State Enforcement Efforts Disappointing In Combatting Medicaid Fraud

According to a recent report issued by the Inspector General of the Department of Health and Human Services, State enforcement results regarding Medicaid fraud cases have been disappointing. Virtually every state in the country has a State Medicaid Fraud Control Unit whose principle job is to uncover and detect fraud and to prosecute the offenders. Such units are also tasked with the responsibility of attempting to recover monies fraudulently obtained from the Medicaid program. Because Medicaid is approximately twenty (20%) percent of the total federal budget and involves staggering amounts of money, one would hope that State Medicaid Fraud Control Units (MFCUS) were aggressive in their efforts at addressing this problem. Unfortunately, the HHS Inspector General, Daniel Levenson, studied the efficacy of state enforcement efforts through state MFCUs and found that on average, only twelve (12) cases per year were even referred to the State Medicaid Fraud Control Units by their State Medicaid Agencies.

According to the Inspector General’s report, twenty-six (26) Fraud Control Units said that in the last year of the study (which was conducted from July, 2002 through June, 2005) they received less than twelve (12) referrals each year from State Medicaid Agencies averaging therefore less than one referral per month. Thus, over half (½) of the states in this country report less than one case per month being referred to the State Medicaid Fraud Control Unit for investigation concerning fraud.

The report of the Inspector General clearly establishes the need for the passage of State False Claims Acts. Like the Department of Justice, the government itself is poorly equipped to deal with undetected fraud when it comes to Medicare and Medicaid in general. The Department of Justice has recognized that the most important enforcement tool it has to root out fraud is the Federal False Claims Act which encourages whistleblowers /informants to come forward. Because the states themselves have such a poor track record in uncovering fraud and referring cases for investigation, it is clear that each state in this country needs its own State False Claims Act to encourage the reporting of fraudulent claims submitted to Medicaid by whistleblowers. The more encouragement for such reports by whistleblowers the more likely it is that fraud will be detected and addressed.

The Inspector General’s report has clearly established the need for increased enforcement in this area. The report did not attempt to take into consideration performance standards for Medicaid agencies nor could they determine how well the State Medicaid Agencies perform. Nonetheless, the report is instructive in establishing that the vast majority of states have failed to effectively address fraud through internal enforcement within the State Medicaid programs they administer. This being the case, one would hope that the Inspector General’s report would encourage Legislatures throughout this country to enact State False Claims Acts so that states might have the same experience that the federal government has experienced vis a vis increased enforcement in this area.

The ranking Republican of the Senate Finance Committee, Senator Charles Grassley of Iowa, after review of the Inspector General’s findings, was critical of the efforts of some of the states. “You can’t recover what doesn’t get reported” Grassley said. “And if . . . state agencies are reporting only part of the fraud, then whistleblowers and others probably account for a good part of the rest of the recoveries that would otherwise be lost to Medicaid fraud.” To his credit, Senator Grassley has pushed for legislation that would encourage states to reward whistleblowers financially. Of course, we continue to hope that the State of Georgia and other states similarly situated which have yet to enact their own versions of the Federal False Claims Act on a state level will act to do so without further delay.