Federal Funding for State Medicaid Fraud Control Units Still Needed

HRD-81-2: Published: Oct 6, 1980. Publicly Released: Oct 6, 1980.

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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.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should provide for funding the establishment and operation of State Medicaid fraud control units beyond September 1980.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to issue guidelines on essential elements that should be included in a fraud unit's formal procedures with local prosecutors or working relationships with the State attorney general to assure statewide prosecution of fraud cases.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to develop criteria, in consultation with fraud units and State Medicaid agencies, to guide Medicaid agencies on the extent to which a potential fraud case should be developed before referral to the fraud unit and what types of data and analysis should be included in the referral.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to decertify those State fraud units that do not meet the statewide prosecution requirement of the law and regulations.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to determine which fraud units do not have adequate procedures for following up on the amount of overpayments actually collected and require them to establish appropriate procedures.

    Agency Affected: Department of Health and Human Services

  5. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to develop a fraud unit training manual incorporating the most effective techniques and methods of dealing with Medicaid provider fraud based on the experience gained by the fraud units.

    Agency Affected: Department of Health and Human Services

  6. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to verify, on a sample basis, the accuracy of the statistics included in the State fraud units' quarterly reports on their fraud investigation activities.

    Agency Affected: Department of Health and Human Services

  7. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of HHS should direct the HHS Inspector General to reassess the the adequacy of the arrangements now in effect in States where the attorney general's office does not have statewide criminal fraud prosecution authority, or if it does, the unit is located outside that office to assure that prosecution can be carried out as needed statewide.

    Agency Affected: Department of Health and Human Services

 

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