Medicare and Medicaid Programs, Case Study Example

With the expansion of Medicare and Medicaid programs to new recipients, many have inappropriately used funds, originally appropriated for these programs, for their own personal enrichment.  The United States government has taken legal action to help ameliorate this situation including the promulgation of the False Claims Act, the Medicaid Integrity Pain, and the Federal Deficit Reduction Act.

The False Claims Act, originally promulgated in 1987, is a federal statute that aims at preventing citizens from filing false claims, particularly in programs related to Medicare and Medicaid.  In particular, under the False Claims Act individuals who knowingly submit, or cause another person or entry to submit, false claims for payment of government funds are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000  per false claim (Schneider, 2007).  .  The False Claims Act is tightly connected to the Medicaid program in that those individuals or corporations who are known to file false reimbursement claims may be subject to harsh punishment (Schneider, 2007). Indeed, under the affiliated State False Claims Act it is unlawful for any Medicaid provider to knowingly make or cause to be made a false claim for payment.  In addition, the False Claims Act has been particularly successful in dealing with overcharges related to pharmaceutical purchases with pricing and marketing fraud related to Medicaid and Medicare clients (Schneider, 2007).  Those entities covered under these laws include those who receive more than five million dollars annually from the Medicare program.

The Federal Deficit Reduction Act was promulgated in 2005 and passed into law in 2006. The main point of the Act was to reduce federal spending.  Part of the Act, as will be explained later, is the  Medicaid Integrity Plan, dramatically increasing the amount of resources allocated to CMS to fight fraud and waste.  In addition, the Act moved to specifically reduce funding for the Medicare program.  The DRA included net reductions of $4.8 billion from 2005-2010 and $25.1 billion over the next ten years from Medicaid (Kaiser Family Foundation, 2006).  The CBO estimates that the reduction in benefits would affect 1.6 million enrollees by the year 2015 with some eligibility groups being exempted but not the main beneficiary group: adults (Kaiser Family Foundation, 2006).  Finally, the law addressed changes in long-term care services. In particular, the law previous to the Act required that that individuals applying for Medicaid long-term care services to divest all but a minimum level of assets before becoming eligible.  The Act allowed a community spouse to keep some assets under management in case of impoverishment.  (Kaiser Family Foundation, 2006).

The Medicaid Integrity Plan was originally drafted as part of the Deficit Reduction Act (DRA) of 2005; the Act created the Medicaid Integrity Program under section 1936 of the Social Security Act (the Act) (CMS, 2008).  The MIP was the first Federal government strategy to prevent and reduce fraud, waster, and abuse in the $300 billion per year Medicaid program.  Under the MIP, the federal government’s main agency on this matter (CMS) was tasked to hire contractors and to audit services and claims related to the Medicaid program.  Second, CMS is mandated to provide effective support and assistance to states in their efforts to combat Medicaid provider fraud and abuse (CMS, 2010).

Overall, these three legal documents played a key role in reforming the Medicaid program. In particular, while aiming to reform how the Medicaid system was delivered , the regulations were also aimed at reducing waste and fraud in the system.

^References

Schneider, A.  (2007). The Role of the False Claims Act in Combatting Medicare & Medicare Fraud by Drug Manufacturers: An Update. Medicaid Policy LLC Working Paper.CMS.  (2010).  Comprehensive Medical Integrity Plan (CMIP).  Available at: https://www.cms.gov/DeficitReductionAct/02_CMIP.asp#TopOfPage.

Kaiser Family Foundation. (2006). Deficit Reduction Act of 2005: Implications for Medicaid.