The tools to fight fraud

Our view: Maryland needs Medicaid anti-fraud law — or taxpayers, patients pay

March 16, 2010

Last week, the O'Malley administration and Maryland's hospitals and small community providers forged a compromise over legislation to battle Medicaid fraud. If approved by the House and Senate, the measure is expected to save taxpayers $20 million next year and allow the state to more aggressively go after those who would knowingly file false claims with the government.

But amazingly, the bill's passage is considered far from certain. Last year, a similar proposal failed on the Senate floor by a single vote. Maryland can ill afford for that to happen again - not when budget cuts have already forced major reductions in health care services.

That Maryland should be so hesitant to accept the tools the Department of Health and Mental Hygiene needs to go after Medicaid fraud is appalling. So is the possibility of opening a $20 million deficit in next year's budget, which is what would happen if the measure fails to pass.

Critics claim that what Gov. Martin O'Malley has proposed - allowing the state to go after triple damage awards in civil fraud cases - would lead to excessive and costly litigation. They fear the protections the proposed law gives to whistle-blowers would support frivolous lawsuits filed by disgruntled employees and plaintiffs' lawyers looking to make a quick buck.

But the authority Maryland seeks is similar to what the federal government and about half of states already have. Without the threat of triple damages, perpetrators of fraud can be emboldened in the knowledge that the backlog of federal false claims cases is considerable, and the worst Maryland officials can do under current law is seek reimbursement. There's not much disincentive to fraud as the law now stands.

Under the compromise, state courts would have the authority to downsize damage awards (and legal fees) if necessary, and whistle-blower lawsuits would be dismissed whenever the state chooses not to intervene in a case. The proposed changes would also narrow the definition of fraud to ensure that it transcends mere acts of negligence.

Maryland health Secretary John M. Colmers says he is satisfied that the measure would still produce considerable cost savings for taxpayers and deter those who would commit fraud. But the proposal is unlikely to prove acceptable to MedChi, the state medical society, or to the large drug companies that traditionally oppose any law that enables private lawsuits. They have opposed the effort in the past.

Such objections can't be allowed to scuttle the legislation again. Complex Medicaid fraud schemes too often go undetected unless whistle-blowers step forward.

The proposal might not be the answer to ending all fraud, waste and abuse in the $6 billion program, but it would surely be helpful - as it's proven to be in states from Texas to Tennessee. States that enact such legislation even earn an incentive from the federal government - a 10 percent bigger share of recovered sums.

The shady providers who double-bill, bill for phantom procedures, charge for bogus medical devices or otherwise defraud government health insurance to the poor ought to be made to pay for their crimes. Governor O'Malley has rightly made the measure's passage a top priority this year; lawmakers ought to do the same.

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