Weak anti-fraud programs lead to $43B Medicare, $21.9B Medicaid overpayments

Medicare and Medicaid are still vulnerable to fraud, largely due to poor oversight data, the Office of Inspector General and the Government Accountability Office testified yesterday.

In 2011, the Centers for Medicare & Medicaid Services estimated that it issued nearly $43 billion in Medicare overpayments and $21.9 billion Medicaid overpayments, as some of the most expensive and highest-risk programs on GAO's watch list, according to a GAO summary yesterday.

GAO noted that the two programs have different challenges. For example, Medicaid runs 51 distinct state-based programs.

The two agencies, however, stressed that CMS must oversee their efforts to control costs.

"[T]hese programs are not effectively accomplishing their missions," Ann Maxwell, regional inspector general, said yesterday. "[B]oth programs had low findings of actual overpayments and, as a result, yielded negative returns on investment. These programs also delivered very few referrals of potential fraud to OIG and our law enforcement partners. In many ways, these programs resemble a funnel through which significant federal and state resources are being poured in and limited results are trickling out."

The leak in payments is attributed to significant shortcomings of data. For example, due to poor data, Medicaid Integrity Contractors misidentified potential overpayments and the Medi-Medi Program identified fewer overpayments and fewer cases of potential healthcare fraud, according to Maxwell.

"It is critical that CMS and the states continue working on reducing improper payments. While both have made efforts to reduce improper payments, further action is needed," GAO said.

For Medicare, CMS implemented several improved enrollment safeguards, including screening enrollment applications for categories of providers by risk level. CMS and GAO also are working on prepayment edits based on coverage and payment policies, to identify abnormally rapid increases in medical equipment billing, for example. Although CMS has begun using recovery auditing in its prescription drug program, it hasn't for its managed care plans, GAO noted.

For Medicaid, CMS has started collaborating with states to identify targets for federal postpayment audits, which should help to avoid duplication of federal and state audit efforts. CMS hasn't established a robust process for states to evaluate vulnerabilities identified by the states' new recovery audit contractors to identify and recoup overpayments, GAO said.

For more information:
- read the GAO summary and report (.pdf)
- see Ann Maxwell's testimony (.pdf)

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