CMS Not Doing Enough to Fight Medicaid Fraud, GAO Finds

Published June 15, 2015

Medicaid, the national government health care program meant to help provide health care for the impoverished, is riddled with fraud, according to a Government Accountability Office (GAO) study that analyzed Medicaid payment data from the year 2011 in four states: Arizona, Florida, Michigan, and New Jersey.

The agency found about 8,600 Medicaid beneficiaries received payments in two or more of the four states that year, in violation of federal law, totaling at least $18.3 million. It also discovered Medicaid payouts to approximately 200 deceased beneficiaries, totaling about $9.6 million.

GAO also found approximately 50 health care providers billed Medicaid even though they were excluded from the program for patient abuse and fraud. Those bills amounted to approximately $60,000.

GAO recommends the Centers for Medicare and Medicaid Services (CMS) do more to prevent fraud by providers and patients by providing new guidance to states about screening Medicaid beneficiaries more thoroughly and giving the states full access to the federal government’s records on Medicaid providers.

“Every dollar [stolen] is committing a crime,” said Mara Mellstrom, legislative manager at the Foundation for Government Accountability. “This is no different from stealing from your neighbor.”

Amount of Fraud Unknown

Almost 70 million Americans are currently enrolled in Medicaid, according to a report released by the U.S. Department of Health and Human Services in February. The report states Medicaid spending grew by 6.1 percent in 2013, to $449.4 billion, and constituted 15 percent of national health expenditures.

CMS projects health care expenditures financed by federal, state, and local governments will account for 48 percent of national health care spending and a total of $2.5 trillion by 2023. This is a 44 percent increase from 2012, when total government health care spending was approximately $1.2 trillion.

“Ultimately, due to the nature of the enrollment program, it is difficult to tackle the fraud,” Mellstrom said. “The depth of Medicaid fraud is truly unknown, since so many states do the minimum in addressing the issue from the get-go.”

If states used a better screening approach or took a more active role in catching scammers, they could achieve a 2 to 5 percent savings in Medicaid spending, Mellstrom says.

“It’s about bringing welfare programs into the 21st century, and it’s really [about] making use of your resources,” Mellstrom said. “We need to backtrack and see how we got here.”

Misplaced Incentives Cited

States don’t have much incentive to flush out waste, fraud, and abuse in programs like Medicaid, and this leads to misallocated resources, says Thomas Miller, a resident fellow at the American Enterprise Institute.

“Improvised coverage doesn’t provide the care promised and it’s not particularly well-administered, and therefore some of that money gets diverted into other places,” Miller said.

Some states are moving toward a private-sector managed-care approach that enables slightly better policing of fraud, Miller says.

“There’s been mixed results in that,” Miller said. “It’s probably a little bit better, but it doesn’t mean the problem has been solved.”

Jehadu Abshiro ([email protected]) writes from Dallas, Texas.

Internet Info:

Government Accountability Office, “Medicaid: CMS Could Take Additional Actions to Help Improve Provider and Beneficiary Fraud Controls”:

CMS, “National Health Expenditures 2013 Highlights”: