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Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) Medicare claims medical review process to determine whether: (1) the improved medical review activities at the demonstration carriers produced measurable savings or benefits to the claims process; (2) additional medical review funding for other carriers would be cost-effective; and (3) HCFA medical review oversight needs to be improved.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services 1. The Secretary of Health and Human Services should direct the Administrator, HCFA, to take better advantage of carrier medical review activities by developing precise measures of carrier performance in such key medical review areas as the: (1) effectiveness of carrier data analysis capabilities; (2) adequacy of carrier medical policies; (3) scope and effectiveness of prepayment screens; and (4) significance of carrier medical review savings.
Closed - Not Implemented
HCFA initiatives have refocused Medicare program integrity activities and negated the recommendation. More effective utilization of scarce program safeguards was needed to offset declining funds and increasing claims volume. That environment has dramatically changed. The Health Insurance Portability and Accountability Act created a Medical Integrity Program (MIP) and the Fraud and Abuse Control Program. MIP provided a stable source of funding for program integrity activities and authorized HCFA to contract with entities other than claims processing contractors to specialize in cost report audits and medical and utilization reviews. HCFA is testing this approach in several states. The Fraud and Abuse Control Program established funding for fraud and abuse activities and activities that target aberrant providers, and places more emphasis on ensuring claims accuracy before payment. HCFA has developed a database that allows the rapid identification and analysis of aberrant data across provider types.

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