Structural changes to Medicaid funding necessary to reduce fraud

Overhauling the way states receive Medicaid funding from the federal government could pave the way to improved state-based fraud and abuse prevention, according to one healthcare policy expert. 

In an editorial for the San Diego Union-Tribune, Sally C. Pipes, president and CEO of the Pacific Research Institute, argues that Medicaid's current structure "actively encourages fraud." In an effort to expand Medicaid programs across the country, states currently receive at least one dollar from the federal government for every dollar spent on the program. This approach, Pipes writes, is a disincentive for fraud and abuse detection, since every dollar identified as fraudulent translates to one less dollar of federal funding.

Instead, Pipes says the federal government should replace the current funding system with "fixed block grants," which would give states the autonomy to spend Medicaid funding as they see fit, and incentivize them to identify waste and abuse.

"Almost immediately, states would look for ways to improve their own programs' efficiency and wring out waste and fraud," Pipes writes. "After all, they'd get to keep the savings. Further, block grants would make state and local officials more accountable. At present, they can too easily blame Washington for Medicaid's failures."

For years, the Government Accountability Office (GAO) has identified Medicaid as a high risk program for fraud and abuse, and in June, the agency told Congress that the Centers for Medicare & Medicaid Services needs to do more to prevent millions in improper payments. Previously, GAO has called for states to show the cost benefits of anti-fraud systems.

Meanwhile, the White House has called for a more aggressive approach to improper payments made through Medicare and Medicaid, and backed that request up with $34 million in additional discretionary funding for the Health Care Fraud and Abuse Control program for 2016, adding to the $378 million allocated in fiscal year 2015.

To learn more:
- read the San Diego Union-Tribune editorial