The state Senate passed bill 5960 dealing with Medicaid fraud 41-5 on May 11. It has been scheduled for a public hearing and executive session in the House Ways and Means Committee this afternoon. The committee will then vote whether or not to send it to the House floor for a vote.

The plan that would allow the state to work with citizens to prosecute Medicaid fraud and recover state funds. Experts estimate that Medicaid fraud amounts to between 3 and 10 percent of expenditures.

The bill received backing from both Senate Republicans and Democrats, including Sen. Cheryl Pflug, R-Maple Valley, who was one of its sponsors.

“When you consider that the state spends $8.5 billion a year on Medicaid bills, this rate of fraud becomes a very substantial amount of money very quickly,” said bill sponsor Sen. Karen Keiser, D-Kent.

“This legislation is crucial to successful recovery because it empowers the public to alert the state to known cases of fraud,” said Pflug. “The Attorney General calls this bill an important tool in locating the source of fraud, and it will result in recovering hundreds of millions of dollars of state funds taken illegally.”

The bill was modeled after the Federal False Claims Act. It provides incentives and whistleblower protections to employees who witness fraud in the workplace. It allows the state to receive a greater share of the recovery and the Attorney General to contract out cases if it is unable to pursue them.

“The bill allows the court to dismiss any frivolous lawsuits or suits meant for harassment,” said Pflug. “That builds-in strong protections to assure that we’re only prosecuting solid cases.”

The federal law, which is in 25 other states, allows individuals to sue providers who have defrauded the government. If the claim is substantiated, the person receives a share of the recovery.

“By empowering individuals to shine a light on the hidden sources of Medicaid fraud,” said Pflug, “the state will be able to prosecute many more claims and recover millions more in settlements and penalties.”

Other states have seen success pursuing reforms to Medicaid fraud investigation. In Texas, fraud recovery dollars went from $160 million in 2007 to $338 million by 2009.

“Evidence shows that concerted Medicaid fraud recovery efforts work,” Keiser said. “States, including our own, could potentially triple and even quadruple current recovery levels. This is not new revenue. This is recovering revenue foregone.”