Federal Budget Cuts Are Undermining Efforts To Crack Down On Medicare And Medicaid Fraud

A combination of federal budget cuts have left Medicare and Medicaid anti-fraud operations understaffed and unprepared to keep pace with rampant abuse in America’s health entitlement programs, according to officials with the Department of Health and Human Services (HHS). The disparity is likely to be exacerbated in the face of further cuts as millions of poor Americans gain health coverage for the first time through Obamcare’s Medicaid expansion in 2014.

The Center for Public Integrity (CPI) reports that several of HHS’s Deputy Inspectors General testified to a congressional panel in June that their investigative departments are set to lose over 400 staffers — over 20 percent of its anti-fraud workforce — in the coming year.

That amounts to hundreds of potential fraud cases that can’t be investigated by HHS, which in turn harms consumers and wastes government money. “We’re operating with a reduced budget in the face of the growing program,” said one HHS Deputy Inspector General, Gary Cantrell, during his congressional testimony. “And just last year alone, our office closed down 1,200 complaints due to lack of resources. Those are complaints that came through the door that we didn’t have the resources to investigate further to determine whether it was a viable criminal case or not.”

The most common types of public insurance fraud target poor and elderly Americans on government assistance. Providers can bilk these unsuspecting victims by “upcoding” the cost of their services, self-referring patients for unnecessary procedures, and even stealing their beneficiaries’ identification numbers to profit off of their government-funded benefits.


Entitlement fraud crackdowns were bolstered by funding in the 2009 stimulus bill, as well as Obamacare provisions that allow HHS and the Justice Department to analyze medical claims data that indicate fraudulent practices and focus efforts on regions with a history of abuse. Those practices have proven extremely successful overall — recently-released government figures show that the Justice Department recovered almost $15 billion in Medicare fraud money over the last four years, likely contributing to the program’s improving solvency.

But according to CPI, the financial resources for these efforts are dwindling with the expiration of several old programs. The timing could prove problematic, since millions of Americans will be put on Medicaid for the first time in 2014 thanks to the health care reform law. And since there is still widespread confusion over Obamacare’s enrollment provisions, poor Americans are alluring targets for shoddy insurance scams. In fact, there have already been reports of Obamacare “insurance card” schemes cropping up in advance of the health care law’s full implementation.