Medicaid fraud has always been a significant factor in the costs of the program. Because Medicaid is a joint program between states and the federal government, all states have their own system of both monitoring and investigating Medicaid fraud. Though only a small fraction of the healthcare providers who provide Medicaid services ever engage in fraud, the federal government alone lost $22 billion in 2011 because of fraudulent Medicaid payments.
Medicaid costs about $400 billion a year, and is the fastest growing budgetary expense in all states. However, each state has a different Medicaid system, making it much harder to develop a single, unified method of identifying and preventing Medicaid fraud. Despite those problems, abuse has slowly declined over the years. In 2008, it was estimated that 11% of the total Medicaid budget had been lost to fraud, that number decreased to 8% in 2011.
With state budgets increasingly tight and many forced to make significant cutbacks in Medicaid coverage, states have also been trying to reduce the amount spent on fraudulent Medicaid payments. If the Supreme Court does not overturn the Affordable Care Act’s Medicaid expansion provisions, all states will have to expand coverage by 2014. Millions more Americans will be covered under the expansion, costing states even more in services, as well as in fraud losses.