WASHINGTON – In violation of federal law, states routinely fail to notify federal authorities when they've kicked health care providers out of their Medicaid programs for incompetence, fraud and other reasons, government investigators have found.

The lack of notice makes it easier for barred providers to set up shop in other states and to continue getting payments from federal health programs.

The inspector general for the Health and Human Services Department maintains the list of health care providers prohibited from getting any federal health reimbursements. Last year, the IG's office added 3,308 people and organizations to that database, but probably could have added many more, according to a survey that investigators conducted recently.

Investigators surveyed the states to find out how often their Medicaid programs sanction a provider in a way that would in the vast majority of cases merit a spot in the IG's exclusion database. An astounding 61 percent of the 4,319 sanctions imposed by state Medicaid agencies in 2004 and 2005 could not be found in the federal database.

States with high match rates tended to be states that took action against more than 100 health care providers, though that wasn't always the case. Alabama, Louisiana and Texas had the highest match rates. More than 80 percent of the providers suspended from their state Medicaid programs could be found on the national list.

However, the two states that suspended the largest number of providers, New York and Florida, had the lowest matching rates, 21 percent and 9 percent respectively.

About a dozen states submitted incomplete data or reported not taking any action against health care providers in 2004 and 2005. Among them were California and Michigan, two states with large Medicaid populations.

Jeff Nelligan, a spokesman for the Centers for Medicare and Medicaid Services, said the agency agrees there's room to increase the number of referrals from the states. It will “strive to reduce the barriers that may currently exist,” he added.

In all, 47 states responded to the survey. State officials frequently said they were unclear about what kind of information was supposed to be forwarded to the HHS inspector general.

“It would be handy to have a little cheat sheet that clearly stated refer these cases with this info,” an unidentified state official wrote.

Another state official wrote that until they had responded to the inspector general's survey, “no coordinated effort existed ... to make referrals.”

Reasons for exclusion from federal health programs include convictions for fraud and patient abuse, licensing board sanctions and default on federal health education loans. Under law, no federal payment can be made for anything that an excluded person furnishes, orders or prescribes.

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