The city could recoup millions of dollars through a state program that will allow it to investigate possible cases of Medicaid fraud.

Mayor Bloomberg and Governor Pataki said yesterday that the city would join a relatively new pilot program designed to involve local municipalities in rooting out fraud in Medicaid, the government health care program that covers low-income people. Under the program, the city will get to keep up to 25% of any recoveries it makes and will be reimbursed for its expenses.

“We expect that the city’s efforts could eventually generate millions of dollars in fraud recoveries and will contribute to restoring the integrity of the Medicaid program,” Mr. Bloomberg said in a statement. He also noted that the city is projecting a Medicaid bill of nearly $5 billion for 2007.

The program — known as the Medicaid Fraud, Waste and Abuse Demonstration Project — was passed as part of legislation in 2005. Governor-elect Spitzer, who will be sworn in Monday, has vowed to make ridding the system of abuses a priority.

Until now, the city has had the authority to investigate fraud perpetrated only by individual patients — not hospitals, physician groups, and other medical providers who bill Medicaid.

Deputy Mayor Edward Skyler said the city would hire about 50 new investigators, auditors, and medical specialists to staff its new office of Medicaid Provider Fraud Investigation. The office will work with the state Office of the Medicaid Inspector General.

“We’re going to be very aggressive about it,” Mr. Skyler said. “The city is spending billions of dollars on Medicaid, but until now it hasn’t had the legal authority to root out fraud on its own. This allows the city to find abuses and then share in the recovery.”

Twelve other counties outside New York City, including Westchester, Nassau, and Rockland, are participating in the program. Tips about Medicaid fraud can be reported at omig.state.ny.us or at 877-87FRAUD.