OIG: Contractor conflicts of interest weaken Medicare

Medicare zone program integrity contractors (ZPIC) in charge of preserving the integrity of millions of Medicare dollars often have financial relationships with the Centers for Medicare & Medicaid Services and with other offerors, making the federal program vulnerable to conflicts of interest, the Office of Inspector General said yesterday.

In fact, two-thirds of the private companies that bid on contracts have financial ties to claims processors, the Associated Press reported. Although the agency found many business and contractual relationships, offerors reported that those relationships rarely caused actual conflicts, OIG said.

Commissioned by Sens. Max Baucus (D-Mont.), Tom Carper (D-Del.), and Claire McCaskill (D-Mo.) who voiced their concerns about contractor and program integrity, the OIG report pointed to a flawed bidding system and an inadequate conflict-of-interest policy, the AP noted.

CMS uses ZPICs to identify improper billing patterns to fight Medicare fraud, waste and abuse and refer cases to OIG for further investigation. During the bidding process, prospective ZPICs (offerors) are supposed to disclose financial interests in other companies that might affect their work. However, OIG found they often failed to provide all the relevant information. And when ZPICs did disclosure potential conflicts, they did it inconsistently. OIG noted that it could be because CMS doesn't have a written policy for reviewing conflict and financial interest information submitted by offerors.

"[C]onflicts of interest that affect the impartiality of ZPICs could weaken CMS's efforts to protect Medicare from fraud, waste and abuse," OIG said.

For example, if a health insurer owns a program integrity contractor and offers a Medicare prescription drug plan, that ZPIC could have a disincentive to investigate fraud involving those drug plans, the OIG noted.

"Conflicts of interest that go undetected or not appropriately addressed could cost the Medicare program money and weaken public trust in its services. If ZPICs with conflicts of interest become less vigilant in combating fraud, then taxpayer dollars may be wasted on payments to unscrupulous providers," OIG continued.

OIG called for clear guidelines in how offerors can propose bids and report business relationships, as well as for CMS to develop a formal policy on how it should review that conflict-of-interest information.

Medicare currently pays 4.4 million claims worth more than $1 billion every day, according to the AP.

For more information:
- check out the OIG summary and report (.pdf)
- see the AP article

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