Lengthy Delays in Processing of Overpayments Under Part A of the Medicare Program May Result in Losses of Millions of Dollars

TCD-75-4: Published: Apr 4, 1975. Publicly Released: Apr 4, 1975.

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GAO, in its continuing effort to improve the effectiveness of the Government's collection operations reviews agency operations periodically. One such review involved part A of the Medicare program which covers in-patient hospital services, post-hospital care in skilled nursing facilities, and care in the patient's home. The Bureau of Health Insurance administers this program. The law authorizes the Secretary of Health, Education, and Welfare to contract with intermediaries to pay hospitals and institutions for beneficiaries' care.

The Medicare program became effective July 1, 1966. Under Medicare reimbursement principles, intermediaries pay interim payments, not less than once a month, to providers of services for the reasonable cost of such services to beneficiaries. Providers submit cost reports to account for all costs incurred. GAO found that overpayments arise because interim payments are too high, providers fail to file cost reports, or providers bill for excessive or noncovered services to beneficiaries. Uncollectable payments are referred to GAO for possible referral to the Department of Justice for enforced collection proceedings. GAO was concerned that overpayments made during the early years of the program would be barred under the 6-year statute of limitations, resulting in possible losses of millions of dollar to the Government. GAO told the Bureau of Health Insurance that under the statute of limitation the earliest possible date should be used in determining when the right of action first accrues.

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