The Government Accountability Office (GAO) recommends that audit contractors' post-payment review activities could be more valuable if CMS directed these contractors to focus on items and services where RACs are not expected to focus their reviews, and where improper payments are known to be high, specifically home health and durable medical equipment.

That recommendation, along with others, are contained in highlights of recent testimony before the Subcommittees on Health and Oversight, Committee on Ways and Means, House of Representatives by Kathleen M. King, Director of Health Care for the GAO, and made public June 15.

In her testimony, King reported that the Centers for Medicare & Medicaid Services (CMS) has estimated improper payments for Medicare fee-for-service (FFS) at $24.1 billion in calendar year 2009 and that this may not be a full picture of the risk for improper payments because some improper payments may not be detected and hence may not be reflected in the improper payment rate.

Five Key Areas to Reduce Improper Payments

King said the GAO identified challenges and strategies in five key areas important in preventing fraud, waste, and abuse, and ultimately to reduce improper payments. CMS has made progress in some of these areas, and recent legislation may provide the agency with enhanced authority. However, CMS faces continuing challenges, noted King in her remarks. Among those recommendations from the GAO are the following:

1. Strengthening provider enrollment process and standards. Checking the background of providers at the time they apply to become Medicare providers is a crucial step to reduce the risk of enrolling providers intent on defrauding or abusing the program. In particular, GAO has recommended stricter scrutiny of providers identified as particularly vulnerable to improper payments to ensure they are legitimate businesses.

2. Improving pre-payment review of claims. Pre-payment reviews of claims are essential to helping ensure Medicare pays correctly the first time. GAO has recommended CMS further enhance its ability to identify improper claims through additional automated pre-payment claim review before they are paid.

3. Focusing post-payment claims review on the most vulnerable areas. Post- payment reviews are critical to identifying payment errors and recouping overpayments. GAO has recommended that CMS better target claims for post payment review on the most vulnerable areas.

4. Improving oversight of contractors. Because contractors administer Medicare, overseeing their activities to address fraud, waste, and abuse is critical. GAO found that CMS's oversight of prescription drug plan sponsors' compliance programs has been limited. However, partly in response to GAO's recommendation, CMS oversight of these programs is expanding.

5. Developing a robust process for addressing identified vulnerabilities. Having mechanisms in place to resolve vulnerabilities that lead to improper payment is vital to program management, but CMS has not developed a robust process to specifically address these. GAO has recommended that CMS establish an adequate process to ensure prompt resolution of identified improper payment vulnerabilities.

Noting that Congress allocated funds specifically for CMS oversight activities including the recently passed Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA) of 2010, King said both have provisions that may help strengthen strategies CMS could take to reduce improper payments.

Continuing Challenge for CMS

Preventing improper payments in Medicare is a continuing challenge, acknowledged King in her testimony. Within Medicare FFS, CMS contractors are responsible for processing and paying approximately 4.5 million claims per day, enrolling providers, responding to beneficiary questions and investigating potential Medicare fraud.

For Medicare Advantage, Medicare's private health insurance program, and the Medicare prescription drug benefit, CMS contracts with private health plans and drug plan sponsors respectively, that are responsible for administering Medicare benefits. Hence, CMS contractors have an important role in preventing improper payments.

Concerns Over Home Health and DMEPOS

CMS's national RAC program, begun in March 2009, was intended to address post-payment efforts; however, the GAO continues to have concerns about post-payment reviews of HHAs and DMEPOS.