Washington state could soon lose a successful program that in the three years it has operated has uncovered and penalized fraud, returned nearly $3 for every $1 spent in investigating and prosecuting cases and protected the source of medical coverage for 1.75 million residents.
Unless the Legislature votes to reauthorize the Medicaid Fraud False Claims Act, an effective tool used by the state Attorney General’s Office for rooting out Medicaid fraud and encouraging compliance will be shut down by the end of June.
The act, passed in 2012, adds a third avenue for investigating Medicaid fraud, bolstering the efforts by the federal False Claims Act and criminal investigation of the state Attorney General’s Office. Washington is one of 29 states with a False Claims Act.
The 1.75 million state residents who depend on Medicaid include low-income adults, children, pregnant women, elderly adults and those with disabilities. Medicaid is funded jointly by the federal and state governments. Of the $9.6 billion spent in 2014 in Washington, $4 billion was provided by the state.
Medicare and the taxpayers’ interest in limiting waste, fraud and abuse from false claims for medical services, drugs, supplies and equipment, must be protected. The Legislature needs to prevent the False Claims Act from expiring, as recommended by the Legislature’s own Joint Legislative Audit and Review Committee. Bipartisan bills in the House (HB 1067) and Senate (SB 6156) would extend the act until 2021 or later.
JLARC, in its report, found that the act has allowed the state to pursue 29 civil cases of Medicaid fraud that it otherwise would not have had the authority to pursue. Following the act’s creation the state AG’s office added a civil section for Medicaid fraud that includes four attorneys, five investigators, a financial examiner and two paralegals. The federal government funds three-fourths of the program’s expenditures, with the state picking up the other fourth.
In the three years the program has been in effect, the JLARC report found, the act was responsible for $6.1 million in additional fraud recoveries, of which the state recouped $2.8 million. Average annual civil recoveries increased 28 percent compared to the three and a half years prior to the program’s enactment. Recovered funds are reinvested in Medicaid services for state residents.
In calling for the act’s renewal, state Attorney General Bob Ferguson credited the act with revealing instances of fraud and abuse that might have remained concealed without it. In addition to information from the state’s Medicaid program, the AG’s office is able to act on tips from the public, stories in newspapers and the media and from whistle-blowers, called qui tam filings.
Reauthorization of the False Claims Act also must protect provisions for qui tam filings.
When the legislation was first considered in 2012, hospital and medical associations and others said the whistle-blower filings could be abused themselves and result in frivolous lawsuits. The JLARC report found no evidence of that. In the act’s three years, four qui tam cases have been filed: One case, which involved poor quality of care and kickbacks, resulted in a settlement; another was dismissed following a state investigation; and two more are pending.
The act’s three years of cost-effective investigation of fraud and its role in discouraging dishonest medical providers and others from attempting to file false claims have earned its reauthorization by the Legislature.
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