Medicaid

The Medicaid program cost state and local governments more than $150 billion in 1993 for health services and supplies. It is highly vulnerable to fraud because of its size, structure, target population, and coverage. The ensuing drain on program funds is hard to gauge, but state Medicaid officials believe it may be as high as 10 percent of program expenditures. Prescription drugs are a very appealing target. Schemes include pharmacists routinely adding medications to customers' orders and clinics inappropriately giving Medicaid recipients completed prescription forms, or scrips, that can be sold on the street to the highest bidder. Some pills costing 50 cents at the pharmacy have been resold for as much as $85. Although states have been tackling Medicaid fraud with some success, the problem persists. Officials in many states say that most leads go unpursued, cases take too long to resolve, and penalties are light even for those convicted. Most say that a lack of resources hinders oversight, investigations, and prosecutions. GAO suggests that the Health Care Financing Administration take the lead and develop an overall strategy to guide states in their struggle against Medicaid fraud.