GAO Report (Medicare Fraud)

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GAO Report (Medicare Fraud)
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    GAO United States Government Accountability Office TestimonyBefore the Subcommittees on Health andOversight, Committee on Ways andMeans, House of Representatives MEDICARE FRAUD,WASTE, AND ABUSEChallenges and Strategiesfor Preventing ImproperPayments Statement of Kathleen M. KingDirector, Health Care For Release on DeliveryExpected at 10:00 a.m. EDTTuesday, June 15, 2010 GAO-10-844T  What GAO Found United States Government Accountability Office Why GAO Did This Study H ighlights Accountability Integrity Reliability June 15, 2010   MEDICARE FRAUD, WASTE, AND ABUSE Challen g e s and S trate g ie s for Preventin g ImproperPayment s   Highlights ofGAO-10-844T, a testimonybefore the Subcommittees on Health andOversight, Committee on Ways andMeans, House of Representatives T GAO has designated Medicare as ahigh-risk program since 1990, in part because the program’s sizeand complexity make it vulnerableto fraud, waste, and abuse. Fraudrepresents intentional acts of deception with knowledge that theaction or representation couldresult in an inappropriate gain,while abuse represents actionsinconsistent with acceptablebusiness or medical practices.Waste, which includes inaccurate payments for services, also occursin the Medicare program.   Fraud, waste, and abuse all canlead to improper payments,overpayments and underpaymentsthat should not have been made, orthat were made in an incorrectamount. In 2009, the Centers forMedicare & Medicaid Services(CMS)—the agency thatadministers Medicare—estimatedbillions of dollars in improper payments in the Medicare program.This statement will focus onchallenges facing CMS and selectedkey strategies that are particularlyimportant to helping prevent fraud,waste, and abuse, and ultimately toreducing improper payments. It isbased on nine GAO products issuedfrom September 2005 throughMarch 2010 using a variety of methodologies, including analysisof claims, review of relevant policies and procedures,stakeholder interviews, and site visits. GAO received updatedinformation from CMS in    June2010. GAO has identified challenges and strategies in five key areas important in preventing fraud, waste, and abuse, and ultimately to reducing improper payments. GAO has made recommendations in these areas. CMS has made progress in some of these areas, and recent legislation may provide the agencywith enhanced authority. However, CMS faces continuing challenges.1. Strengthening provider enrollment proce ss and s tandard s . Checkingthe background of providers at the time they apply to become Medicare providers is a crucial step to reduce the risk of enrolling providers intent ondefrauding or abusing the program. In particular, GAO has recommendedstricter scrutiny of providers identified as particularly vulnerable toimproper payments to ensure they are legitimate businesses.2. Improving pre-payment review of claim s . Pre-payment reviews of claims are essential to helping ensure that Medicare pays correctly the firsttime. GAO has recommended that CMS further enhance its ability toidentify improper claims through additional automated pre-payment claimreview before they are paid.3. Focu s ing po s t-payment claim s review on mo s t vulnerable area s . Post- payment reviews are critical to identifying payment errors and recoupingoverpayments. GAO has recommended that CMS better target claims for post payment review on the most vulnerable areas.4. Improving over s ight of contractor s . Because Medicare is administeredby contractors, overseeing their activities to address fraud, waste, andabuse is critical. GAO found that CMS’s oversight of prescription drug plansponsors’ compliance programs has been limited. However, partly inresponse to GAO’s recommendation, CMS oversight of these programs isexpanding.5. Developing a robu s t proce ss for addre ss ing identified vulnerabilitie s . Having mechanisms in place to resolve vulnerabilities thatlead to improper payment is vital to program management, but CMS has notdeveloped a robust process to specifically address these. GAO hasrecommended that CMS establish an adequate process to ensure promptresolution of identified improper payment vulnerabilities. View GAO-10-844T or key components. For more information, contact Kathleen M.King at (202) 512-7114 or kingk@gao.gov.   Page 1 GAO-10-844T Mr. Chairman and Members of the Subcommittees:I am pleased to be here today to discuss our work regarding fraud, waste,and abuse in the Medicare program. 1 We have designated Medicare as ahigh-risk program since 1990, in part because we found the program’s sizeand complexity make it vulnerable to fraud, waste, and abuse. 