Medicare

Inadequate Review of Claims Payments Limits Ability to Control Spending Gao ID: HEHS-94-42 April 28, 1994

Medicare overpayments of millions of dollars are being made because of inadequate safeguards by contractors who process Medicare claims and inattention by the federal Health Care Financing Administration (HCFA). Carriers use inaccurate or incomplete data in compiling statistical reports profiling doctors and other providers. Their focused reviews to identify irregular billing patterns and unusual spending trends suffer from HCFA's failure to spell out appropriate analysis methods and outcome measures. As a result, HCFA cannot be sure that Medicare carriers are systematically targeting providers or services that most warrant attention. Shortcomings in carriers' claims review activities exist, in part, because HCFA lacks meaningful requirements for--and the data needed to measure--carriers' postpayment review performance. Shortcomings also persist because funds earmarked for postpayment review have not kept pace with the growth in Medicare claims or as a percentage of the carriers' overall administrative budget.

GAO found that: (1) HCFA does not monitor Medicare carriers' postpayment analyses and often misses opportunities to identify millions of dollars in excessive payments; (2) Medicare carriers use claims data to identify billing abuses and excessive payments for health care services; (3) Medicare carriers use inaccurate data in compiling statistical reports on physicians and other providers; (4) HCFA has failed to provide carriers with appropriate analysis methods and outcome measures and cannot ensure that the carriers are systematically targeting providers that warrant investigation; (5) procedural and legal constraints hinder carrier efforts to act against abusive providers; (6) HCFA lacks the data needed to measure carriers' postpayment review performance; (7) HCFA does not assess the extent that carriers' recovery efforts and payment controls save program costs or deter future abuses; (8) funds allotted for postpayment review have not kept pace with the growth in Medicare claims; and (9) HCFA needs to expand guidance and technical assistance for carriers' data analysis methods and establish relevant measures to assess carriers' postpayment review performance.

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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