WASHINGTON--Some 5 to 8 percent of state and federal Medicaid funding is generally believed to be lost to fraud and abuse, a CMS official said.

That range--which was quoted to senators at a March 28 Homeland Security and Governmental Affairs subcommittee hearing--translates to $15 billion to $24 billion each year from the $300 billion program, according to a BNA report.

CMS Center for Medicaid Services Director Dennis Smith said fraud "comes in a variety of shapes and sizes," with the greatest area of concern involving health care providers who have an incentive to overbill Medicaid.

The Subcommittee on Federal Financial Management, Government Information and International Security examined recent attempts to fight Medicaid fraud--including provisions in the recently passed Deficit Reduction Act, such as improved enrollment documentation requirements, incentives for states to enact false claim acts and additional funding for the OIG to control fraud and abuse.

Smith said the DRA also mandates the creation of a new Medicaid Integrity Program, requiring CMS to develop a comprehensive plan to audit, identify and recover overpayments as well as provide education.

Aggressive prosecution is a necessary component of any fraud control program, according to Subcommittee Chairman Sen. Tom Coburn, R-Okla.--he said more physicians and providers need to go to jail as an example of what happens when people steal from Medicaid, BNA reported.

"I'm hot after this [fraud] because this is where the money is," Coburn said. "We've got to get better."

According to HHS Inspector General Daniel Levinson, the federal share of each state's Medicaid costs is anticipated to total more than $192 billion this year.

For more information on the subcommittee hearing, click here.