Medicaid Fraud Oversight Issues

Because Medicaid program spending is projected to exceed $900 billion by fiscal year 2025, curbing Medicaid Fraud will save significant taxpayer dollars.  One of the biggest problems for the Medicaid program is the lack of accurate, complete, and timely data.  As one might expect, the work and oversight function of the Centers for Medicare and Medicaid Services (CMS) is severely limited when it is dealing with incomplete and/or inaccurate information.

Nolan Auerbach & White is an experienced Healthcare Fraud Law Firm representing courageous whistleblowers.

So, why is there such a paucity of accurate information?  Most of the blame can be traced to the decentralized nature of the Medicaid program.  Medicaid, as a federal-state partnership, relies to a great degree on information from the 50 state-Medicaid programs throughout the country.  The GAO has noted that data from some states are reported years late, and others have failed to report complete data.

Recently, CMS implemented a national repository for Medicaid data – the Transformed Medicaid Statistical Information System (T-MSIS).  While implementing the T-MSIS initiative is a multi-year process, CMS has apparently already seen improvement in the frequency of data reported by the various states, and in the timeliness of reporting.

That said, several states were still not reporting all of the required data through the T-MSIS.  In addition, different states tended to format the T-MSIS data differently, making it more difficult for CMS to be able to do cross-state comparisons.

According to the GAO, CMS to date has not conducted a full fraud risk assessment for Medicaid, and has not designed a risk-based antifraud strategy.  Without those components, CMS is less able to ferret out the kinds of fraud that cost the Medicaid millions, or even billions of dollars.  With a proper fraud risk assessment, CMS would be able to identify risks, estimate likelihood of fraud, and judge the potential impact of such fraud.  GAO has determined that with proper assessment, CMS could better ensure that it was addressing all of the possible risks, and properly prioritize those fraud risks that are the most significant.

While CMS is the centralized federal agency that oversees the Medicaid program, more collaboration with the states would improve oversight considerably. Indeed, state auditors have conducted evaluations that identified significant improper payments and outlined deficiencies in Medicaid processes.  For example, an Oregon audit found about 31,000 questionable payments to Coordinated Care Organizations and found that about 48,000 people enrolled in Oregon’s Medicaid program were ineligible.  That finding equated to about $88 million in avoidable expenditures.  As another example, Massachusetts identified more than $211 million in unallowable, questionable, duplicative, unauthorized, or potentially fraudulent billing in its state program.

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.


Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.


Bruce A. Moilan Sr.

$27 Million

Bruce Moilan was a seasoned hospital systems expert by the time he contacted our Firm. At the time he decided to file his qui tam lawsuit, he was employed by South Texas Health System as a System Director for Materials Management. In this position, he oversaw $24 million in annual purchases of supplies and equipment and helped determine budget, reduction and cost analysis throughout the contract bidding and negotiations process. His job was to insure proper implementation for purchasing, receiving and management of inventory, for McAllen Hospitals, L.P.


Contact Us