Medicare:

Fraud and Abuse Control Pose a Continuing Challenge

HEHS-98-215R: Published: Jul 15, 1998. Publicly Released: Jul 15, 1998.

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Pursuant to a congressional request, GAO reviewed fraud and abuse in both Medicare's fee-for-service and managed care programs, focusing on: (1) the impact of inadequate program safeguard funding on efforts to combat improper Medicare payments; (2) ineffective management and oversight of fee-for-service payments and operations; and (3) ineffective oversight of Medicare managed care plans.

GAO noted that: (1) although the majority of health care providers participating in Medicare provide quality services and bill the program properly, its size, complexity, and rapid growth make it an attractive target for fraud and abuse; (2) more specifically, the Health Care Financing Administration's (HCFA) past program safeguard efforts have been hindered because budgetary constraints have reduced resources for these efforts as the number of claims has grown; (3) although the Health Insurance Portability and Accountability Act of 1996 (HIPAA) provided HCFA an ensured and increasing funding source for program safeguard efforts, shortcomings in HCFA's management of these efforts have contributed to Medicare losses; (4) for example, HCFA has been slow to employ the funds Congress provided under HIPAA; (5) HCFA has agreed to set contractor program safeguard budgets in a more timely manner in the next fiscal year; (6) in addition, HCFA has not adequately screened providers before admitting them to the Medicare program but is beginning to take steps to tighten admission standards for home health agencies, a well-known problem area; (7) Medicare's managed care program is vulnerable to other forms of fraud and abuse that could be reduced through competition among health maintenance organizations (HMO); (8) HCFA's oversight of the Medicare HMOs has often been ineffective; and (9) furthermore, HCFA's efforts to comply with the Balanced Budget Act of 1997 and provide information about HMO performance to beneficiaries so that they can make informed choices when selecting an HMO have been slower than necessary.

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