HCFA Could Do More to Identify and Collect Overpayments

HEHS/AIMD-00-304: Published: Sep 7, 2000. Publicly Released: Sep 7, 2000.

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Pursuant to a congressional request, GAO provided information on efforts to recover Medicare's overpayments, focusing on: (1) how the Health Care Financing Administration (HCFA) and its contractors identify potential overpayments, and whether techniques used by recovery auditors would improve overpayment identification; (2) how well HCFA and its contractors collect overpayments once they are identified, and whether the services of recovery auditors would improve HCFA collection efforts; and (3) what challenges HCFA would face if it were required to hire recovery auditors to augment its overpayment identification and collection activities.

GAO noted that: (1) despite HCFA's efforts to pay claims correctly in its $167 billion fee-for-service Medicare program, several billions of dollars in Medicare overpayments occur each year; (2) it is therefore critical that HCFA undertake effective postpayment activities to identify overpayments expeditiously; (3) HCFA's claims administration contractors use several postpayment techniques to identify overpayments; (4) these include medical review to ensure reports for providers that are paid on the basis of their costs, and reviews to determine if another entity besides Medicare has primary payment responsibility; (5) the contractors identify and collect billions of dollars through these activities, but how well each contractor performs them is not clear because HCFA lacks the information it needs to measure the effectiveness of contractors' overpayment identification activities; (6) while recovery auditors may also save money for clients, such as state Medicaid agencies, by identifying overpayments, the identification techniques they use are generally similar to those already used by HCFA and its contractors; (7) this does not mean that HCFA could not benefit from a stronger focus on specific postpayment activities; (8) however, doing so may require additional program safeguard funding so as not to shift funds away from HCFA's other efforts, such as prepayment review to prevent overpayments; (9) Congress has given HCFA assured funding for program safeguard activities; (10) however, the funding level is about one-third less than it was in 1989 and, although it will increase until 2003, it will only keep pace with expected growth in Medicare expenditures; (11) for fiscal year 1999, based on HCFA estimates, the Medicare Integrity Program saved the Medicare program more than $17 for each dollar spent--about 55 percent from prepayment activities and the rest from postpayment activities; (12) because these activities can bring a positive return, GAO suggests that Congress consider increasing HCFA's funding to bolster its postpayment review program; (13) HCFA plans to expand its pilot projects from some to all of its claims administration contractors; and (14) however, it has established minimum thresholds for referrals for collection that are higher than the Department of the Treasury and debt collection center will accept because HCFA says that it does not have the resources needed to pursue collection on the large volume of debt below its thresholds.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: For fiscal year 2006, the Congress increased its appropriation for program integrity funds by $100 million in addition to the amount of $720 million, which is the maximum scheduled in the Health Insurance Portability and Accountability Act of 1996. In the Deficit Reduction Act of 2005, the Congress also included the Medi-Medi program into the Medicare Integrity Program, with funding specified in the law. Medi-Medi matches Medicare and Medicaid claims, to identify providers with questionable billing to these programs. In fiscal year 2007, funding under the continuing resolution was at $720 million, with $24 million for the Medi-Medi program. In fiscal year 2008, funding for MIP was $720 million, the funding for the Medi-Medi program was $36 million. In fiscal year 2009, estimated funding for MIP is $720 million, the funding for the Medi-Medi program is estimated to be $48 million.

    Matter: Congress should consider increasing HCFA's Medicare Integrity Program funds to allow an expansion of postpayment and other effective program safeguard activities, and require HCFA to report on the financial returns from these and other program safeguard investments.

  2. Status: Closed - Implemented

    Comments: The Congress acted upon this matter, through Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (42 U.S.C. 1395y(b)(7)&(b)(8)), which required submission of enrollment information by group health plans to the Secretary of the Department of Health and Human Services so that the information could be used to establish whether Medicare was the primary or secondary payor for enrolled individuals.

    Matter: Because HCFA has had difficulties gaining the cooperation of health insurers in identifying beneficiaries covered by other insurance under the Medicare Secondary Payer Program, Congress should consider requiring all private health insurers to comply with HCFA requests for the names and identifying information of their enrolled beneficiaries.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: CMS has not announced any plans for such an evaluation.

    Recommendation: To improve overpayment identification and collection, the Administrator, HCFA, should require that the effectiveness of prepayment and postpayment activities be evaluated to determine the relative benefits of various prepayment and postpayment safeguards.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration

  2. Status: Closed - Implemented

    Comments: Following GAO's guidance in the report and the recommendation, the agency lowered the dollar limit of eligible debt to be referred to $25, ordered the contractors to begin referring debt as it became delinquent as well as referring from its backlog of aged debt, and set forth a time frame for completion of all eligible delinquent debt--by the end of fiscal year 2002. Through its current debt referral process, HHS collected about $20 million in fiscal year 2001, and about $28 million for the first 9 months of fiscal year 2002.

    Recommendation: The Administrator, HCFA, should require that all debt be transferred to the Department of Health and Human Services (HHS) Program Support Center for collection or referral to Treasury for collection as soon as it becomes delinquent and is determined to be eligible for transfer. For its current backlog of debt that is determined to be eligible, HCFA should validate and refer such debt to HHS' Program Support Center as quickly as possible.

    Agency Affected: Department of Health and Human Services: Health Care Financing Administration


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