Unveiling Medicaid fraud and abuse: the influence of price transparency and state political context

Despite the tremendous waste due to Medicaid fraud and abuse, not much scholarly attention has been paid to state variation in the investigations. This study explores the factors influencing variations in Medicaid fraud and abuse investigations across U.S. states, with a focus on the role of All-Payer Claims Databases (APCDs) and state political context. To test the impacts of price transparency and political factors, we built a dataset spanning eight years (2014 to 2021) and covering 49 states, excluding North Dakota. We then conducted a fixed-effects panel data analysis based on the results of a Hausman test. The impact of APCDs is statistically significant, suggesting its association with more fraud and abuse detection. A Democratic governor tends to be associated with fewer Medicaid fraud investigations. The findings of this research demonstrate that the operation of APCDs can influence the number of Medicaid fraud investigations conducted by Medicaid Fraud Control Units (MFCUs). Moreover, political discretion plays a role in the number of state investigations into Medicaid fraud and abuse.