The Maryland Senate on Tuesday defeated by one vote a bill that intended to step up efforts to root out fraud in the state's Medicaid program, the Baltimore Sun reports. The bill, which was similar to laws passed in almost half of the states, would have enabled Maryland officials to pursue smaller cases of fraud and collect civic penalties of up to $10,000 and triple damages. Under current law, those found guilty of fraud can be penalized only for the amount in question. In addition, the law would have allowed whistle-blowers to file lawsuits on behalf of the state.

Maryland Gov. Martin O'Malley (D) said the bill should be passed in light of the state's financial troubles and included $22 million in his budget proposal from additional collections from providers who defraud Medicaid. According to some estimates, 10% of Medicaid dollars are lost to fraud, and state officials say that since the federal government passed similar legislation in 1986, it has recouped more than $16 billion. Maryland Department of Health and Mental Hygiene Inspector General Thomas Russell said, "States that have this have been able to put taxpayer money back into the budget as a result of unscrupulous entities taking advantage of the Medicaid program."

The bill faced strong opposition from doctor, hospital and pharmaceutical industry groups, who said the changes would lead to more frivolous lawsuits and increase administrative costs for providers. According to the groups, those costs would then be shifted to patients at a time when the rising cost of health care is already a national problem. Nancy Fiedler of the Maryland Hospital Association said the measure would have made it more difficult for hospitals to retain physicians in the state and would have increased litigation costs, adding that 60% of state hospitals lost money in the last quarter of 2008. She said that her group did not believe claims that the bill would have generated meaningful savings. Jonathan Diesenhaus, an attorney representing the Pharmaceutical Research and Manufacturers of America, said, "If we're having trouble chasing Medicaid fraud ... this is not the solution," noting that the bill would "cost money and create improper incentives for prosecutors" (Smitherman, Baltimore Sun, 3/25).

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