Medicare:

One Scheme Illustrates Vulnerabilities to Fraud

HRD-92-76: Published: Aug 26, 1992. Publicly Released: Sep 10, 1992.

Additional Materials:

Contact:

William J. Scanlon
(202) 512-7114
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO provided information on Medicare's involvement with fraudulent medical laboratory operations, focusing on: (1) the extent of false claims paid by Medicare; (2) Medicare's success in recovering lost funds; and (3) Medicare's vulnerability to similar fraudulent activities.

GAO found that: (1) although Medicare experienced some success in identification and prosecution of fraudulent laboratory operators, many fraudulent claims were unrecovered; (2) physicians avoid liability for repayment by failing to respond to Health Care Financing Administration (HCFA) and carrier collection letters, stopping operations and forming new corporate identities, and using group practice billing; (3) recovering fraudulent claims concerning unnecessary tests remains difficult due to the required burden of proof; (4) pursuit of fraud cases through civil procedures is hampered by a lack of interagency cooperation and critical missing files; (5) inadequate monitoring of physicians' referral patterns, the ease of obtaining multiple provider numbers, and the failure of provider information regulations to exclude past violators continue to make Medicare vulnerable to fraud; and (6) some carriers have developed computerized claims edits to automatically suspend claims payments, and HCFA requires carriers to establish separate fraud investigations branches, but reduced Medicare funding may constrain and adversely affect investigations and reviews.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In August 1994, HCFA revised its carrier manual instructions to require review of physician referrals for tests, supplies, etc. The guidelines (S. 7504) specify that aberrances be investigated to determine the cause and that corrective action be taken.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to develop procedures and provide policy guidance to Medicare contractors concerning the use of available information on referrals, to identify and review providers who prescribe abnormal amounts of diagnostic tests or medical supplies or whose referrals to specific laboratories or suppliers are unusually high.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: The Balanced Budget Act of 1997 contains provisions that authorize HCFA to deny provider numbers to applicants under certain conditions. Among those conditions are that the applicant does not provide complete and accurate information concerning ownership and control of business entities, or identifying information about management employees and subcontractors.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to develop procedures and provide policy guidance to Medicare contractors concerning the use of available information on ownership, and to identify and review instances of individuals who were involved in past fraudulent or abusive activity or have an individual ownership interest in entities to which they refer patients.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: HCFA's new National Provider System will assign numbers to providers, labs, and suppliers. Included among those to be newly enumerated will be physiological labs. Ownership and financial information will be system requirements.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to strengthen controls over who can bill the program by establishing standards for the assignment of provider numbers to laboratories.

    Agency Affected: Department of Health and Human Services

 

Explore the full database of GAO's Open Recommendations »

Sep 15, 2016

Sep 14, 2016

Sep 12, 2016

Sep 9, 2016

Sep 6, 2016

Aug 31, 2016

Looking for more? Browse all our products here