Trump Budget Would Boost Spending to Fight Medicare, Medicaid Fraud

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By James Swann

Government efforts to fight health-care fraud would get a $70 million boost under the Trump administration’s proposed budget blueprint for fiscal year 2018.

The March 16 proposal would provide $751 million in discretionary funding for the Health Care Fraud and Abuse Control account, $70 million more than what was in the annualized 2017 continuing resolution. The increase comes despite an overall $15 billion cut in funding for the Department of Health and Human Services. The HCFAC program coordinates federal, state and local law enforcement activities related to health-care fraud and abuse.

The proposed funding increase represents a commitment by the administration to continue supporting the Health Care Fraud Prevention and Enforcement Action Team (HEAT) model, but questions remain regarding Medicaid fraud enforcement, Ellyn Sternfield, a health-care attorney with Mintz Levin in Washington, told Bloomberg BNA. The HEAT model is an anti-fraud collaboration between the Departments of Justice and the HHS.

Sternfield said many of the HEAT model’s past successes have involved the work of Medicaid Fraud Control Units, which could be on the chopping block due to possible changes to the overall Medicaid program.

The American Health Care Act, which would repeal and replace parts of the Affordable Care Act, would phase out the current Medicaid expansion and replace it with block grants, which Sternfield said could include fewer federal mandates and reduced federal funding.

“I heard that the proposed budget cuts out many granted programs from DOJ, but I’ve not heard any drill-down on HHS grants,” Sternfield said.

HHS Secretary Tom Price said March 16 the proposal represents “a robust commitment to preventing waste, fraud and abuse across the department, particularly within the Medicare and Medicaid programs.”

MFCU Grants

While there has been no mention of cuts to the Medicaid Fraud Control Unit program, “the devil will be in the details,” Sternfield said. For example, would states still be required to have an MFCU under a block grant program, Sternfield said, or would the Office of Inspector General still maintain a MFCU grant program.

“If the federal government intends to back away from the MFCU program, won’t that hamper federal and state health-care enforcement efforts?” Sternfield said.

States are required to create an MFCU that’s separate from the state Medicaid agency and intended to investigate and prosecute Medicaid provider fraud as well as any fraud in the administration of the Medicaid program. The federal government provides 75 percent of the program’s funding through a grant program overseen by the HHS OIG.

Return on Investment

The continued support for program integrity, in the face of overall HHS budget cuts, is likely a recognition of the return on investment provided by anti-fraud efforts, Judith Waltz, a health-care attorney with Foley & Lardner in San Francisco, told Bloomberg BNA

“Part of that support is because the HCFAC program has been able to demonstrate a good return on investment, both in actual dollars and in the nonquantifiable deterrent side as well,” Waltz said. The administration’s budget blueprint said the HFCAC program had a 5:1 return on investment between 2014 and 2016, meaning the program recovered $5 for every $1 spent.

However, Waltz said, the administration’s program integrity priorities may change. While the OIG has some independence in its oversight mission, other HHS agencies that are funded by the HCFAC program will be under the direct control of the Trump administration.

“With the administration’s statements about reducing regulatory burdens, there may be less emphasis on fraud, waste and abuse allegations that reflect regulatory noncompliance, as opposed to situations where services weren’t rendered as claimed,” Waltz said.

The support for program integrity efforts may be due to the revenue they bring in for the government, Elizabeth Carder-Thompson, a health-care attorney at Reed Smith LLP in Washington, told Bloomberg BNA.

“In a budget that generally whacks HHS pretty hard, it’s notable that the president is targeting this area for more funds, clearly buying into the promise of a high return on investment,” Carder-Thompson said.

In addition to more revenue, the extra funding for program integrity can help reduce the costs associated with fraud, abuse and waste, Carder-Thompson said.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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