Medicare fraud recovery efforts have been "hugely successful" compared with Medicaid anti-fraud results, according to two studies released today by Taxpayers Against Fraud.
Federal Medicaid fraud recovery totaled just $43 million in 2001, while the total collected for Medicare fraud was more than $1 billion, said researchers commissioned by TAF, a Washington, D.C.-based organization devoted to promoting use of the whistleblower provisions of the False Claims Act.
The absence of state false-claims legislation in most states and the variance in priorities among regional U.S. attorneys general have contributed to the discrepancy, according to attorney Andy Schneider, lead author of the Medicaid report. Schneider is a principal of Medicaid Policy, a research and policy consulting firm based in Washington, D.C.
"With so many states under pressure to cut back their Medicaid programs because of budget constraints, we can and should do more to take back every dollar possible from those who defraud Medicaid," Schneider said.
The federal False Claims Act does not establish liability for looting state funds, he said. Yet only 11 states and the District of Columbia have enacted state statutes that would allow them to do so. Schneider recommended that Congress encourage states to enact their own false claims acts with strong protections and incentives for whistleblowers, similar to the federal law.
He pointed to the federal False Claims Act as a model of success. The cost-effectiveness of the federal government's Medicare fraud recovery effort has improved from a ratio of 8-to-1 in 2000 to nearly 9-to-1 in 2001, according to the Medicare study conducted by Jack Meyer. Meyer is president of New Directions for Policy, a nonpartisan research and policy organization based in Washington, D.C.
More Medicare cases are brought and settled under the False Claims Act than Medicaid cases, and the largest Medicare settlements are considerably larger than those for Medicaid cases, according to Schneider's study. Indeed, the Meyer report concluded that the increase in Medicare fraud recoveries was due in large part to the $745 million settlement with for-profit hospital company HCA.
"Our experience with Medicare is a lesson in the FCA's importance," Meyer said in a written statement. "If the federal government enforces FCA with vigor and respect, it will continue to save taxpayers large amounts of money, contribute to Medicare's fiscal viability, and to deter big-time fraud."
Because federal funding for Medicaid is about 60%, Medicaid settlements return less money to the federal government than Medicare-related settlements, which may be one impediment to more federal involvement in Medicaid fraud recovery, Schneider said. However, False Claims Act cases involving the pharmaceutical industry and Medicaid are increasing, said James Moorman, president of Taxpayers Against Fraud.
Jim Sheehan, an associate U.S. attorney from Philadelphia, said the impact of greater fraud enforcement activity and investment at the state and federal level can deter fraud and predict lower fraud losses for both the Medicaid and Medicare programs.
"If you show an active enforcement presence, they will back off," Sheehan said.