Medicare Integrity Program:

CMS Used Increased Funding for New Activities but Could Improve Measurement of Program Effectiveness

GAO-11-592: Published: Jul 29, 2011. Publicly Released: Aug 29, 2011.

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The Medicare program makes about $500 billion in payments per year and continues to have a significant amount of improper payments--almost $48 billion in fiscal year 2010. The Centers for Medicare & Medicaid Services' (CMS) Medicare Integrity Program (MIP) is designed to identify and address fraud, waste, and abuse, which are all causes of improper payments. MIP's authorizing legislation provided funding for its activities and subsequent legislation provided additional funding. GAO was asked to report on how effectively CMS is using MIP funding to address Medicare program integrity. GAO examined (1) how CMS used MIP funding to support the program's activities from fiscal years 2006 through 2010, (2) how CMS assesses the effectiveness of MIP, and (3) factors CMS considers when allocating MIP funding. GAO analyzed CMS budget and other documents, interviewed CMS officials, and examined the agency's method of calculating return on investment (ROI), a performance measure used by CMS to measure the effectiveness of MIP activities.

CMS used the increase in total MIP funding received, from $832 million in fiscal year 2006 to $1 billion in fiscal year 2010, to expand MIP's activities. The additional funding supported oversight of Medicare Part C (Medicare benefits managed through private plans) and Part D (the outpatient prescription drug benefit) and agency efforts to examine the claims of Medicare beneficiaries who also participate in Medicaid--a joint federal-state health care program for certain low-income individuals. CMS officials also reported that CMS was able to move some funding from activities, such as provider audit, to other activities because of savings achieved from consolidating contractors. The largest percentage increase from this redistribution went to benefit integrity activities, which aim to deter and detect Medicare fraud through proactive data analysis and coordination with law enforcement. Although CMS has reported that the agency measures MIP's performance with goals related to reductions in the improper payment rates for Medicare fee-forservice, Part C, and Part D, CMS officials with direct responsibility for MIP generally do not connect measurements of effectiveness of MIP activities with the CMS goals of reducing improper payments. These goals to reduce improper payments, which were reported as goals previously and for fiscal year 2012, are particularly important in light of the President's Accountable Government Initiative, which aims to reduce overall improper payments by $50 billion by the end of 2012. In interviews with GAO, CMS officials with direct responsibility for implementing MIP activities generally did not connect the measurement of effectiveness of MIP activities with these CMS goals to reduce improper payments and instead cited other measures of effectiveness. This suggests that CMS has not clearly communicated to its staff the relationship between the daily work of conducting MIP activities and the agency's improper payment reduction performance goals. Because MIP will be central to CMS's efforts to reduce Medicare improper payments, MIP staff need to understand how their work supports these goals. In addition, the Patient Protection and Affordable Care Act requires CMS to report annually on the use of funds for MIP and the effectiveness of the use of those funds. One way that CMS already measures MIP effectiveness is ROI, which CMS calculates as savings from an activity in relation to expenditures. CMS calculates ROI for most of its MIP activities, but the data it uses have two flaws. First, ROI calculations are not updated when program expenditure data, a key component in the ROI calculation, are updated, which may lead to an incorrect ROI. Second, CMS does not have reliable information to determine the amount of MIP spending by activity for one type of contractor that received about 22 percent of total MIP funding in fiscal year 2010. It will be important for CMS to correct these flaws to ensure reliability in ROI reporting. CMS considers a variety of factors when allocating MIP funding. Based on a review of the documents submitted to justify funding of specific MIP activities, CMS may consider the prior year's funding level, the consequence of not funding, and the performance goal that the activity is intended to meet. GAO recommends that CMS communicate the linkage between MIP activities and the goals for reducing improper payments and that CMS expeditiously improve the reliability of data used to calculate ROI. The Department of Health and Human Services concurred with these recommendations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In its comments on our draft report, CMS concurred with our recommendation to clearly communicate to staff the linkage between GPRA and PPACA performance measures related to the reduction in improper payments and other measures used to determine the performance of MIP activities. In 2014, CMS indicated that its Strategic Plan for Program Integrity (PI Strategy), which the agency said it developed in 2013 as part of the larger CMS Strategy as PPACA was implemented, was developed by senior leadership and served as a mechanism to involve staff in linkages between their work, GPRA measures and PPACA performance measures. The Strategic Plan was provided to GAO in Sept. 2014. Specifically, CMS noted the PI Strategy was developed by a cross-agency senior leadership group, led by the Center for Program Integrity (CPI) and staffed by the Strategy Management Group (formerly the Center for Strategic Planning (CSP)), the Chief Performance Officer (CPO) and performance staff from the Performance Management Group all located in the Office of Enterprise Strategy and Performance. The strategic objectives are reinforced by performance measures, many of which are GPRA performance measures, and by key initiatives which are regularly tracked. Additionally, CMS stated that the Performance Integration Team (PIT) chaired by the CPO has been kept apprised of all developments in the CMS Strategy and the PI Strategic Plan, and its cross-cutting agency priorities and initiatives. This PIT, which includes representatives across CMS, including CPI, continues to be a useful forum for sharing performance-related information, bringing performance efficiencies and best practices to CMS and understanding the CMS Strategy. CMS stated that the CPO also continues to brief Agency leadership ? including CPI leadership -- on CMS performance issues, including requirements of the GPRA Modernization Act, and alignment of CMS performance measures with HHS and CMS Strategic Plans.

