Colorado SB 12-060 is an attempt to reduce Medicaid fraud below through reporting requirements and financial incentives for counties. Recall that the Department of Health Care Policy and Financing (HCPF) has little incentive to reduce Medicaid fraud, as for every Colorado tax dollar it spends, the Feds pay the HCPF a dollar taken from a taxpayer in another state.  This is why replacing the matching this policy (“Federal Medical Assistance Percentages”) with a block grant would be an improvement.

As Michael Cannon at Cato summarizes:

The basic theorem is this: market actors have greater incentives to prevent fraud, because it’s their own money on the line.  Politicians are spending other people’s money, so their incentive to prevent fraud is far less.  Therefore, fraud will always be higher in government programs than in similar market endeavors.

And here’s a shocker: Medicare & Medicaid fraud far exceeds insurance company profits.

Here’s the bill summary. (The absence of capital letters is in the original bill.)

SB 12-060 – Improve Medicaid fraud prosecution
Sponsor: Senator Ellen Roberts
Description: The bill requires the department of health care policy and financing (HCPF) to submit a written report annually to the health and environment committee and the judiciary committee of the house of representatives and to the health and human services and judiciary committees of the senate concerning client fraud in the medical assistance program. In addition, the attorney general’s office is required to submit a written report annually concerning provider fraud.

The bill also changes the amount of a county’s share of recoveries of fraudulently obtained medical assistance when the recovery is initiated by a county department, county board, district attorney, or HCPF on behalf of the county. Instead of sharing one-half of the state funds paid with the state, the county may retain the full amount of the recovery after payment of the federal government’s share.
Hearing: Senate Health and Human Services at 1:30 PM in SCR 356
Contact the Senate Health and Human Services Committee by clicking here

Via Colorado Senate News.