Medicare Integrity Program
CMS Used Increased Funding for New Activities but Could Improve Measurement of Program Effectiveness Gao ID: GAO-11-592 July 29, 2011The Medicare program makes about $500 billion in payments per year and continues to have a significant amount of improper payments--almost $48 billion in fiscal year 2010. The Centers for Medicare & Medicaid Services' (CMS) Medicare Integrity Program (MIP) is designed to identify and address fraud, waste, and abuse, which are all causes of improper payments. MIP's authorizing legislation provided funding for its activities and subsequent legislation provided additional funding. GAO was asked to report on how effectively CMS is using MIP funding to address Medicare program integrity. GAO examined (1) how CMS used MIP funding to support the program's activities from fiscal years 2006 through 2010, (2) how CMS assesses the effectiveness of MIP, and (3) factors CMS considers when allocating MIP funding. GAO analyzed CMS budget and other documents, interviewed CMS officials, and examined the agency's method of calculating return on investment (ROI), a performance measure used by CMS to measure the effectiveness of MIP activities.
CMS used the increase in total MIP funding received, from $832 million in fiscal year 2006 to $1 billion in fiscal year 2010, to expand MIP's activities. The additional funding supported oversight of Medicare Part C (Medicare benefits managed through private plans) and Part D (the outpatient prescription drug benefit) and agency efforts to examine the claims of Medicare beneficiaries who also participate in Medicaid--a joint federal-state health care program for certain low-income individuals. CMS officials also reported that CMS was able to move some funding from activities, such as provider audit, to other activities because of savings achieved from consolidating contractors. The largest percentage increase from this redistribution went to benefit integrity activities, which aim to deter and detect Medicare fraud through proactive data analysis and coordination with law enforcement. Although CMS has reported that the agency measures MIP's performance with goals related to reductions in the improper payment rates for Medicare fee-forservice, Part C, and Part D, CMS officials with direct responsibility for MIP generally do not connect measurements of effectiveness of MIP activities with the CMS goals of reducing improper payments. These goals to reduce improper payments, which were reported as goals previously and for fiscal year 2012, are particularly important in light of the President's Accountable Government Initiative, which aims to reduce overall improper payments by $50 billion by the end of 2012. In interviews with GAO, CMS officials with direct responsibility for implementing MIP activities generally did not connect the measurement of effectiveness of MIP activities with these CMS goals to reduce improper payments and instead cited other measures of effectiveness. This suggests that CMS has not clearly communicated to its staff the relationship between the daily work of conducting MIP activities and the agency's improper payment reduction performance goals. Because MIP will be central to CMS's efforts to reduce Medicare improper payments, MIP staff need to understand how their work supports these goals. In addition, the Patient Protection and Affordable Care Act requires CMS to report annually on the use of funds for MIP and the effectiveness of the use of those funds. One way that CMS already measures MIP effectiveness is ROI, which CMS calculates as savings from an activity in relation to expenditures. CMS calculates ROI for most of its MIP activities, but the data it uses have two flaws. First, ROI calculations are not updated when program expenditure data, a key component in the ROI calculation, are updated, which may lead to an incorrect ROI. Second, CMS does not have reliable information to determine the amount of MIP spending by activity for one type of contractor that received about 22 percent of total MIP funding in fiscal year 2010. It will be important for CMS to correct these flaws to ensure reliability in ROI reporting. CMS considers a variety of factors when allocating MIP funding. Based on a review of the documents submitted to justify funding of specific MIP activities, CMS may consider the prior year's funding level, the consequence of not funding, and the performance goal that the activity is intended to meet. GAO recommends that CMS communicate the linkage between MIP activities and the goals for reducing improper payments and that CMS expeditiously improve the reliability of data used to calculate ROI. The Department of Health and Human Services concurred with these recommendations.
RecommendationsOur 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: Kathleen M. King Team: Government Accountability Office: Health Care Phone: (202) 512-5154GAO-11-592, Medicare Integrity Program: CMS Used Increased Funding for New Activities but Could Improve Measurement of Program Effectiveness
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
July 2011:
Medicare Integrity Program:
CMS Used Increased Funding for New Activities but Could Improve
Measurement of Program Effectiveness:
GAO-11-592:
GAO Highlights:
Highlights of GAO-11-592, a report to congressional requesters.
Why GAO Did This Study:
The Medicare program makes about $500 billion in payments per year and
continues to have a significant amount of improper payments”almost
$48 billion in fiscal year 2010. The Centers for Medicare & Medicaid
Services‘ (CMS) Medicare Integrity Program (MIP) is designed to
identify and address fraud, waste, and abuse, which are all causes of
improper payments. MIP‘s authorizing legislation provided funding for
its activities and subsequent legislation provided additional funding.
GAO was asked to report on how effectively CMS is using MIP funding to
address Medicare program integrity. GAO examined (1) how CMS used MIP
funding to support the program‘s activities from fiscal years 2006
through 2010, (2) how CMS assesses the effectiveness of MIP, and
(3) factors CMS considers when allocating MIP funding. GAO analyzed
CMS budget and other documents, interviewed CMS officials, and
examined the agency‘s method of calculating return on investment
(ROI), a performance measure used by CMS to measure the effectiveness
of MIP activities.
