GOP senator launches effort to close Medicaid loophole allowing fraudsters to rake in millions

Sen. Ashley Moody, R-Fla., is introducing new legislation aimed at closing a legal loophole protecting the beneficiaries of Medicaid fraud from prosecution, Fox News Digital has learned.

Moody's STOP FRAUD in Medicaid Act is routed in her experience as Florida's attorney general, where she was limited to prosecuting Medicaid fraud only on the provider side. The legislation would grant state attorneys general and their Medicaid Fraud Control Units to investigate and prosecute the recipients of fraudulent benefits as well.

"I fought fraud as Florida’s Attorney General, recovering millions of dollars for taxpayers, and I’m fighting it now as a U.S. Senator: finding and closing gaps in our laws to increase enforcement," Moody said in a statement to Fox News Digital on Tuesday.

"The STOP FRAUD in Medicaid Act gives State AGs the authority to pursue and prosecute not just providers but recipients looking to bilk taxpayers. This will go a long way to winning our War on Fraud," the statement continued.

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Moody's office says federal prosecutors can go after fraud recipients under anti-kickback laws, but said federal groups often let the "small fish" skate by. Empowering MFCUs would go a long way toward picking up the slack, they say.

The proposed law could be particularly effective in states like Minnesota, where years of apparently rampant fraud has led to a quagmire of investigations and finger-pointing.

A new state audit investigating the fraud in Gov. Tim Walz's Minnesota revealed that the state's Department of Human Services (DHS) failed for years to properly investigate Medicaid kickback allegations.

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Kickbacks were a key component of fraud schemes uncovered in the state’s autism services program, with prosecutors describing how providers used financial incentives to attract and retain families in order to maximize Medicaid billing, CBS News reported in December.

In one case, investigators said an autism center operator fraudulently billed millions while using tactics that included offering payments or benefits tied to enrollment, illustrating how kickbacks helped drive inflated claims and contributed to large-scale misuse of public funds intended for children with autism.

The audit recommended that DHS "should amend its administrative rule defining ‘fraud’ to clearly include kickbacks" and said the legislature should intervene if that doesn’t take place.

In a press release, Minnesota House Fraud Prevention Committee Chair Kristin Robbins, a Republican state representative running for governor, wrote, "The continued lack of accountability for the rampant fraud in this state is astounding."

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Fox News' Andrew Mark Miller contributed to this report.