January 8, 2010 9:23AM

Medicaid’s Cash Cab

By Tad DeHaven

As Congress hashes out an agreement behind closed doors to expand the government’s role in health care, a Medicaid story out of New York serves as another reminder that government is part of the health care problem, not the solution. Audits released by the state’s comptroller found $169 million in misspent funds, including a $196,000 cab bill for a woman who took a daily $300 taxi ride to visit her son in Albany for three years.

The following are some of the findings:

  • $53 million in overpayments for Medicaid recipients who had multiple identification numbers.

  • $20 million that was nearly spent because the state’s computer system failed to catch a clerical error. Auditors caught it before it was paid out.

  • $5.4 million in overpayments to 10 hospitals that billed for discharging a patient when, in fact, the patient had been transferred to another facility. Hospitals receive higher payments for discharges rather than transfers.

  • $1.2 million paid for services that were not medically necessary or not provided.

According to the state’s comptroller, “[T]he state Medicaid system is leaking millions of dollars… Safeguards designed to protect the taxpayers by detecting waste, fraud and abuse keep failing." However, this is business as usual when it comes to New York’s notoriously fraud-ridden Medicaid program, as a Cato essay on fraud and abuse in federal programs notes:

The former chief investigator of the state’s Medicaid fraud office believes that about 10 percent of the state’s Medicaid budget is consumed by pure fraud, while another 20 to 30 percent is consumed by dubious spending that might not cross the line of being outright criminal.

A 2005 investigation by the New York Times found remarkably brazen examples of fraud and abuse in New York’s Medicaid. The article noted that the program has “become so huge, so complex, and so lightly policed that it is easily exploited… [T]he program has been misspending billions of dollars annually because of fraud, waste, and profiteering.”

With the massive and complex expansion of Medicaid and other health programs in the pending legislation, we can expect a gargantuan expansion in fraud and abuse. The good news, I suppose, is that the government will need a massive hiring of new health care auditors, which should reduce the nation’s unemployment rate.

For more on fraud and abuse in government healthcare, see here.