Govt. Blows $102 Mil To Catch $19 Mil In Medicaid Fraud

In a shameful—and costly—example of government incompetence, a special program created to combat Medicaid fraud has cost American taxpayers more than five times the amount of overpayments it has identified.

That means the anti-fraud project, known as National Medicaid Audit Program, has cost the U.S. government $102 million to operate since 2008 while identifying only $19.4 million in overpayments. It seems like a bad joke, but unfortunately it’s not. Instead it’s one of many examples of government inefficiency that ends up sticking it to the people.  

The idea behind the National Medicaid Audit Program was a good one. It was launched to tackle a monstrous epidemic of fraud and overbilling in the joint federal-state healthcare program for the poor. Medicaid has the second-highest (Medicare, the government’s health insurance program for the elderly is first) estimated improper payments of any federal program. In fact, the feds say that $21.9 billion of Medicaid’s federal expenditures of $270 billion in fiscal year 2011 involved improper payments.

That means the government paid for medically unnecessary treatments and services or procedures not covered by the program. In some cases the service or treatment was billed but never provided. It’s bad situation for everyone. So what does the government do? Create yet another deficient program to police the corruption. Problem is that a bunch of idiots were apparently hired to run it.

At least that’s what most people will likely conclude after reading a federal audit about the Medicaid anti-fraud program published this week by the nonpartisan Government Accountability Office (GAO), which serves as the investigative arm of Congress. In a nutshell, the National Medicaid Audit Program uses incomplete federal data to crack down on fraud so the majority of probes failed to find any, even when it was there.

You can’t make this stuff up! It’s all laid out in the GAO’s 43-page report. It’s not like the Medicaid fraud patrol is in denial that using incomplete data doesn’t cut it. Its own figures show that audits that used incomplete data only identified overpayments 4% of the time. This is why the program is moving toward a “collaborative approach” in which complete data is considered to identify potential fraud. So now they use this new approach and guess what? It works better and uncovered more than $12 million in overpayments right off the bat. Imagine that.