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Medicare Anti-Fraud Efforts Said to Be Dwarfed by Scope of Problem

By Rebecca Adams, CQ HealthBeat Associate Editor

June 24, 2014 -- Medicare officials recovered about $19.2 billion in fraudulent payments over the past five years, including $210 million through a new system that tries to predict and stop fraud before it occurs, according to a federal report issued Wednesday. But the recovered sum is dwarfed by the size of the problem: Medicare makes up to $50 billion per year in improper payments, including fraud, a Government Accountability Office (GAO) official testified at a House hearing.

The Centers for Medicare and Medicaid Services (CMS) needs to do more to curb fraud and wasteful spending, according to GAO Director of Health Care Kathleen M. King, who appeared before the House Energy and Commerce Subcommittee on Oversight and Investigations hearing.

CMS "has made progress in implementing several key strategies GAO identified or recommended in prior work as helpful in protecting Medicare from fraud," she said. "However, implementing other important actions that GAO recommended could help CMS and its program integrity contractors combat fraud."

In 2013, Medicare paid for medical care for approximately 51 million people at a cost of about $604 billion. That year, the program made almost $50 billion in payments that should not have been made or were incorrect. That includes overpayments, underpayments, payments that were not documented as they should have been and fraud.

"This is a shocking amount of taxpayer money to lose every year, especially considering that some experts tell us that we don't even know the full extent of the problem," said Tim Murphy, R-Pa., chairman of the subcommittee. "These financial losses are simply unacceptable."

Murphy cited an HHS Office of Inspector General finding that a few years ago, Medicare paid out $23 million to dead people. He also called attention to news reports this year that a California doctor billed about $22 million in inappropriate Medicare payments for wheelchairs.

GAO has designated Medicare as a high-risk program since 1990. King suggested three major ways to improve protections of Medicare funding.

One would bolster efforts already underway by CMS to check the credentials of medical providers. Under the health care law (PL 111-148, PL 111-152), CMS hired contractors to make sure medical providers and suppliers have valid licenses and are at legitimate locations. King said that CMS could further strengthen screenings by issuing a rule to work on compliance programs and require additional information, such as a notification of any suspension of payments from a federal health care program.

GAO also suggested better oversight of prepayment reviews to deny improper claims before they are paid and postpayment reviews to recover improperly paid claims.

And King said that Medicare should take common-sense steps to make it harder to commit fraud. For example, GAO has pushed CMS several times to remove seniors' Social Security numbers from their Medicare cards to help prevent identity theft and fraud. CMS agreed with the concept, but hasn't followed through. Officials said funding limitations and other problems made it hard to implement the recommendation.

CMS Center for Program Integrity Deputy Administrator and Director Shantanu Agrawal said that the agency put in place additional screening tools in March 2011. Of the 1.5 million suppliers and providers who participate in Medicare and need to be revalidated under the new screening requirements, more than 930,000 providers and suppliers have faced the new screening requirements and more than 350,000 provider and supplier practice locations had their billing privileges deactivated because they didn't respond to information requests.

Agrawal said that 20,218 providers and suppliers have had their privileges revoked so that they can no longer bill the program because they have been convicted of felonies, are not licensed or otherwise don't pass the screening tests.

The agency is working to develop ways to better ferret out wrongdoing. For instance, Agrawal said that CMS is creating a process to match enrollment data against public and private databases to get more updated felony conviction information.

"Although we have made significant progress by implementing important policies to improve provider screening, we are continually refining our policies and processes," Agrawal said.

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