GAO: Expanding prepayment audits could save Medicare $115M

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Although controversial, prepayment audits could save Medicare as much as $114.7 million, the Government Accountability Office said in a report released to the public yesterday.

Medicare already has saved $1.76 billion in 2010 from prepayment edits, but as GAO said, "That total is probably an underestimate because CMS does not collect information on savings from all of its current edits."

CMS leaks out about $28.8 billion in improper payments, 8.6 percent of the total $336 billion Medicare payments issued.

In its review, GAO identified $14.7 million in 2010 improper payments, inconsistent with national policies, and another $100 million inconsistent with local coverage determinations, where automated prepayment edits could have helped, the agency noted.

Requested by Sens. Tom Carper (D-Del.), Tom Coburn (R-Okla.), the GAO report comes at a time when Congress is looking for potential savings during fiscal cliff negotiations.

"GAO's work once again highlights how ineffective the federal government is at addressing waste, fraud and abuse in our healthcare programs," Sen. Scott Brown (R-Mass.) said in a Politico article.

Providers haven't looked favorably on the idea of prepayment audits, including resistance from the American Medical Association. Although they support the goal to stop fraud and waste, some providers say broad reviews might not be the best way to prevent fraud and could cost them dearly in reimbursements.

CMS uses controls called edits, programmed into claims processing systems to compare claims data to Medicare requirements. Those edits approve or deny claims or flag them for further review.

Although less than a quarter of prepayment edits are "manual" for clinical review, most of the prepayment edits are automated, meaning if a claim does meet criteria of an edit, it is automatically denied.

CMS processes and pays about 4.8 million Medicare claims a day, according to the report. In 2011, Medicare administrative contractors (better known as MACs) and other administration contractors processed 1.2 billion claims.

For more information:
- here's the GAO summary and report (.pdf)
- read Politico article

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