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Medicare Contractors Should Coordinate More in Hunt for Improper Payments, GAO Report Says

By Kerry Young, CQ HealthBeat Associate Editor

August 13, 2014 -- The network of contractors intended to prevent Medicare from paying needlessly for services sometimes overlap in these efforts and need to better coordinate their work to be more effective, said a report from the investigative arm of Congress.

That step would spare doctors, hospitals and other providers of health services from duplicate reviews, it noted.

A dozen lawmakers, including the top members of the Senate Finance and House Energy and Commerce committees, recently issued a press release making public the findings of the July Government Accountability Office (GAO) report.

Medicare, which pays for health services for more than 50 million elderly and disabled Americans, is one of the largest expenses of the federal government, with an expected outlay of $595 billion for the current budget year, GAO said. As much as $36 billion of Medicare spending may go to improper payments. To combat this kind of loss, the Centers for Medicare and Medicaid Services (CMS) relies on four different kinds of services. Providers of health services have told lawmakers that they have concerns about the consistency and accuracy of this complex audit process.

"The information in this report can now be used by Congress and CMS to help make improvements and ensure more consistent oversight of both the contractors and audit process," the lawmakers said in a joint statement about GAO's findings.

Among the requesters were Ron Wyden, D-Ore., the chairman of the Senate Finance Committee; that panel's ranking Republican, Orrin G. Hatch of Utah; Fred Upton, R-Mich., the chairman of the Energy and Commerce Committee; and that panel's ranking Democrat, Henry A. Waxman of California.

Also among the requesters were Charles Boustany, R-La., the chairman of the Ways and Means subcommittee on oversight and that panel's ranking Democrat, John Lewis of Georgia.

GAO found that there has not been enough guidance from the Centers for Medicare and Medicaid Services to prevent overlap in the work of the four kinds of businesses used to check for improper payments. These groups are:

  • Medicare administrative contractors (MACs), which process and pay claims;
  • zone program integrity contractors (ZPICs), which investigate potential fraud cases;
  • recovery audit contractors (RACs), which examine payments not previously reviewed by other contractors;
  • comprehensive error rate testing (CERT) contractors, which review claims to estimate annually what Medicare's improper payment rate is.

One of the recovery audit contractors told CMS that in 2011, for example, it had to halt reviews on 2,000 claims because a zone program integrity contractor (ZPIC) had not informed it of an ongoing investigation, GAO said. It also found that CMS has not developed full guidance for MACs and ZPICs about whether they can duplicate other contractors' reviews.

"Without complete guidance for all postpayment claims review contractors about when duplicative reviews are permitted, CMS does not have assurance that MACs and ZPICs understand when and how to avoid duplicative reviews," GAO said in the report. "Absence of such guidance can also leave providers confused about whether a duplicative review is appropriate."

In a statement, Hatch said that CMS's efforts to coordinate its contractors "are simply inadequate."

"By establishing clear guidance and communication with its contractors, as recommended by this report, CMS can strengthen the postpayment audit review process to better serve contractors and taxpayers alike," Hatch said.

Other requesters of the GAO report included Dianna DeGette of Colorado, who serves on Energy and Commerce; Sen. Tom Carper,D-Del., chairman of the Homeland Security and Governmental Affairs Committee and that panel's ranking Republican, Tom Coburn of Oklahoma, as well as Sens. Charles E. Grassley, R-Iowa, Bob Corker, R-Tenn., and Claire McCaskill, D-Mo.

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