Stop Medicaid Fraud: Coordinate State & Federal Response with False Claims Act

05/29/2013 // Justice News Flash: Featured Column // Kathleen Scanlan // (press release)

While Medicare is a federally funded health care program, Medicaid was created as a joint federal-state health insurance program that serves approximately 60 million low-income Americans. Before the program’s creation, low-income Americans struggled to get healthcare through an unreliable hodgepodge of local, state, and federal assistance programs. Medicaid now provides health care to the elderly, disabled, children, and pregnant women in every state. While each state administers its own Medicaid program, and eligibility requirements vary from state to state, they all must meet federal guidelines to qualify for the federal dollars that make up a significant portion of the program’s funding.

According to the Congressional Budget Office (CBO), the federal government spent $251 billion on Medicaid in 2012. Federal Medicaid spending is also expected to increase to as much as $572 billion by 2023 because of increasing health care costs, the aging of the population and the expansion of eligibility under the Affordable Care Act in 2014.

Perhaps not surprisingly, the frauds commonly found on the Medicare program are also perpetrated on the Medicaid program and cost hundreds of millions if not billions every year. These can include upcoding, double-billing, false reporting, paying kickbacks and off label marketing of pharmaceuticals, to list a few.

With costs expected to increase in the next decade, fraud prevention is a critical component to the program’s long-term survival. However, since Medicaid is a joint federal-state health insurance, efforts to fight fraud must involve coordinated federal-state action. At the federal level, there is a national Health Care Fraud and Abuse Control Program (HCFAC). There is also an investigative unit in each state, the Medicaid Fraud Control Unit (MFCU), which is able to coordinate with other states and the federal government. Congress also passed legislation to incentivize the states to ramp up their own state false claims acts to facilitate the recovery of state funds lost through fraud. When allocating recovery in a Medicaid fraud case, a state with a false claims act with liability and penalty provisions that are at least as expansive as the federal False Claims Act and reward and promote whistleblower (qui tam) actions on par with the federal law will receive 10 percent more recovery than they would otherwise. For example, when Medicaid fraud occurs and there is recovery of fraudulently paid claims, the federal government apportions 10% of its recovery to a state with a false claims act that meets Congress’ criteria.

Congress’ message to the states is clear: it’s so important to recover as much state and federal money as we possibly can that we’re willing to give you 10% of our recovery to make sure it happens. The directive to include whistleblowers is equally important, and numerous states have heeded the message. Some, like California, have acknowledged the key role whistleblowers play and have enacted rewards even larger than those in the federal False Claims Act. Under California’s law whistleblowers are entitled to up to 50% of the recovery as reward, compared to 30% allowed under the federal law.

The coordinated efforts to combat Medicaid fraud have already yielded results. In 2012, the 50 MFCUs conducted 11,660 investigations related to Medicaid fraud and $835.7 million in federal Medicaid money was returned to the U.S. treasury. Collectively, the states reported that $2.9 billion of lost money was recovered through civil and criminal cases. False claims acts and whistleblowers are critical to the integrity of the Medicaid program itself.

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