Combating Medicaid Fraud and Abuse

QUICK SUMMARY

States are targeting Medicaid fraud and abuse with an array of policies and tools. To help policy makers learn from one another, the State Health Care Spending Project combed through federal data to gather hundreds of practices found to be promising by state and federal Medicaid agencies. Our report highlights the importance of this work and some results of anti-fraud and abuse measures in our online database.

The Problem

Fraud and abuse in Medicaid waste dollars needed to deliver important health care services and can subject patients to unnecessary or ineffective tests and treatments.

These problems add pressure to state and federal budgets, too. In 2012, an estimated $19 billion—or 7 percent—of federal Medicaid funds was absorbed by improper payments, which include fraud and abuse as well as unintentional mistakes such as paperwork errors. Improper payments totaled an estimated $11 billion—or 9 percent—from states' Medicaid budgets in 2010, the most recent year for which data are available.

Finding Solutions 

Drawing on reports from the federal Centers for Medicare & Medicaid Services (CMS), we built a database that makes it simple to learn about anti-fraud and abuse strategies used in a specific state or at different stages in Medicaid's interactions with providers and patients.

The CMS regularly invites states to identify which of their own approaches they believe are effective in reducing fraud, abuse, or wasteful errors in Medicaid programs. The agency publishes the findings, highlighting practices it considers “noteworthy.”

Our database centralizes the hundreds of anti-fraud and abuse practices found in our review of 85 CMS reports available online as of February 2013. Policy approaches from all 50 states and the District of Columbia are included.

How We Organized States' Practices 

While fraud and abuse can be committed by both Medicaid providers and patients, our review of the CMS data revealed that the vast majority of states' actions are focused on providers (e.g., medical practices, pharmacies, managed care organizations).

In general, states have three opportunities to protect against fraud and abuse among providers:

1. Screening them before and after they are accepted into the program;
2. Reviewing claims before they are paid; and
3. Reviewing claims after they are paid and recovering those deemed improper—known as “pay and chase.”

The amounts saved or recovered through these practices can vary widely. But by giving policy makers easy access to a wide array of anti-fraud and abuse practices, we aim to help them ensure that more Medicaid funds support legitimate services that improve the health of the millions of Americans counting on the program.

The State Health Care Spending Project is an initiative of The Pew Charitable Trusts and the John D. and Catherine T. MacArthur Foundation.