Frank Pallone: “One of the things that Democrats have been critical of in the Republican changes to the Medicaid program is a provision…”

“One of the things that Democrats have been critical of in the Republican changes to the Medicaid program is a provision that actually repeals statutory safeguards that have protected against some fraud and abuse. I think people have the notion that the reform proposals that have come forward on the floor here over the last year would somehow curb fraud and abuse, but in many cases they repeal existing statutory protections against fraud and abuse. For example, in the Medicaid program over the past 10 years the largest single abuse of Federal Medicaid funds has been the use by some States of what is called illusory financing schemes. This is where they have these fictitious payments to disproportionate share hospitals and then the State substitutes Federal for State dollars effectively reducing the State's share of program costs. In 1991 and again in 1993 Congress enacted legislation designed to curb these abuses where they set up these fictitious funds and the Republican bill expressly repeals these statutory safeguards essentially reopening the door to abuse of the Federal Treasury by States if they want to lower their own Medicaid spending without reducing the amount of Federal Medicaid funds that they would fall down on.”