High-Risk Series

Medicare Gao ID: HR-97-10 February 1, 1997

In 1990, GAO began a special effort to identify federal programs at high risk for waste, fraud, abuse, and mismanagement. GAO issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas; it followed up on the status of these areas in February 1995. This, GAO's third series of high-risk reports, revisits these troubled government programs and designates five additional areas as high-risk (defense infrastructure, information security, the year 2000 problem, supplemental security income, and the 2000 decennial census), bringing to 25 the number of high-risk programs on GAO's list. The high-risk series includes an overview, a quick reference guide, and 12 individual reports. The high-risk series may be ordered as a full set, a two-volume package including the overview and the quick reference guide, or as 12 separate reports describing in detail these vulnerable government programs. GAO summarized the high-risk series in testimony before Congress (GAO/T-HR-97-22).

GAO found that: (1) since GAO's last high-risk report in 1995, the government has made important strides in efforts to protect Medicare from exploitation; (2) recent legislation, the Health Insurance Portability and Accountability Act of 1996, increases funding for program safeguards, although per-claim expenditures will remain below the level of 1989 after adjusting for inflation; (3) in addition, the Health Care Financing Administration (HCFA) anticipates that it will gain enhanced oversight capacity and reduced administrative costs when the next-generation claims processing system, the Medicare Transaction System (MTS), is fully implemented, which HCFA expects to occur after the year 2000; (4) the Health and Human Services Inspector General and other federal and state agencies have banded together to fight fraud in five states in an effort called Operation Restore Trust; (5) after the first year of operation, the effort yielded more than $40 million in recoveries of payments for claims that were not allowed under Medicare rules, as well as convictions for fraud, impositions of civil monetary penalties, and the exclusion of providers from the program; (6) the act gives HCFA additional flexibility to contract with firms specializing in utilization reviews and makes more severe the penalties for Medicare fraud; (7) in addition, HCFA is improving its credentialing process for Medicare providers and is currently evaluating commercially available software for its potential to screen out some types of inappropriate claims; (8) judicious changes in Medicare's day-to-day operations entailing HCFA's improved oversight and leadership, its appropriate application of new anti-fraud-and-abuse funds, and the mitigation of MTS acquisition risks are necessary to reduce substantial future losses; and (9) as Medicare's managed care enrollment grows, HCFA must ensure that payments to health maintenance organizations (HMO) better reflect the cost of beneficiaries' care, that beneficiaries receive information about HMOs sufficient to make informed choices, and that its expanded authority to enforce HMO compliance with federal standards is used.

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