The Indiana Medicaid Fraud Control Unit (MFCU) released a statement indicating that $14 million was recovered in 2007 for the Medicaid program. This is a substantial figure and demonstrates the robust return on investment (ROI) for states leveraging fraud, waste and abuse technologies for their Medicaid Management Information Systems (MMIS). As many states are facing a budget crunch in FY 2008 coinciding with increasing Medicaid costs these systems play a vital role in controlling costs and reducing deficits. Further, recovered money can be used to improve the Medicaid program and potentially increase enrollment.

As noted in a recent INPUT Industry Analysis report, through the Medicaid Transformation Grants from the Centers for Medicare and Medicaid Services (CMS) seven awarded states elected to utilize the funds to develop fraud, waste and abuse systems. In a 2006 annual report on state MFCUs the US Department of Health and Human Services, Office of Inspector General indicated that more than $1.1 billion in Medicaid fraud and abuse was recovered. The popularity and necessity of these systems will continue to increase as states work to comply with federal legislation and to control Medicaid costs.

States typically employ two systems which interface, the Surveillance and Utilization System (SURS) which provides claims and billing evaluation and the Fraud and Abuse Detection System (FADS) which identifies patterns of fraud and abuse via electronic data reports. One such example is the Washington state Medicaid Transformation Grant which is aimed at program integrity efforts and enhancing FADS. More information on this initiative from INPUT can be found here.