it more difficult to cheat the system.
  • For example, a substantial piece in last year's health care law requires electronic records systems for all medical professionals who provide health care for Medicaid and Medicare patients.
  • Federal lawmakers have also considered proposals that would grant greater oversight over state MFCUs so that their effectiveness could be monitored.

Fraud-prevention efforts have also been escalated as a product of the economic environment: with all states looking to cut spending, attacking fraud is a relatively attractive option.  This motivation stems from the financial structure for Medicaid, which receives funding from both federal and state governments.  Furthermore, because the incentives to reduce fraud are internalized within the decision-making process, efforts to prevent fraud continue with little additional spurring.  Further investigations are exploring the benefits of information sharing, while other studies assess the applicability to Medicare of antifraud strategies in Medicaid.

Source: Kelly Kennedy, "Government Triples Money Recovered from Medicaid Scams," USA Today, October 20, 2011.

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