March 11, 2011

GAO Declares Medicare, Medicaid “High-Risk” Programs for Fraud, Waste, Abuse

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mspivey100WASHINGTON, D.C. – The U.S. Government Accountability Office (GAO) has identified Medicare and Medicaid as “high-risk” programs in terms of vulnerability to potential fraud, waste, abuse and improper payments, authorities said this week.


Federal officials explained that Medicare is considered high-risk in part because of its complexity and susceptibility to improper payments, while Medicaid was cited due to concerns about the adequacy of its fiscal oversight to prevent inappropriate spending. The Centers for Medicare & Medicaid Services (CMS), the agency that administers Medicare and Medicaid, estimated that the two federal programs during the 2010 fiscal year accounted for more than $70 billion in improper payments.


Authorities cited adherence to prior GAO recommendations and the enforcement of recently enacted laws, plus other agency actions, as methods to help CMS execute five key strategies the GAO identified in previous reports on how to combat impropriety in Medicare and Medicaid. The methods are based on 16 GAO products issued from April 2004 through June 2010 and cover areas such as analyses of Medicare or Medicaid claims, review of relevant policies and procedures, and interviews with local officials. The GAO also recently received updated information from CMS on agency actions.

 

The five strategies cited by the GAO included:

 

1.  Strengthening provider enrollment standards and procedures, something believed to be capable of helping reduce the existence of enrolling entities intent on defrauding the programs. Made possible by the Patient Protection and Affordable Care Act of 2010 (PPACA), CMS is implementing this plan, which involves among other measures designating providers by levels of risk and providing more stringent review of high-risk providers.

 

2.  Improving pre-payment review of claims, thereby ensuring that Medicare pays correctly the first time. CMS is implementing a PPACA provision requiring states to add automated pre-payment controls in their Medicaid programs. In addition, CMS is seeking contractors to apply predictive modeling analysis to claims as a way to develop new pre-payment controls to add to Medicare (however, CMS has not implemented certain GAO recommendations related to pre-payment review).

 

3.  Focusing post-payment claims review on some of the most vulnerable areas, a practice critical to identifying payment errors and recouping overpayments. CMS is instituting recovery audit contractor (RAC) programs in Medicare and Medicaid to strengthen post-payment review; however, contractors generally choose their own focus while the GAO continues to contend that CMS should make it a priority to dictate focus on its own.

 

4.  Improving oversight of contractors, a particularly critical area of emphasis. The CMS recently took action to address GAO recommendations to improve oversight of prescription drug plan sponsors' fraud and abuse detection programs and to comply with other contractor oversight provisions in the PPACA.

 

5.  Developing an all-encompassing process for addressing identified vulnerabilities, something CMS has not done for areas identified by Medicare RACs (nor has the agency fully implemented GAO recommendations in this regard). CMS guidance to states on Medicaid RAC programs also did not include steps to address vulnerabilities through a corrective action process, authorities said.


Effective implementation of these recommendations will be a key factor in helping to reduce future improper payments, according to the GAO.

 

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