Uncovering Fraud and Waste in Medicaid

WASHINGTON, D.C. – Medicaid issued nearly $22 billion dollars in improper payments in Fiscal Year 2011, higher than any government program except Medicare.  Two House Oversight and Government Reform subcommittees, including the Subcommittee on Government Organization, Efficiency, and Financial Management chaired by Congressman Todd Platts (PA-19), examined this and other financial accountability issues regarding Medicaid at a hearing Wednesday. 

The difficulty in exposing Medicaid fraud was brought to light during the hearing by Richard West, a Vietnam War veteran who started receiving home health care services in 2003.  Mr. West discovered that his home health care company had billed Medicaid for approximately 735 hours of nursing care that he never received. After several government agencies refused to act on Mr. West’s findings, he was forced to file a whistleblower lawsuit under the False Claims Act. The ensuing investigation uncovered widespread fraud and resulted in the company reaching a $150 million civil settlement with the federal government and 41 states. 

“I am a Vietnam Veteran, and never took or asked for any services that I didn’t need,” Mr. West testified.  “If someone is willing to steal from a sick old vet, I would like to think my government would help.”

“Healthcare fraud is sometimes called a faceless or victimless crime, and we often talk about it in terms of money lost,” said Rep. Platts. “As a result, it can be easy to overlook what a devastating impact it can have on fraud victims.”

Medicaid has long been identified as a high-risk program due to its vulnerability to fraud and improper payments.  The U.S. Government Accountability Office (GAO) has questioned the adequacy of oversight efforts within Medicaid. In 2006, the Centers for Medicare and Medicaid Services (CMS) created the Medicaid Integrity Program to better identify fraud and initiated two new systems to improve data quality and financial accountability.  GAO recently issued a report finding that both of the new systems were inadequate and underutilized and GAO could not find any evidence of financial benefits in implementing the new systems, despite the fact that CMS has been using them for over five years.

In addition, many states are not reporting required Medicaid data, and even when they do, it often takes a year for CMS to receive and verify the data – making it extremely difficult to prevent fraud before payments are issued.  While CMS spent $42 million on contractors to identify fraud through audit work in 2010, GAO has noted “pervasive deficiencies” in CMS’s oversight of its contractors.  The potential for Medicaid fraud continues to grow. The new health care law will increase Medicaid spending by over $600 billion between 2014 and 2021.

Wednesday’s hearing continued the Subcommittee’s oversight of Executive Branch financial management and accountability issues throughout the 112th Congress.  Recent hearings have examined financial management deficiencies at the U.S. Department of Defense, improving data protection at the U.S. Department of Homeland Security, and reviewing Internal Revenue Service policies regarding tax identity theft. Today’s hearing was conducted jointly with the Oversight Subcommittee on Healthcare, District of Columbia, Census and the National Archives.