Report: NC spending more to halt Medicaid fraud than it recovers

The report noted that North Carolina is spending millions of dollars on claim reviews that are not fraudulent, and attorneys aren't able to follow up on many that are. In the 2013-14 fiscal year, for example, the state paid contractors $3.7 million to hunt out fraudulent claims, but the state was able to recover less than $500,000.

One of the reasons for the imbalance is that investigators couldn't pursue some fraud claims in court because they couldn't get enough reliable evidence due to problems with the NCTracks enrollment system. Also, the report noted, it's very difficult to get money back from providers who may have gone out of business or who are willing to go to court.

Meanwhile, health care providers say that the reviews in place take too much time and paperwork and are driving some providers out of the program.

State Medicaid director Dave Richard also said turnover within the agency has slowed its work.

"No question that we had room for improvement. No question we continue to have room for improvement," Richard said. "But we have hired qualified people to work in those leadership roles. Our goal is to make sure this section does the best for the state of North Carolina."

Another issue, he said, is that, when his program finds an overpayment, the state has to repay the federal government its share, regardless of whether the state ever gets any money back.

Lawmakers are expected to recommend changes to the fraud detection program next month.