	Background

Although jointly financed by the states and the federal government,  Medicaid is administered directly by the states and consists of 56 distinct  state-level programs. As program administrators, states have primary responsibility for  conducting program integrity activities that address provider enrollment,  claims review, and case referrals. Various states  individually attributed cost savings or recoupments to these efforts valued  in the millions of dollars. In addition, CMS performs oversight of states’  Medicaid fraud and abuse control activities. CMS Expends Limited Resources and Lacks Coherent Plan to Improve States’ Medicaid Fraud and Abuse Control Activities

A wide disparity exists between the level of resources CMS expends to  support and oversee states’ fraud and abuse control activities and the  amount of federal dollars at stake in Medicaid benefit payments. In fiscal year 2005, CMS’s Medicaid staff  resources allocated to supporting or overseeing states’ anti-fraud and  abuse operations was an estimated 8.1 FTEs—3.6 FTEs at headquarters  and 4.5 FTEs in the regional offices. Canvassing the 10 regional CMS offices, we  found that 7 regions each have a fraction of an FTE and the rest each have  less than 2 FTEs devoted to providing assistance on fraud and abuse  issues. For example, Region IV—which covers eight states and accounted  for $33 billion of federal funds for Medicaid benefits in fiscal year 2004— reported having 1 FTE devoted to Medicaid fraud and abuse control  activities. As CMS’s  distribution of these funds varies from year to year, the level of support for  fraud and abuse control initiatives is uncertain and depends on the  priorities set by the agency. CMS Structure and Lack of Planning Suggest Weak Commitment to Supporting States’ Medicaid Fraud and Abuse Control Efforts

The placement of Medicaid’s antifraud and abuse function in CMS’s  organizational structure and a lack of stated goals and objectives suggests  a limited institutional commitment to Medicaid fraud and abuse control  activities. Under this organizational  structure, the Medicaid fraud and abuse staff in CMSO are not in an  optimal position to leverage the resources allocated to the office with  responsibility for developing tools and strategies for combating fraud and  abuse. From 1997 to 2003, the leadership and funding of  CMS’s support for states’ antifraud and abuse efforts resided in a  consortium of two regional offices. CMS’s distribution of resources may require some activities to be scaled  back and others to be eliminated. Since January 2000, CMS’s Medicaid staff from headquarters  and regional offices have been conducting compliance reviews of about  seven to eight states a year. Nevertheless, at the currently  scheduled pace, states’ programs will be reviewed once in 7 years at the  earliest. Concluding Observations

Relatively few and questionably aligned resources and an absence of  strategic planning underscore the limited commitment CMS has made to  strengthening states’ ability to curb fraud and abuse. Despite the millions  of dollars CMS receives annually from a statutorily established fund for  fraud and abuse control, the agency has not allocated these resources to  sufficiently fund initiatives that can help states increase the effectiveness  of their Medicaid fraud and abuse control efforts. Developing a strategic  plan for Medicaid fraud and abuse control activities would give CMS a  basis for providing resources that reflect the financial risk to the federal  government. We discussed facts in this statement with a relevant CMS official. He noted  that CMS does not view fraud and abuse control activities as separate from  its financial management responsibilities. He indicated that CMS has  invested substantial resources in program integrity activities that focus on  the financial oversight of the Medicaid program. While we agree that  financial oversight of Medicaid is a key component of program integrity,  we maintain that the other component—fraud and abuse control  activities—warrants a greater commitment than it currently receives. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

Today's hearing addresses fraud and abuse control in Medicaid, a program that provides health care coverage for eligible low-income individuals and is jointly financed by the federal government and the states. In fiscal year 2003, Medicaid covered nearly 54 million people and the program's benefit payments totaled roughly $261 billion, of which the federal share was about $153 billion. States are primarily responsible for ensuring appropriate payments to Medicaid providers through provider enrollment screening, claims review, overpayment recoveries, and case referrals. At the federal level, the Centers for Medicare & Medicaid Services (CMS) is responsible for supporting and overseeing state fraud and abuse control activities. Last year, GAO reported that CMS had initiatives to assist states, but the dollar and staff resources allocated to oversight suggested that CMS's level of effort was disproportionately small relative to the risk of federal financial loss. Concerned about the stewardship of federal Medicaid funds, Congress has raised questions about CMS's commitment to Medicaid fraud and abuse control. This statement focuses on (1) the level of resources CMS currently applies to helping states prevent and detect fraud and abuse in the Medicaid program and (2) the implications of this level of support for CMS fraud and abuse control activities.

What GAO Found

Since GAO reported last year, the resources CMS expends to support and oversee states' Medicaid fraud and abuse control activities remain out of balance with the amount of federal dollars spent annually to provide Medicaid benefits. In fiscal year 2005, CMS's total staff resources allocated to these activities was about 8.1 full-time equivalent (FTE) staffing units--approximately 3.6 FTEs at headquarters and 4.5 FTEs in the regional offices. Among CMS's 10 regional offices--each of which oversees states whose Medicaid outlays include billions of federal dollars--7 offices each have a fraction of an FTE and the rest each have less than 2 FTEs allocated to Medicaid fraud and abuse control efforts. Moreover, the placement of the Medicaid fraud and abuse control staff at headquarters--apart from the agency's office responsible for other antifraud and abuse activities--as well as a lack of specified goals for Medicaid fraud and abuse control raise questions about the agency's level of commitment to improve states' activities in this area. CMS's support and oversight initiatives include a pilot project for states to enhance claims scrutiny activities by coordinating with the Medicare program. Despite the project's positive results in several states, less than one-fifth of the states currently participate in the project and resource constraints may require CMS to scale back these efforts instead of expanding them to additional states that are seeking to participate. Similarly, CMS's support activities--such as conducting national conferences, regional workshops, and training--have been terminated altogether. The frequency of CMS's on-site reviews of states' fraud and abuse control activities--about seven to eight visits a year--has not changed since GAO reported on this last year. This means that federal oversight of a state's Medicaid program safeguards will not occur, at best, more than once every 7 years. Relatively few and questionably aligned resources and an absence of strategic planning underscore the limited commitment CMS has made to strengthening states' ability to curb fraud and abuse. Despite the millions of dollars CMS receives annually from a statutorily established fund for fraud and abuse control, the agency has not allocated these resources to sufficiently fund initiatives that can help states increase the effectiveness of their Medicaid fraud and abuse control efforts. Developing a strategic plan for Medicaid fraud and abuse control activities would give CMS a basis for providing resources that reflect the financial risk to the federal government. In discussing the facts in this statement with a CMS Medicaid official, he stated that the agency does not view antifraud and abuse initiatives as separate from financial oversight, an area that has received substantial resources in recent years. While we agree that financial management is important to program integrity, we believe that an increased commitment to helping states fight fraud and abuse is warranted.