Medicare:

Health Care Fraud and Abuse Control Program Financial Reports for Fiscal Years 1998 and 1999

AIMD-00-257R: Published: Jul 31, 2000. Publicly Released: Jul 31, 2000.

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Pursuant to a legislative requirement, GAO reviewed the Health Care Fraud and Abuse Control (HCFAC) Program financial reports for fiscal years (FY) 1998 and 1999 as required by the the Health Insurance Portability and Accountability Act (HIPAA) of 1996.

GAO noted that: (1) the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) joint HCFAC reports for fiscal years 1998 and 1999 reported that $107.4 million and $114.4 million, respectively, were deposited into the trust fund pursuant to HIPAA; (2) the sources of these deposits, as shown in the joint reports, were primarily penalties and damages ($103 million in FY 1998 and $73.6 million in FY 1999) resulting from health care fraud audits, evaluations, investigations, and litigation; (3) the joint reports also stated that $119.6 million in FY 1998 and $137.2 million in FY 1999 were appropriated from the trust fund for the HCFAC program; (4) of those amounts, HHS and DOJ allocated $85.7 million in FY 1998 and $98.2 million in FY 1999 to the HHS/Office of Inspector General (OIG) to continue its Medicare and Medicaid fraud enforcement activities; (5) the remaining $33.9 million in FY 1998 funds and $39 million in FY 1999 funds were allocated to: (a) DOJ, which received $28.5 million in FY 1998 and $30.7 million in FY 1999 primarily to continue its litigative efforts and to provide health care fraud training; and (b) other HHS organizations, which received $5.5 million in FY 1998 and $8.2 million in FY 1999 for a variety of activities, including the development of a new adverse action databank; (6) based on GAO's review of selected deposit, allocation, and expenditure transactions, GAO found that these transactions were related to HIPAA deposits, allocations, and expenditures as reported by HHS and DOJ in their joint reports; (7) GAO found no material weakness in HHS' and DOJ's processes for accumulating HCFAC deposit, allocation, and expenditure information; (8) GAO could not identify expenditures from the trust fund for HCFAC activities not related to Medicare because neither the HHS/OIG nor DOJ separately account for or monitor those expenditures; (9) GAO also could not determine the magnitude of savings to the trust fund, or other savings, resulting from the HCFAC trust fund expenditures during fiscal years 1998 and 1999; (10) however, the HHS/OIG reported $10.8 billion and $11.8 billion for fiscal years 1998 and 1999, respectively, in cost savings of health care funds as a result of its recommendations or other initiatives; (11) the Healthcare Integrity and Protection Data Bank (HIPDB) opened for reporting on November 22, 1999, and for querying on March 6, 2000; and (12) however, implementation of HIPDB was postponed primarily as a result of the delayed issuance of final governing regulations.

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