Medicare: Modern Management Strategies Needed to Curb Program Exploitation

GAO discussed ways for Medicare to avoid unnecessary payments stemming from waste, fraud, and abuse. GAO noted that: (1) Medicare's vulnerability to overpayments is due to higher than market rates for some services, inadequate fraud and abuse controls, superficial criteria for confirming provider authenticity, and weak enforcement efforts; (2) Medicare could have saved at least $3 billion over 5 years if it had used commercial software for detecting fraudulent and abusive claims; (3) it is difficult to check nonmedical suppliers because they are not subject to licensing and privacy laws that require verifying their social security and tax identification numbers; (4) although Medicare pursues few fraud and abuse cases, penalties are light when levied and few abusive providers are forced out of business; (5) although private sector health care management techniques could help Medicare modernize its pricing methods and utilization controls, statutory prohibitions limit Medicare's use of them; and (6) adapting the private sector health care management approach to Medicare should focus on pre-enforcement efforts and more competitively developed payment rates, enhanced fraud and abuse detection efforts, and more rigorous criteria for Medicaid billing authorization.