NCPA - National Center for Policy Analysis


September 24, 2004

Despite new procedures put in place over the years to control Medicaid overpayments, widespread fraud and abuse of the system by health care providers is still prevalent, according to a new report by the Government Accountability Office (GAO).

Examples include:

  • In California, more than 15 clinical laboratories illegally billed the state for $20 million worth of tests that physicians never requested, and optical store owners defrauded the state of almost $3 million by filing false claims for eyeglass replacements.
  • In Florida, a hospital received about $2.9 million in Medicaid overpayments for services that were miscoded.
  • In Indiana, a pharmaceutical company defrauded the state's Medicaid program of about $2 million by purposely using higher reimbursement codes for prescription drugs.

States would like to recover some of the payments. For instance, Abbott Laboratories will pay state Medicaid programs almost $50 million because of fraudulent billing practices.

The varied and substantial cases of Medicaid fraud or abuse that have been uncovered around the country have prompted program integrity units and legislatures in many states to take active roles in prevention and detection efforts, notes the GAO.

In their attempts to limit improper payments, states have pursued a broad range of methods, such as tightened provider enrollment and advanced claims review techniques. Some states report identifying substantial cost savings, and further efforts are likely to generate positive returns on such investments, says the GAO.

Source: Report to the Chairman, Committee on Finance, U.S. Senate, "Medicaid Program Integrity: State and Federal Efforts to Detect and Prevent Improper Payments," Government Accountability Office, July 9, 2004.

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