Nassau Legislator Peter Schmitt and Nassau County Executive Edward Mangano...

Nassau Legislator Peter Schmitt and Nassau County Executive Edward Mangano announces a $45 million deficit deficit reduction plan in Mineola, New York. (July 23, 2012) Credit: Howard Schnapp

Nassau and Suffolk counties would be able to keep tens of thousands of dollars in funds recovered from Medicaid fraud investigations under new federal legislation to be proposed next week.

Rep. Steve Israel (D-Dix Hills) said Friday that he will introduce a measure to allow counties to keep up to 50 percent of the money recovered from successful Medicaid prosecutions. Most of those funds currently are returned to the state.

"There is no strong and sustained economic incentive for counties to do these [investigations] because they do not always share in the recoveries," said Israel, who announced the bill at a news conference in Mineola with Nassau County Executive Edward Mangano.

In 2011, Nassau investigated more than 4,700 cases of welfare fraud and abuse, primarily involving Medicaid, and recovered $685,000. But the county, which spent roughly $2 million in staff salaries investigating fraud cases, kept only $171,000, said Scott Skrynecki, director of the Office of Investigations at the Department of Social Services.

"The county absorbs the costs of the investigation and really doesn't receive any of the dollars that are recovered," Mangano said.

A Suffolk County spokeswoman could not immediately provide details about the county's Medicaid investigations.

New York State allows counties to keep as much as 15 percent of funds recovered from fraud cases involving Medicaid providers and 25 percent from those involving Medicaid recipients.

Israel's legislation, the Local Medicaid Enforcement Incentives Act of 2012, would take as much as $100 million in funds from the Department of Health and Human Services' budget to create a grant program that would fund expenses associated with Medicaid fraud investigations. Individual states could receive up to $5 million under the condition that at least 50 percent of the recovered funds are sent back to the counties.

Israel said he does not expect any GOP opposition to the bill. The bill will likely be moved to the House Energy and Commerce Committee. A spokeswoman with the GOP-led committee did not return a call for comment.

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