A bill to amend titles XVIII and XIX of the Social Security Act to strengthen the capabilities of States and the Federal Government to detect medicaid fraud and abuse.

Requires States under title XIX (Medicaid) of the Social Security Act to establish mechanized claims processing and information retrieval systems in order to increase the efficiency of the administration of a State's medicaid plan and prevent medicaid fraud and abuse.

Penalizes States which do not establish such systems by reducing specified medicaid payments.

Waives the provisions of this Act with respect to States which would not significantly benefit from the implementation of such system.