States share Medicaid fraud funding woes

Members of a congressional panel this month listened to repeated tales of inadequate funding and antiquated technology preventing numerous state Medicaid agencies from effectively combating fraud cases that result in billions of dollars lost nationally each year.

Some state Medicaid agencies are critically underfunded and rely on 20-year-old computers to detect and track fraud, forcing them to seek the help of the private sector in identifying and recovering money from fraudulent claims, Medicaid officials told members of the House Commerce Committee's Oversight and Investigations Subcommittee. Medicaid may have lost $17 billion to fraud and abuse during fiscal 1998, according to General Accounting Office reports.

Subcommittee chairman Fred Upton (R-Mich.), called for aid from the federal level, specifically from the Health Care Financing Administration and the Office of the Inspector General at the Department of Health and Human Services.

"As anyone who has recently purchased a personal computer can tell you, technology is changing so rapidly...a [computer] purchased five years ago is hopelessly antiquated," Upton said in his opening remarks. "How, then, can we expect Medicaid state agencies, some of which are still using 10- or 20-year-old computer systems to process and review Medicaid claims, to have any hope of uncovering these new, highly complex fraud schemes?"

Penny Thompson, program integrity director at HCFA, said in her testimony that the agency is modifying its National Fraud Investigation Database, which contains Medicare information, to include Medicaid cases. That should help the states' efforts in identifying and stopping corrupt providers nationwide.

The agency also recently established a national fraud and abuse electronic bulletin board, co-sponsored by the American Public Human Services Association, to enable states to share information on pertinent issues, she said.

However, Thompson was not convinced that technology alone could solve the problem. "Technology can play a great role, but it doesn't substitute for expertise, resources and commitment that are [essential] for fraud programs," she told FCW.

Last year, in an effort to fight Medicaid fraud and waste, HCFA hired Malcolm Sparrow, an expert on health care issues, to conduct a series of seminars nationwide at which state personnel could discuss their concerns.

Those seminars determined that many states have "inadequate technological infrastructures and a basic inability to interrogate databases efficiently to ferret out proper claims."

HCFA chief information officer Gary Christoph did not attend the subcommittee hearings but did offer his views on technology's role in the Medicaid fraud process. "As we get more sophisticated in analyzing information [and data], there are ways that technology can help us, [specifically] through data mining," he said.

"I'm very interested in exploring the new data mining techniques because it's a tool that can help, but it's very difficult...because you can't eliminate 100 percent of the risk. You need to put tools in place to try and help you because what you might find today, you won't find tomorrow," Christoph said, alluding to the highly sophisticated schemes and mobility of individuals attempting to commit Medicaid fraud.

Subcommittee vice chairman Richard Burr (R-N.C.) said he was impressed with HCFA's technological efforts and plans to fight fraud that are under way.

But he noted that the overall structure of the system—including policies in which the federal government matches only 50 percent of money spent to combat fraud by states; the brief, 60-day time period for states to return overpayments made to recipients with federal money; and the lenient suspension rules meted out to individuals convicted of Medicaid fraud—need examination and legislation. He said the time for fact-finding missions is over.

"You don't need to [research] it—you need to deal with it and find a solution," Burr said. "[Frankly], HCFA doesn't hear the state folks." He said he anticipates legislative language that would institute some changes. "But I hope HCFA adopts them on their own" before that, he said.

A HCFA World Wide Web site located at contains a listing of state statutes that target Medicaid fraud. It includes links to states' legislation on program integrity as well as contact information for the programs.


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