2 Fraudrepresents intentional acts of deception with knowledge that the action orrepresentation could result in an inappropriate gain, while abuserepresents actions inconsistent with acceptable business or medical practices. Waste, which includes inaccurate payments for services, such asunintentional duplicate payments, also occurs in the Medicare program.Fraud, waste, and abuse all can lead to improper payments, overpaymentsand underpayments that should not have been made or that were made inan incorrect amount. The Centers for Medicare & Medicaid Services(CMS) 3 —the agency that administers Medicare—has estimated improper payments for Medicare fee-for-service (FFS) at $24.1 billion in calendar year 2009. 4 Even this may not be a full picture of the risk for improper payments because some improper payments may not be detected andhence may not be reflected in the improper payment rate. 5   1 Medicare is the federally financed health insurance program for persons aged 65 or over,certain individuals with disabilities, and individuals with end-stage renal disease. The program consists of four parts. Medicare Part A covers hospital and other inpatient stays.Medicare Part B is optional insurance, and covers hospital outpatient, physician, and otherservices. Medicare Parts A and B are known as srcinal Medicare or Medicare FFS.Medicare beneficiaries have the option of obtaining coverage for Medicare Part A and Bservices from private health plans that participate in Medicare Advantage—Medicare’smanaged care program, also known as Medicare Part C. All Medicare beneficiaries may purchase coverage for outpatient prescription drugs under Medicare Part D. 2 In 1990, GAO began to report on government operations that it identified as “high risk” forserious weaknesses in areas that involve substantial resources and provide critical servicesto the public. See GAO,  High-Risk Series: An Update ,GAO-09-271(Washington, D.C.: January 2009). http:// www.gao.gov/highrisk/risks/insurance/medicare_program.php. 3 CMS is an agency within the Department of Health and Human Services (HHS) to whichHHS has delegated responsibility for administering the Medicare program .   4 “Improper Medicare FFS Payments Report” in HHS’s  Fiscal Year 2009 Agency Financial Report, November 2009. 5 HHS’s Office of Inspector General has raised concerns that the improper payment rates forcertain provider types may be understated based on its review of additional medicalrecords and interviews with beneficiaries and providers.    Beginning in 1997, Congress has allocated funds specifically for CMSoversight activities designed to ensure that claims are paid correctly, boththrough dedicated funding and augmented more recently through annualappropriations. Further, the Patient Protection and Affordable Care Act(PPACA) 6 and the Health Care and Education Reconciliation Act of 2010(HCERA) 7 have provisions that may help strengthen strategies CMS maytake to reduce improper payments. For example, the legislation requiresthe Department of Health and Human Services (HHS) to undertake certainactions designed to strengthen the agency’s processes of screening andenrolling Medicare providers in an effort to combat fraud, waste, andabuse.However, preventing improper payments in Medicare is a continuingchallenge. 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 potentialMedicare fraud. 8 For Medicare Advantage, Medicare’s private healthinsurance program, and the Medicare prescription drug benefit, CMScontracts with private health plans and drug plan sponsors, respectively,that are responsible for administering Medicare benefits. Hence, CMScontractors have an important role in preventing improper payments. 9 Inthe course of our work, we have identified challenges facing CMS andselected key strategies that are particularly important to helping preventfraud, waste, and abuse, and ultimately to reducing improper payments.My testimony today will focus on our findings in these areas.This statement is based on nine products that we have issued regardingfraud, waste, abuse, and improper payments in the Medicare program.These products were issued from September 2005 through March 2010 6 Pub. L. No. 111-148, 124 Stat. 119. 7 Pub. L. No. 111-152, 124 Stat. 1029. 8 Providers enroll in Medicare by meeting a series of requirements. For example, homehealth agencies (HHA) must submit an enrollment application that is screened by aMedicare contractor. If the application meets CMS standards, the contractor recommendsapproval to the state and CMS. The state reviews the HHA to determine if it is compliantwith federal conditions of participation including requirements related to organizationstructure, administration, patient rights, medical supervision, and patient assessment. TheHHA can also be accredited by an approved accrediting organization. The HHA must alsomeet the statutory and regulatory requirements in the state in which it is located. 9 For the purposes of this statement, we refer to any organization that is funded by Medicareto administer any part of the Medicare program as a “contractor.” Page 2 GAO-10-844T
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