Adapting Private Sector Techniques Could Curb Losses to Fraud and Abuse

T-HEHS-95-211: Published: Jul 19, 1995. Publicly Released: Jul 19, 1995.

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GAO discussed Medicare's continuing vulnerability to questionable, abusive, and exploitative provider billing. GAO noted that: (1) Medicare is vulnerable to abusive billing because it has higher-than-market rates for certain supplies and services, inadequate fraud and abuse detection procedures, inadequate criteria for confirming the authenticity of providers billing the program, and lengthy delays and inadequacies in its corrective actions; (2) the Health Care Financing Administration (HCFA) lacks the resources to review Medicare service rates; (3) contractor funding for detecting and following up on questionable claims has been declining for several years; (4) HCFA is implementing an integrated system to track each beneficiary's claims to identify suspicious activities and is exploring whether it can adopt and modify commercial software to process and pay claims; (5) few fraud and abuse cases are prosecuted and even fewer result in substantial fines or the provider being barred from the program; (6) private payers use various management approaches to prevent overcharging and to detect abusive and unqualified providers; (7) Medicare's pricing methods and utilization controls are outdated, partially due to the requirement to minimize government involvement in medical care; and (8) Medicare could save billions of dollars by pricing services and procedures more competitively, enhancing its antifraud and abuse efforts, and requiring providers to prove their suitability as Medicare vendors.

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