Finding fraud: enforcement, detection, and recoveries after the ACA.

Abstract

Medicaid Fraud Control Units investigate and prosecute acts of financial fraud and patient abuse within the program. Prior to the expansion of Medicaid under the Affordable Care Act (ACA), federal government MFCU expenditures totaled half a percent of Medicaid expenditures. Following the enrollment of 12 million adults into the Medicaid program under the ACA, expenditures for these units are now less than pre-ACA levels, as a share of program expenses. We use data for states' fraud enforcement efforts in the period 2010-2018 and a difference-in-differences design that exploits states' decision to expand Medicaid under the ACA. States that did expand Medicaid increased their fraud investigations, compared to states that did not expand. Further, civil recoveries and excluded individuals increased after the Medicaid expansion. We find evidence that increases in program scale, in terms of enrollment and utilization, reverted to the mean, facilitating the identification of outlier provider behavior.