Medicaid Fraud More than $63 Million in 5 States Alone, GAO Report Finds

October 6, 2009 - 7:13 PM
A California man took on the name of a dead person to receive taxpayer-funded health care for more than three years, charging $200,000 to the Medicaid system, including $2,870 to buy controlled substances under an assumed identity.
( – A California man took on the name of a dead person to receive taxpayer-funded health care for more than three years, charging $200,000 to the Medicaid system, including $2,870 to buy controlled substances under an assumed identity.
A Houston-area physician’s assistant kept on signing the name of the doctor who once employed her after that doctor had died. The prescriptions, many of which were also covered by Medicaid, were also for prescription pain killers.
More than 1,800 prescriptions were filled for people who are dead and another 1,200 prescriptions were written with the signatures of deceased doctors, according to an investigation of five states by the Government Accountability Office (GAO). And those were only two of the startling findings in a report that discovered $63.2 million in waste in five states alone.
That GAO report issued last week found 65,000 cases of fraud in the Medicaid prescription drug program in California, Illinois, New York, North Carolina, and Texas. The report also found widespread doctor-shopping by Medicaid recipients.
Medicaid, launched in 1965, is a federal program administered by the states to provide health care financial assistance for low-income persons and families. A little more than 60 million people used Medicaid in 2007 at a cost of $319 billion.
In the new GAO report concerning $63.2 million in fraud and waste in five states, at least  $200,000 in Medicaid funds were used to pay for prescriptions written for dead people, while $500,000 in Medicaid was used to pay for prescriptions signed with the names of deceased doctors.
“After enrolling beneficiaries, Medicaid offices in the selected states generally did not periodically compare their information against death records,” the GAO report found.
In addition to its annual federal budget, the Medicaid program will receive $87 billion in federal assistance from the economic stimulus bill passed earlier this year. On a related funding note, Medicaid prescription drug costs accounted for more than $23 billion in fiscal year 2008, or about 7 percent of the entire Medicaid budget.
The GAO said Medicaid should take strong action to prevent debarred doctors and pharmacies from getting federal dollars; identify doctor shopping; identify duplicate enrollments; and “periodically identify deaths of Medicaid providers and prevent the approval of claims when appropriate.”
A spokesperson for the Center for Medicare and Medicaid services could not be reached for comment Friday. But the report said that CMS officials agree with the recommendations.
The report confirmed that 70,636 Medicaid beneficiaries in the five states probed visited at least six doctors and up to 46 different pharmacies to get prescriptions for controlled substances during fiscal year 2006 and 2007. The most doctors one person visited was 112, the report said.
Nine Medicaid recipients visited more than 51 doctors seeking prescriptions, while 396 visited between 21 and 50 doctors. The report further found that 926 Medicaid recipients visited between 16 and 20 doctors, while 5,066 visited between 11 and 15 doctors. The largest number of recipients, 64,239, had visited between six and 10 doctors.
In a separate matter from the substance abuse cases, Medicaid paid $2.3 million to 65 health care providers and the pharmacies, even though these providers and pharmacies were barred from receiving federal funds.
“The offenses that led to their exclusion from federal health programs included Medicaid fraud and illegal diversion of controlled substances,” the GAO report said. “Our analysis understates the total number of excluded providers because the selected states either did not identify the prescribing medical practitioner for many Medicaid claims (i.e., the field was blank) or did not provide the taxpayer identification number for the practitioner, which was necessary to determine if a provider was banned.”
The GAO report faulted both the state governments and the federal Center for Medicare and Medicaid Services for the lack of oversight that allowed the fraud.
“States are primarily responsible for the fight against Medicaid fraud; however, the selected states did not have a comprehensive fraud prevention framework to prevent the abuse of controlled substances,” the GAO report said. “CMS is responsible for overseeing state fraud and abuse control activities but has provided limited guidance to the states to prevent fraud and abuse of controlled substances.”