Medicaid: fighting fraud: states are sniffing out Medicaid swindlers and saving a lot of money.

• Author: Comlossy, Megan
• Position: MEDICAID

Combating Medicaid fraud and abuse is no easy task. And while some states do it better than others, all face enormous challenges. Limited resources, mountains of transactions and sophisticated scams make for a very tough, but extremely important, job. Just ask Texas.

Dr. Michael David Goodwin, an orthodontist, devised a scheme to defraud the Lone Star State's Medicaid program out of more than $2.6 million. From 2008 to 2011, he billed for services that weren't medically necessary and during times when he wasn't even in town. His bonanza ended when he was caught by state and federal anti-fraud agencies.

Goodwin was by no means a lone ranger. Texas has been hit hard by similar attempts to defraud Medicaid in the past few years. After dental and orthodontic reimbursement rates increased for children's Medicaid in 2007, spending on those services in Texas shot through the roof, much more than in other states. It's not that children in Texas were in greater need of orthodontic services or receiving more expensive care than kids in other states. Rather, it was a handful of orthodontists putting braces on children who didn't need them that was behind the spike in reimbursable care. Some dental clinics were even going so far as to entice Medicaid patients with gift cards and other incentives.

These cases of crooked orthodontists, physicians, home health care providers, pharmacists or other providers are not unique to Texas. Nor are fraud, waste and abuse new to Medicaid programs across the country.

The sheer size and complexity of the joint state-federal Medicaid program--60 million Americans covered at a cost of more Megan Comloss)' is a policy associate in the Health Program at NCSL. than $450 billion annually--put it at considerable risk for violations. Exactly how much is unknown, although estimates by the Centers for Medicare and Medicaid Services suggest tens of billions of dollars each year.

"There are too many instances of providers engaging in waste, fraud and abuse," says New York Senator Kemp Hannon (R). And many agree with him. Although this is not a new issue, states and the federal government have renewed their efforts to protect the integrity of the Medicaid program as one way to contain rising costs.

Fraud Fighters

Even in an age of bitterly divided politics and polarization, legislators--from both sides of the aisle and at the state and federal levels--agree that detecting, deterring and combating Medicaid fraud is a way to hold down costs. So what can lawmakers do?

"Our role is to create an environment where auditors, investigators and other fraud-fighters have the statutory authority and budgetary resources to do their jobs," says Utah Senate President Wayne Niederhauser (R).

How states do that looks somewhat different from one state to another. Federal funding, support, technical assistance and, in some cases, collaboration from federal agencies, aid states' efforts to combat fraud.

But day-to-day responsibility for fighting fraud rests with state entities. Depending on the state, these may include Medicaid agencies, Medicaid fraud control units, Medicaid inspectors general, attorneys general, auditors or others.

To address the reports of costly...