Medicare

Medicare's size and mission make it an attractive target for exploitation. That wrongdoers continue to dodge safeguards underscores the need for increasingly sophisticated ways to protect against system abuses. Improved oversight and leadership at the Health Care Financing Administration (HCFA), the mitigation of risks involved in acquiring Medicare's new multibillion dollar automated claims processing system--the Medicare Transaction System, and the appropriate use of new anti-fraud-and-abuse funds should help stem substantial losses in the future. Moreover, as Medicare's managed care enrollment grows, HCFA needs to ensure that beneficiaries receive enough information about health maintenance organizations (HMO) to make informed choices and that the agency enforces HMO compliance with federal standards. How HCFA will use the funding and authority provided under the Health Insurance Portability and Accountability Act of 1996 to improve its oversight over Medicare expenditures has not yet been determined. However, HCFA's earlier efforts to oversee fee-for-service contractors, the acquisition of the Medicare Transaction System, and Medicare managed care plans were plagued by weak monitoring, poor coordination, and delays. In GAO's view, HCFA's prospects for successfully combatting Medicare fraud and abuse are unclear.

GAO noted that: (1) GAO selected Medicare as one of the initial programs to be included in GAO's high-risk efforts because of the program's size, complexity, and rapid growth; (2) in addition, HCFA's efforts to fight Medicare fraud and abuse have not been adequate to prevent substantial losses because the tools available over the years have been underutilized or not deployed as effectively as possible; (3) because of budget constraints, the number of reviews of claims and related medical documentation and the site audits of providers' records have dwindled significantly; (4) in addition, HCFA's management of its claims processing controls and Medicare's automated information systems has been unsatisfactory; (5) as a result, Medicare's information systems and the staff monitoring claims have been less than effective at spotting indicators of potential fraud, such as suspiciously large increases in reimbursements, improbable quantities of services claimed, or duplicate bills submitted to different contractors for the same service or supply; (6) because of acknowledged system weaknesses, HCFA is in the process of acquiring a new multimillion-dollar automated system called the Medical Transaction System (MTS); (7) MTS is intended to replace Medicare's multiple automated systems and is expected to enhance significantly its fraud and abuse detection capabilities; (8) however, HCFA has not effectively managed the process for acquiring this system; (9) less than adequate oversight has also resulted in little meaningful action taken against Medicare health maintenance organizations (HMO) found to be out of compliance with federal law and regulations; (10) other than requiring corrective action plans, HCFA has not sanctioned poor performing HMOs, using such tools as excluding these HMOs from the program, prohibiting continued enrollment until deficiencies are corrected, or notifying beneficiaries of the HMOs cited for violations; (11) accumulated evidence of in-home sales abuse coupled with high rates of rapid disenrollment for certain HMOs also indicate that some beneficiaries are confused or are being misled during the enrollment process and are dissatisfied once they become plan members; and (12) recent and proposed legislation, chiefly the Kassebaum-Kennedy legislation, also known as the Health Insurance Portability and Accountability Act of 1996, and the budget reconciliation legislation now being considered by the Congress, refocus attention on various aspects of Medicare fraud and abuse.