Federal Funding for State Medicaid Fraud Control Units Still Needed

Medicaid fraud costs American taxpayers millions of dollars annually. To help reduce the losses, Congress enacted the Medicare-Medicaid Anti-Fraud and Abuse Amendments authorizing 90 percent Federal matching payments for fiscal years 1978-80 as an incentive for States to establish Medicaid fraud control units. It was expected that this financial relief would enable many State Governments to establish new units or expand existing ones and that, after the units had been in operation a few years, they would begin to recover from prosecutions amounts equal to or exceeding their operating costs. The Department of Health and Human Services (HHS) Office of the Inspector General is responsible for certifying, funding, and monitoring the fraud control units. GAO reviewed 7 of the 30 existing State certified fraud units.

From their effective certification dates through December 31, 1979, these units reported potential recoveries of about $19 million, about one-half of their total operating costs. The additional Federal funding has resulted in increases in the number of staff, cases handled, and convictions. Fraud units also deter Medicaid providers from attempting fraud and have had an impact on changing State legislation and Medicaid regulations to make it easier to identify fraud and to provide for more stringent penalties. If some type of continued Federal funding is not provided, many units will cease to exist or will operate at a reduced level of effectiveness. New fraud units in other States are not likely to be established. Situations which have hindered the effective operation of State fraud units have included: (1) potential fraud cases which have not contained sufficient information to make a meaningful evaluation of fraud prosecution potential; (2) investigations which have been hampered by problems in dealing with State Medicaid agencies; (3) problems in hiring and retaining staff because of low salaries, personnel ceilings, and the uncertainty of Federal funding; and (4) fraud unit staffs which have not received adequate training. Two of the fraud units reviewed did not implement the formal procedures which HHS has approved to assure prosecution.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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