Fraud and Abuse

Nursing home patients are an attractive target for fraudulent and abusive health care providers that bill Medicare for undelivered or unnecessary services. A wide variety of providers, ranging from durable medical equipment suppliers to laboratories to optometrists and doctors, have been involved in fraudulent and abusive Medicare billing schemes. Several features make nursing home patients attractive targets. First, because a nursing facility houses many Medicare beneficiaries under one roof, unscrupulous billers of services can operate their schemes in volume. Second, nursing homes sometimes make patient records available to outsiders, contrary to federal regulations. Third, providers are permitted to bill Medicare directly, without certification from the nursing home or the attending physician that the items are necessary or have been provided as claimed. In addition, Medicare's automated systems do not collect data to flag improbably high charges or levels of services. Finally, even when Medicare spots abusive billings and seeks recovery of unwarranted payments, it often collects little money from wrongdoers, which either go out of business or deplete their resources so that they cannot repay the funds.

GAO found that: (1) fraudulent and abusive billing of Medicare is widespread and frequent and a wide variety of providers have been involved in Medicare fraud or abusive billing related to nursing facility patients' care; (2) most fraud and abuse involves billing Medicare for unnecessary or undelivered services and supplies or misrepresenting services to obtain reimbursement; (3) Medicare patients in nursing facilities are attractive fraud targets because of the high volume and concentration of Medicare beneficiaries in nursing facilities, easier access to patients' medical records, billing without confirmation, the lack of sufficient and timely warning flags in Medicare's automated claim processing systems, and inadequate recovery of unwarranted payments; (4) to change its reimbursement method to incorporate the nursing facilities' monitoring of the provision of services and supplies Medicare will need long-term commitment, structural changes, unified billing, and capped payments; and (5) short-term steps to reduce fraud and abusive billing include instituting federal penalties for unauthorized disclosure of patients' medical records and incorporating various early warning controls into Medicare's claim processing systems.

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.

Director: Team: Phone: