Medicaid Fraud and Abuse

The American federal government pays health care costs of citizens that earn very low incomes through the establishment of Medicaid programs which are often abused by government contractors. To curb this predicament several legislations and policies have been formulated thus further reducing the costs for running Medicaid programs.

For instance the False Claim Act also referred to as the Lincoln law is a provision under the US legislation that advocates for whistle blowing which enables citizens to sue on behalf of the government federal contractors involved with fraudulent acts against the federal government. This law mainly applies to government funded programs such as health care and military affiliates (CMS para. 2).

The fund used by the government is collected from the taxpayers’ coffers therefore, the False Claim Act enables the government to effectively manage Medicaid programs at effective costs because the public is able to recover billions of dollars that had been stolen in form of fraud.

The involved culprits are sentenced to stiff civil penalties and government compensations that demand triple payment for the losses incurred by the Medicaid programs. For instance in 2004 taxpayers were able to recover approximately $0.4 billion dollars from civil penalties and about $43 million dollars in form of compensation fines from seven pharmaceutical manufacturing companies (CMS para. 4).

 The Medicaid Integrity Program (MIP) was formulated in 2005 when the Deficit Reduction Act (DRA) of 2005 was created to economical empower Centers for Medicare and Medicaid Services (CMS) and thus enabled the division to detect and prevent Medicaid fraud and abuse. The DRA formulated a comprehensive Medicaid Integrity plan (CMIP) which was geared towards managing and developing MIP operations.

In the process a five year cycle program which provided CMS with 100 new federal employees and approximately $50 million to $70 million dollars per year was established. This has effectively helped the federal government to run cost effective Medicaid programs thus reduce the cost of health care to Medicaid enrollees (CMS para. 4-5).

The Deficit Reduction Act of 2005 (DRA) was enacted into the US constitution in 2006 by President Bush to save approximately $40 million dollars annually to help fund state and federal government programs such as health care, education and housing because it is a US Budget Act of Congress.

The federal DRA ensures that both the state and the federal government efficiently control Medicaid frauds and abuses because they are sufficiently economically empowered. Therefore, effectively curb theft, inappropriate use of allocated Medicaid fund and occurrence of simple mistakes that drag the Medicaid programs into losses and drain the taxpayers’ coffers.

Furthermore, the act allow each US State to enact its False Claim Act further enabling the federal government to run cost effective Medicaid programs because of the establishment of comprehensive and systematic approaches that enables Medicaid beneficiaries to access health care at affordable prices (CMS para. 7).

The government has been effective in curbing Medicaid fraud and abuse because of the heavy penalties they implement on such acts which discourage prospective culprits from engaging in them.

Also the government has re-evaluated the acts further closing down on loopholes that paved way for this paradigm. Moreover, the state closely collaborates with federal government to ensure the success and development of the Medicaid programs. Furthermore, the government has invested in the Medicaid program ensuring efficient administration of the programs and managed of the state and federal resources (CMS para. 10).

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Works Cited

CMS. “Medicaid”. Managed Care Enrollment Report (2004). 3rd, June, 2009.             <>.