Medicare

Medicare, because of its size and mission, is an attractive target for exploitation. GAO included Medicare in its list of government programs at high risk for waste, fraud, and abuse. (See GAO/HR-97-10, Feb. 1997.) In addition, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently estimated that in 1997 11 percent, or $20 billion, of Medicare fee-for-service payments were inappropriate. The Health Insurance Portability and Accountability Act of 1996 provides important new resources and tools to fight health fraud, abuse, and inappropriate payments. These new resources include increased funding for anti-fraud-and-abuse activities for the HHS OIG, as well as for the Justice Department and the FBI. The act also established the Medicare Integrity Program, which ensures increasing funding for Medicare program safeguard efforts and authorizes the hiring of specialized anti-fraud contractors. This report assesses the Health Care Financing Administration's (HCFA) progress in implementing the Medicare Integrity Program. GAO provides information on (1) what additional resources and authorities Congress provided to HCFA through the program, (2) how HCFA has made use of these resources and authorities to better protect Medicare funds, and (3) how HCFA plans to uses these authorities and resources in the future.

GAO noted that: (1) the Health Insurance Portability and Accountability Act of 1996 (HIPAA) established the Medicare Integrity Program to subsume the program safeguard activities of HCFA and its current claims processing contractors; (2) rather than fund safeguard activities as part of HCFA's annual administrative budget appropriation, HIPAA appropriates safeguard funding for each year beginning in fiscal year (FY) 1997; (3) the Department of Health and Human Services (HHS) proposed this type of funding arrangement in 1994 so that HCFA and its contractors could better plan and manage program safeguard efforts; (4) the Medicare Integrity Program also provides HCFA the authority to contract with specialists in program safeguards, to separate these functions from current claims processing and payment contracts; (5) the new contracts with program safeguard specialists are intended to make important improvements in HCFA's program safeguard efforts; (6) these improvements will make it possible to review all of the claims for a single beneficiary in one place, reduce the number of contractor safeguard units to increase consistency and simplify HCFA's oversight, and better manage the conflicts of interest that develop when Medicare contractors expand into new health care businesses; (7) for FY 1998, HIPAA significantly increased program safeguard funding over the FY 1997 level; (8) although this funding increase for 1998 was assured when HIPAA became law, HCFA did not notify contractors of their funding until one-third of FY 1998 was past; (9) contractors reported that, because of this delayed notification, they delayed plans to increase their program safeguard staff; (10) HCFA is progressing slowly in contracting with safeguard specialists; (11) the first contract, to be awarded by January 1999, will be limited in scope, covering only part of the work envisioned for program safeguard contracts; (12) this first contract will therefore not provide many of the benefits ultimately expected, nor will it reduce HCFA's reliance on its current contractors for program safeguards; and (13) HCFA has no firm plans regarding when it will expand the scope of this contract or award a second safeguard specialist contract.

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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