    Recommendation: To enhance accountability and sharpen the focus of the agency on reducing improper payments, the Administrator of CMS should clearly communicate to staff the linkage between Government Performance and Results Act (GPRA) and Patient Protection and Affordable Care Act (PPACA) performance measures related to the reduction in improper payments and other measures used to determine the performance of Medicare Integrity Program (MIP) activities.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Open

    Comments: In its comments on the draft report, CMS concurred with our recommendation to periodically update ROI calculations after contractor expenses have been audited to account for changes in expenditure data reported to CMS and publish a final ROI after data are complete. According to CMS, the agency will update the ROI when there has been a material change in the data used in the calculation and, at a minimum, will revisit the ROI annually to account for revisions in contractor cost reports and updated savings information. CMS indicated that it had reviewed the data used to calculate the fiscal year 2011 ROI and developed a revised ROI, which was under review as of June 2012. However, CMS did not indicate that it intended to regularly update its ROI after contractor expenses had been audited. In August 2014, CMS still did not indicate that it intended to regularly update the ROI.

    Recommendation: To enhance the reliability of data used to calculate the MIP ROI, the Administrator of CMS should periodically update ROI calculations after contractor expenses have been audited to account for changes in expenditure data reported to CMS and publish a final ROI after data are complete.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  3. Status: Closed - Implemented

    Comments: In July 2011, we reported that the Patient Protection and Affordable Care Act (PPACA) requires the Centers for Medicare & Medicaid Services (CMS) to report annually on the use of funds for the Medicare Integrity Program (MIP) and the effectiveness of the use of those funds. One way that CMS measures program effectiveness is through calculation of return on investment (ROI); however, we reported that the data CMS used to calculate the ROI had several flaws, including a lack of reliable information to determine the exact amount spent by Medicare Administrative Contractors (MAC) on individual MIP activities. We reported that, to enhance the reliability of data used to calculate the MIP ROI, the Administrator of CMS should, among other things, complete the implementation of data system changes that would permit CMS to capture accurate MAC spending data, thereby helping to ensure an accurate ROI. In response to our recommendation, CMS reported in 2014 that changes were made in the CMS Analysis, Reporting, and Tracking (CMS-ART) system that allow the MACs to submit final estimated cost proposals (business proposals) and monthly cost reports electronically to CMS. Officials stated that CMS-ART supports the agency's efforts to monitor, review, and analyze actual costs incurred (reflected in the monthly cost reports) versus projected costs and hours agreed to upon the contract award (reflected in the business proposal). Implementing these data system changes helps to ensure reliability in ROI reporting, thereby improving CMS's ability to assess the effectiveness of MIP activities.

    Recommendation: To enhance the reliability of data used to calculate the MIP ROI, the Administrator of CMS should expeditiously complete the implementation of data system changes that will permit CMS to capture accurate Medicare administrative contractor (MAC) spending data, thereby helping to ensure an accurate ROI.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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