MEDICAID MONEY LAUNDERING

The scene of this crime is Medicaid; it turns out that states have been goosing their financing arrangements to maximize their federal payouts and dump more of their costs onto taxpayers nationwide. The swindle works like this, says the Journal:

• A state overpays state-run health-care providers, such as county hospitals or nursing homes, for Medicaid benefits far in excess of its typical rates.
• Then the federal government reimburses the state for "half" of the inflated bills.
• Once the state bags the extra matching funds, the hospital is required to rebate the extra money it received at the scam's outset.

In fact, a new industry of contingency-fee consultants has sprung up to help states find and exploit the "ambiguities" in Medicaid's regulatory wasteland. All the feds can do is notice loopholes when they get too expensive and close them, whereupon the cycle starts over.

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