Report: Medicaid fraud is running rampant

Fraud in the Medicaid program is rampant and only eight federal employees monitor states' efforts to fight it, according to a Government Accountability Office report released Wednesday.

Medicaid reimbursements are expected to hit $300 billion this year, with more than half of it in federal money.

While the GAO report said it could not specify how much Medicaid fraud costs the government, state and federal prosecutors have uncovered various schemes defrauding the system.

Of particular concern is Medicaid fraud involving drug-pricing practices, according to Sen. Charles E. Grassley (R-IA), who requested the study.

The Centers for Medicare and Medicaid Services has been slowly reviewing state programs since 2000 but will not finish reviewing all 50 states until late 2006, the report said. 

CMS Administrator Mark McClellan said his agency is increasing its financial management staff to review Medicaid spending. The agency budgeted $26,000 in fiscal 2004 for compliance reviews and other oversight of state fraud control units.