Medicare

The fastest growing portion of Medicare is part B, which covers physician services, outpatient hospital services, durable medical equipment, and other services. Part B will account for an estimated half a billion claims and $445 billion in benefit payments in fiscal year 1991. The growth of these payments increases Medicare's vulnerability to erroneously paid claims that may result from provider fraud and abuse. A key line of defense in identifying and correcting fraud and abuse are the Medicare contractors (carriers) who process and pay part B claims. The carriers' primary source of information on possible fraud and abuse is part B beneficiaries. GAO found that carriers are missing opportunities to detect fraud and abuse because telephone personnel who first receive beneficiary complaints often do not refer them to the carriers' investigative units. Instead, beneficiaries are often told to submit their complaints in writing or to resolve them with providers--even though the caller has described the complaint in detail over the phone. Further, when complaints are referred, investigative units often do not examine those that contain substantial indications of potential fraud and abuse. Almost three-fourths of such complaints in GAO's sample were not fully investigated. Although the mishandling of complaints results partly from inadequate government guidance and oversight, the administration's initial fiscal year 1992 budget request significantly reduced funding for carrier personnel who answer beneficiary complaints, including those involving fraud and abuse. However, it appears that funds will be reallocated to minimize this reduction. GAO summarized this report in testimony before Congress; see: Medicare: Improper Handling of Beneficiary Complaints of Provider Fraud and Abuse, by Janet L. Shikles, Director of Health Financing and Policy Issues, before the Senate Special Committee on Aging. GAO/T-HRD-92-2, Oct. 2, 1991 (nine pages).

GAO found that: (1) at the five carriers visited, over half of the beneficiary calls involving complaints or provider fraud or abuse were not properly referred for investigation; (2) carriers often told beneficiaries to submit their complaints in writing or to resolve them with providers, even though the beneficiary described the complaint in detail over the telephone; (3) the carriers did not adequately investigate almost three-quarters of the complaints where substantial indications of potential provider fraud and abuse existed; (4) 15 of the 155 cases included substantial indications of potential fraud and abuse in that the provider had 2 or more similar, substantiated complaints within the last 2 years, or the current complaint, on its own, strongly suggested fraudulent or abusive behavior; (5) the Health Care Financing Administration (HCFA) has not developed instructions for carrier staff who initially receive beneficiary complaints on how to identify and refer those complaints for investigation; (6) annual HCFA evaluations of carrier fraud and abuse detection efforts were inadequate for the five carriers reviewed; (7) carrier officials complained that they lacked sufficient resources to thoroughly investigate all complaints of provider fraud and abuse; and (8) budget reductions in the program safeguard area are undermining fraud and abuse detection activities and resulting in large program losses, but HCFA officials believe that funds for carrier personnel who answer these complaints will be reallocated within the fiscal year 1992 budget.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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