During times of economic uncertainty, it is usually bad policy to expand government payrolls, but there are exceptions to every rule. Since Medicaid fraud is a huge and growing problem, Virginia Attorney General Ken Cuccinelli's proposal to add 10 more investigators next year to the state's Medicaid Fraud Control Unit, or MFCU, is one such exception. The General Accountability Office estimates fraud accounts for about 10 percent of all state Medicaid payments, which means that more than $700 million of the $7.2 billion Virginia spent on Medicaid last year -- half coming from the federal government, and half from state taxpayers -- was stolen from the commonwealth's elderly, poor and disabled residents who depend on the program.
There are many ways to defraud Medicaid, including double-billing, phantom billing for services not rendered, the use of fraudulent Social Security numbers and "upcoding" of treatments in order to collect a higher Medicaid reimbursement. The common denominator, prosecutors say, is greed.
After Cuccinelli was elected in 2011, he expanded the award-winning fraud unit by 25 attorneys, investigators, auditors and medical professionals. Last month, his office announced the successful prosecution of the largest Medicaid fraud case investigated by a state in U.S. history.
Illinois-based Abbott Laboratories Inc. pleaded guilty to promoting "off-label" uses for its prescription drug Depakote, which was approved by the FDA to treat epileptic seizures, bipolar mania and prevent migraines, but not dementia and schizophrenia. Abbott admitted it aggressively marketed Depakote to doctors and nursing homes for these unapproved uses, agreeing to pay $1.5 billion in penalties, which will be divided between the federal government and the states, including Maryland and D.C.
Expanding MFCU will not put an additional burden on Virginia taxpayers, since it is funded 70 percent by the federal government. The state's 25 percent share is covered by the seized assets and criminal penalties collected from those already convicted of Medicaid fraud. The unit currently has 55 criminal cases under active investigation, with an additional 20 cases flagged by whistleblowers, who are entitled to up to 25 percent of all monies recovered from successful prosecutions.
Last year, MFCU collected more than $40 million in court-ordered fines and penalties, the third highest recovery since its establishment in 1982. It is the one of those rare state agencies that more than pays for itself.