Insurance Companies Routinely Fail to Report Medicaid Fraud

According to a recent report by HHS-OIG, insurers who manage Medicaid insurance plans are ineffective when it comes to monitoring its managed care plans for Medicaid fraud and reporting that fraud to the state. The OIG's report, Weaknesses Exist in Medicaid Managed Care Organizations’ Efforts To Identify and Address Fraud and Abuse, reveals that one-third of the health plans it examined had referred fewer than 10 cases each of suspected fraud or abuse to state Medicaid officials in 2015. Two of the insurers, which serve mostly low-income families, reported ZERO cases of fraud all year.

Even when insurers terminate doctors from their network due to fraudulent billing (179 such contracts were terminated "for cause" in 2015), they fail to inform the state. Therefore, that doctor is free to continue their fraudulent billing practices through other insurance providers.

Medicaid plans “are required by law to find fraud and abuse and to share information with states,” said Meridith Seife, a deputy regional inspector general in New York and a co-author of the report. “We are concerned anytime we see evidence that managed-care organizations are not doing that in a rigorous way. There’s a lot of taxpayer dollars at stake.”

This report further highlights the necessity of a robust False Claims Act. With so few safeguards in place, particularly with the private insurance companies tasked with managing Medicaid and Medicare Advantage plans, it often takes a whistleblower to uncover and report fraud being perpetrated by health providers.