Medicare Claims Billing Abuse

With an investment of only $20 million in off-the-shelf commercial software, Medicare could save nearly $4 billion over five years by detecting fraudulent claims by physicians--primarily manipulation of billing codes. On the basis of a test in which four commercial firms reprocessed samples of more than 20,000 paid Medicare claims, GAO estimates that the software could have saved $603 million in 1993 and $640 million in 1994. In addition, GAO estimates that because beneficiaries are responsible for about 22 percent of the payment amounts--mainly in the form of deductibles and copayments--Medicare could have saved an additional $134 million in 1993 and $142 million in 1994. The test results indicate that only a small proportion of providers are responsible for most of the abuses: less than 10 percent of providers in the sample had miscoded claims.