State Medicaid programs lose "substantial" amounts of money to fraud and abuse, and CMS oversight of state program integrity efforts may be insufficient compared with the risk of greater losses, the Government Accountability Office said in a new report. The CMS dedicated eight staff positions and budgeted an additional $26,000 in fiscal 2004 for compliance reviews and other oversight of state fraud control units. The GAO report described several instances of large-scale fraud, including 15 clinical laboratories that billed Medi-Cal, the California Medicaid program, $20 million for services not rendered, but the report also credited a Medi-Cal pilot program with preventing $58 million in fraud in its first year.
Senate Finance Committee Chairman Chuck Grassley (R-Iowa), who requested the report, urged expanded federal oversight of state fraud-fighting efforts in a letter to HHS Secretary Tommy Thompson and CMS Administrator Mark McClellan. In the letter, Grassley said that "fraud and abuse is widespread" throughout the Medicaid program and state fraud-control units "are fighting an uphill battle." Grassley said total federal and state Medicaid spending is projected at $300 billion for 2004, compared with $244 billion in 2002. Obtain a summary or PDF of the report. -- by Mark Taylor