Medicare Claims:

Commercial Technology Could Save Billions Lost to Billing Abuse

AIMD-95-135: Published: May 5, 1995. Publicly Released: May 5, 1995.

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Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) potential use of commercial technology to detect Medicare billing errors, focusing on whether: (1) commercial systems could reduce Medicare costs; and (2) HCFA development approach is likely to generate savings comparable to that of commercial systems.

GAO found that: (1) commercial code manipulation detection systems could have reduced Medicare payments by $603 million in 1993 and $640 million in 1994 and beneficiaries could have saved $134 million in 1993 and $142 million in 1994 in copayments and deductibles; (2) less than 10 percent of health care providers are responsible for miscoded Medicare claims; (3) although HCFA is enhancing its ability to detect code manipulations, its efforts cannot match commercial detection system capabilities or savings; and (4) commercial systems would be cost-effective, since the operation costs for one year would range between $10 million and $20 million for all Medicare carriers and HCFA could save $600 million per year.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA acquired a license for a commercial system to detect code manipulation when processing Medicare claims for physician services and supplies. In October 1998 HCFA implemented the use of this software by Medicare claims processing contractors.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to require Medicare carriers to use a commercial system to detect code manipulation when processing Medicare claims for physician services and supplies.

    Agency Affected: Department of Health and Human Services

 

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