Medicaid Fraud Settlements Return Billions to Government

Even as state Medicaid budgets shrink and fraud continues to plague the government run healthcare insurance program for the elderly and poor, a new report details how both state and federal governments have been making billions of dollars in settlements over Medicaid fraud cases.

The report, issued in late September by the consumer group Public Citizen, details that during the first six months of 2012 alone, pharmaceutical manufacturers have paid about $6.6 billion in settlements to the federal and state governments. The Medicaid fraud cases primarily involved unlawful promotion of drugs, as well as health program overcharges and drug price fixing.

The study covered a period between November 2, 2010 to July 18 of 2012, during which time about $10.2 billion in financial settlements were reached between the drug manufacturers and the government. During that time a single company, GlaxoSmithKline, paid about $3.1 billion in settlements, much over its violations with the drug Avandia and its promotion. About two thirds of the $10.2 billion in settlements all came from three large pharmaceutical companies including GlaxoSmithKline, as well as Johnson & Johnson and Abbott.

The billions recovered by state and federal government agencies represent a significant return on investment when compared to the budgets spent on Medicaid fraud investigation and enforcement. The report states that since about 1991, 17 states have been able to recoup the total value of the money spent on investigations and enforcement, while some have been able to make a profit. At least four states have been identified as making between $12 and $84 for every dollar spent on Medicaid enforcement as a result of the settlements.