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The Centers for Medicare & Medicaid Services (CMS) estimated that the Medicare program paid approximately $20 billion (net) in error for fee-for-service (FFS) claims in fiscal year 2004. CMS established two programs--the Comprehensive Error Rate Testing (CERT) Program and the Hospital Payment Monitoring Program (HPMP)--to measure the accuracy of claims paid. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 directed GAO to study the adequacy of the methodology that CMS used to estimate the Medicare FFS claims paid in error. GAO reviewed the extent to which CMS's methodology for estimating the fiscal year 2004 error rates was adequate by contractor type for (1) the CERT Program, (2) the HPMP, and (3) the combined national error rate (including both the CERT Program and the HPMP). GAO reviewed relevant CMS documents and reports related to the CERT Program and the HPMP. In addition, GAO reviewed work performed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and its contractor that evaluated CMS's fiscal year 2004 statistical methods and other aspects of the error rate estimation process. GAO also conducted interviews with officials from CMS, HHS's OIG, and their contractors.

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