From the U.S. Government Accountability Office, www.gao.gov Transcript for: Medicaid Provider and Beneficiary Fraud Controls Description: Audio Interview by GAO staff with Seto Bagdoyan, Director, Forensic Audits and Investigative Service Related GAO Work: GAO-15-313: Medicaid: Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls Released: May 2015 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's May 2015. Of the $310 billion of federal Medicaid expenditures in 2014, the Centers for Medicare and Medicaid Services estimated that $17.5 billion were potentially improper payments. A team led by Seto Bagdoyan, a director in GAO's Forensic Audits and Investigative Service team, recently reviewed efforts to prevent and detect fraud among Medicaid beneficiaries and healthcare providers. GAO's Jacques Arsenault sat down with Seto to discuss what they found. [ Jacques Arsenault: ] Why is the Medicaid program at such risk for improper payments and fraud? [ Seto Bagdoyan: ] Medicaid is a very large social benefit program. It has tens of millions of beneficiaries, hundreds of thousands of providers, and involves a lot of expenditure on the part of the government, federal government, and the states. We're talking about over $300 billion a year. So, with that in mind, something of this scope and scale is inherently vulnerable to fraud and improper payments and other untoward activity. [ Jacques Arsenault: ] Now in your report, you looked at two types: beneficiary fraud and provider fraud. Can you tell me a little bit more about these two types and what you found in each? [ Seto Bagdoyan: ] First, as a way of clarification, when GAO does forensic audits and investigations, what we're looking for are indicators of potential fraud. The actual determination of fraud is up to the agency or a judicial body to conduct administrative, investigative, and judicial proceedings to determine whether fraud actually occurred. So, with that in mind, what we did is we uncovered about 8,000 beneficiaries who received about $18 million from two or more of the four states we looked at. We also found that 200 individuals who were deceased had their identities used to obtain another $10 million or so after their death. So that couldn't have been them. It was probably more of an identity theft situation. And in terms of providers, we found about 50 who were excluded from Medicaid for reasons such as patient abuse, fraud, or bribery, certainly significant matters to bring to one's attention. [ Jacques Arsenault: ] So then, what is CMS doing to address this potential fraud and these vulnerabilities? [ Seto Bagdoyan: ] Sure, they've taken, to their credit, over time since 2011, they've taken a couple of regulatory actions ,and the first one is to direct the states to use electronic data maintained by a federal data services hub to do a better screening of beneficiaries and providers. And secondly, they focus on the area of licensure, which is very important, and that involves basically screening providers to make sure that their licenses are up to snuff in the states where they conduct their business. [ Jacques Arsenault: ] And from what you found, did these efforts seem to be working? [ Seto Bagdoyan: ] It is hard to tell right now. That's why we're focusing on making additional recommendations. From our experience, it probably takes a number of years before the full effect of any regulatory action is fully felt. Whether it's successful or other actions are necessary, we generally err on the side of saying you probably need to do more because we're finding these things still occurring. [ Jacques Arsenault: ] Can you tell me then about the recommendations that you're making to CMS to prevent and address fraud? [ Seto Bagdoyan: ] What we're saying basically are two things. First is to issue guidance to the states to better identify beneficiaries who are deceased. There is a full death file, which is maintained by a government agency, that they should have access to and do more proactive screening of beneficiaries against that database. And the second one is basically provide guidance to the states, alerting them to the availability and their full access to a database called the Provider Enrollment Chain and Ownership System. It's commonly and affectionately known as PECOS, but it is we believe an effective database for the states to have access to and use regularly. [ Jacques Arsenault: ] And finally, what would you say is the bottom line of this report? [ Seto Bagdoyan: ] Yeah, the bottom line just going back to what I said earlier, this is a huge complex program with millions of interacting beneficiaries and providers and again, the expenditure is enormous, 300 billion plus. These numbers are expected to grow because, with the healthcare reform, Medicaid is expanding rapidly. So we're talking about significant additional scale. So it'll be important for both the federal government and the states to do everything in their power to ensure that they have the controls in place and mitigate, not prevent it entirely, it's a reasonable assurance standard that they'll do everything they can to promote program integrity and catch as much potential fraud and improper payment as they can. 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