Concerns About HCFA's Efforts to Prevent Fraud by Third-Party Billers

T-HEHS-00-93: Published: Apr 6, 2000. Publicly Released: Apr 6, 2000.

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William J. Scanlon
(202) 512-7114


Office of Public Affairs
(202) 512-4800

Pursuant to a congressional request, GAO discussed the effectiveness of the Health Care Financing Administration's (HCFA) efforts to prevent fraud by third-party billing companies that submit claims to Medicare on behalf of providers.

GAO noted that: (1) third-party billing companies often have access to billing information about multiple health care providers and many of their patients; (2) as a result, unscrupulous operators of such businesses have an opportunity to submit false claims; (3) even when HCFA or its contractors suspect that providers' claims are abusive, they are often unable to tell that the claims were submitted by a third-party biller; (4) this is due to limitations in both the systems for processing electronic claims and the complete lack of identifying information on paper claims; (5) while HCFA has established a process--albeit imperfect--to monitor the source of electronic claims, no such process exists for paper claims; (6) paper claim forms include a section or space to identify the provider but not the biller; (7) an Office of Inspector General (OIG) official who has investigated several cases of Medicare fraud by third-party billing companies told GAO that when billing companies used paper claims, it was difficult for the OIG to identify all providers using a given biller; (8) HCFA has no routine registration process to collect comprehensive information about third-party billers; (9) HCFA has made efforts to obtain information on third-party billers, but it still cannot routinely match a third-party biller with all of the providers it represents; (10) in an attempt to gather updated and comprehensive information about providers, HCFA is drafting a regulation to require providers that enrolled in Medicare before May 1996 to complete the new enrollment form to fill this information gap; (11) providers would also be required to recertify the information on their enrollment form every 3 years; (12) HCFA plans to have the regulation in effect by October 1, 2000, and begin requiring providers to update their enrollment information shortly thereafter; (13) this process involves self-reported data that typically will not be validated or updated by the contractors; (14) to make provider and third-party biller information more accessible to the contractors, HCFA is developing a new automated system to access the provider enrollment database; (15) HCFA intends that the system, known as the Provider Enrollment, Chain and Ownership System will provide a complete history of a Medicare provider based on the information in the provider enrollment application; and (16) initially, HCFA plans to incorporate currently available provider information into the system, and, according to HCFA officials, will include updated information from all providers in the future.

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