Senator Michael Balboni announced the Senate passed legislation to dramatically reduce corruption and waste in the publicly financed health plan that insures New York's poor and disabled people.

"We're told that fraud eats up to a third of Medicaid expenses," Senator Balboni said. "That's a burden everyone bears, from the taxpayer who foots the bill to the patient who genuinely needs the services of an already strained system."

The Senate bill overhauls the state's Medicaid fraud detection efforts. According to the US General Accounting Office, between 10 percent and 30 percent of Medicaid expenses are diverted through fraud. That translates to billions of dollars for New York's $44 billion Medicaid program.

According to Balboni, New York's anti-fraud efforts have recouped only a fraction of what's been stolen, and the efforts lag behind other states. In fact, New York ranks alone among the nation's 10 most populous states in spending more on anti-fraud efforts than it recovers, according to the most recent reports filed by states with the federal government.

Between 2001 and 2003, New York's Medicaid Fraud Control Unit (which prosecutes fraud and recovers illicit gains) posted an average 72 cents in recoveries for every dollar spent by state and local governments on fraud recovery, despite having significantly more staff than other states that recouped much more money. By contrast, Texas recouped five times its anti-fraud spending; New Jersey regained six times its investment.

The legislation would create the Office of Medicaid Inspector General to consolidate and coordinate the investigation of Medicaid fraud and contribute to the prosecution of people who commit fraud. Savings from the program would automatically return to local governments that paid the bill in the first place.

The bill was sent to the Assembly.