Effective Implementation of New Legislation is Key to Reducing Fraud and Abuse

HEHS-98-59R: Published: Dec 3, 1997. Publicly Released: Dec 3, 1997.

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William J. Scanlon
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Pursuant to a congressional request, GAO reviewed Medicare fraud and abuse in both fee-for-service and managed care programs, focusing on: (1) the impact of inadequate payment safeguard funding on efforts to combat abusive billing; (2) ineffective oversight of fee-for-service payments and operations and Medicare managed care plans; and (3) challenges that lie ahead for the effective implementation of recent legislation that addresses fraud and abuse.

GAO noted that: (1) Medicare's size, complexity, and rapid growth make it an attractive target for fraud and abuse; (2) efforts by the Health Care Financing Administration (HCFA), the agency responsible for administering the program, to improve the program safeguards have not been adequate to prevent substantial losses, in part because the resources available to avoid inappropriate payments have been underutilized or not deployed as effectively as possible; (3) because of budget constraints, reviews of claims and related medical documentation and site audits of providers' records have become inadequate to keep up with the dramatic increases in Medicare activity; (4) in addition to Medicare's information systems and claims monitoring processes have not been uniformly effective at spotting indicators of potential fraud, such as suspiciously large increases in reimbursements, improbable quantities of services claimed, or duplicate bills submitted to different contractors for the same service or supply; (5) insufficient oversight has also resulted in little meaningful action taken against Medicare health maintenance organizations (HMO) found to be out of compliance with federal law and regulations; (6) although HCFA has required these HMOs to prepare corrective action plans, it has not employed other available remedies; (7) accumulated evidence of in-home sales abuses coupled with high rates of rapid disenrollment for certain HMOs also indicates that some beneficiaries are confused or are being misled during the enrollment process and are dissatisfied once they become plan members; (8) in addition, consumer information that could help beneficiaries distinguish the good plans from the poor performers has not been made publicly available, limiting the ability of beneficiaries to make informed choices about competing plans; (9) this in turn limits the use of competition to drive out poor quality; (10) recent legislation-the Health Insurance Portability and Accountability Act of 1996 and the Balanced Budget Act of 1997-refocuses attention on various aspects of Medicare fraud and abuse through new program safeguard funding, new civil and criminal penalties, and new program authorities; and (11) however, while the implementation of these provisions offers the potential to reduce Medicare losses attributable to unwarranted payments, HCFA's history of lengthy delays in implementing legislation gives rise to concern about whether the authorities granted will be deployed promptly and effectively.

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