Medicaid waste, fraud, and abuse arise from several primary sources: legalized money laundering schemes and resulting corporate welfare; ineligible enrollees in the program; eligibility errors that allow ineligible individuals to enroll and remain enrolled; vulnerable service categories with weak oversight that create opportunities for fraud; and limited transparency, particularly in managed care. The following is a menu of policy options for states to pursue to curb waste, fraud, and abuse in their Medicaid programs and preserve the program for the truly needy.
I. Reducing Legalized Medicaid Money Laundering and Corporate Welfare
States are becoming increasingly reliant on federal sources to finance Medicaid. They utilize financing schemes, such as provider taxes and intergovernmental transfers, to draw down additional federal funding. These financing mechanisms result in large payments…
PROCUREMENT & EXPENDITURE (STOPPING KICKBACKS)
Procurement fraud usually involves inflated invoices or “fictitious” vendors.
- The Three-Way Match: Never pay an invoice unless you have matched the Purchase Order (PO), the Delivery Note (signed), and the Supplier Invoice.
- Vendor Master File Review: Review your vendor list annually. Look for suppliers with the same bank details or physical addresses as your employees.
- Dual Authorization: Implement a “Two-to-Sign” rule for all EFT payments above a certain threshold (e.g., R5,000).
- No “Cashing” of Checks: If you still use physical checks, strictly prohibit “Cash” as a payee and store blank checks in a dual-lock safe.