What GAO Found:
CMS used the increase in total MIP funding received, from $832 million
in fiscal year 2006 to $1 billion in fiscal year 2010, to expand MIP‘s
activities. The additional funding supported oversight of Medicare
Part C (Medicare benefits managed through private plans) and Part D
(the outpatient prescription drug benefit) and agency efforts to
examine the claims of Medicare beneficiaries who also participate in
Medicaid”a joint federal-state health care program for certain low-
income individuals. CMS officials also reported that CMS was able to
move some funding from activities, such as provider audit, to other
activities because of savings achieved from consolidating contractors.
The largest percentage increase from this redistribution went to
benefit integrity activities, which aim to deter and detect Medicare
fraud through proactive data analysis and coordination with law
enforcement.
Although CMS has reported that the agency measures MIP‘s performance
with goals related to reductions in the improper payment rates for
Medicare fee-for-service, Part C, and Part D, CMS officials with
direct responsibility for MIP generally do not connect measurements of
effectiveness of MIP activities with the CMS goals of reducing
improper payments. These goals to reduce improper payments, which were
reported as goals previously and for fiscal year 2012, are
particularly important in light of the President‘s Accountable
Government Initiative, which aims to reduce overall improper payments
by $50 billion by the end of 2012. In interviews with GAO, CMS
officials with direct responsibility for implementing MIP activities
generally did not connect the measurement of effectiveness of MIP
activities with these CMS goals to reduce improper payments and
instead cited other measures of effectiveness. This suggests that CMS
has not clearly communicated to its staff the relationship between the
daily work of conducting MIP activities and the agency‘s improper
payment reduction performance goals. Because MIP will be central to CMS‘
s efforts to reduce Medicare improper payments, MIP staff need to
understand how their work supports these goals. In addition, the
Patient Protection and Affordable Care Act requires CMS to report
annually on the use of funds for MIP and the effectiveness of the use
of those funds. One way that CMS already measures MIP effectiveness is
ROI, which CMS calculates as savings from an activity in relation to
expenditures. CMS calculates ROI for most of its MIP activities, but
the data it uses have two flaws. First, ROI calculations are not
updated when program expenditure data, a key component in the ROI
calculation, are updated, which may lead to an incorrect ROI. Second,
CMS does not have reliable information to determine the amount of MIP
spending by activity for one type of contractor that received about 22
percent of total MIP funding in fiscal year 2010. It will be important
for CMS to correct these flaws to ensure reliability in ROI reporting.
CMS considers a variety of factors when allocating MIP funding. Based
on a review of the documents submitted to justify funding of specific
MIP activities, CMS may consider the prior year‘s funding level, the
consequence of not funding, and the performance goal that the activity
is intended to meet.
What GAO Recommends:
GAO recommends that CMS communicate the linkage between MIP activities
and the goals for reducing improper payments and that CMS
expeditiously improve the reliability of data used to calculate ROI.
The Department of Health and Human Services concurred with these
recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-592] or key
components. For more information, contact Kathleen M. King at (202)
512-7114 or kingk@gao.gov.
[End of section]
Contents:
Letter:
Background:
Increased MIP Funding and Contractor Consolidation Have Enabled CMS to
Expand the Program from Fiscal Year 2006 through Fiscal Year 2010:
Not All MIP Officials Connect MIP Activities with CMS's Goals of
Reducing Improper Payments; Data Used to Calculate ROI Are Flawed:
CMS Considers a Variety of Factors, Including Potential Effect on
Improper Payments, When Allocating Funding:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Centers for Medicare & Medicaid Services (CMS) Oversight
of the Medicare Integrity Program:
Appendix II: Medicare Integrity Program (MIP) Contractors:
Appendix III: Contractor Types Performing Medicare Integrity Program
Activities for Fiscal Year 2010:
Appendix IV: Comments from the Department of Health and Human Services:
Appendix V: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Government Performance and Results Act Performance Goals and
Associated Performance Measures for the Medicare Integrity Program,
Fiscal Year 2012:
Figures:
Figure 1: Medicare Integrity Program Appropriated Funding for Fiscal
Years 2006 through 2010:
Figure 2: Spending for the Medicare Integrity Program Activities for
Fiscal Years 2006 through 2010:
Abbreviations:
CERT: Comprehensive Error Rate Testing:
CMS: Centers for Medicare & Medicaid Services:
CPI: Center for Program Integrity:
DOJ: Department of Justice:
DRA: Deficit Reduction Act of 2005:
GPRA: Government Performance and Results Act:
HEAT: Health Care Fraud Prevention and Enforcement Action Team:
HHS: Department of Health and Human Services:
HIPAA: Health Insurance Portability and Accountability Act of 1996:
MAC: Medicare administrative contractor:
MEDIC: Medicare drug integrity contractor:
Medi-Medi: Medicare-Medicaid Data Match Project:
MIP: Medicare Integrity Program:
MSP: Medicare Secondary Payer:
OFM: Office of Financial Management:
OIG: Office of Inspector General:
OMB: Office of Management and Budget:
PPACA: Patient Protection and Affordable Care Act:
PSC: program safeguard contractor:
ROI: return on investment:
ZPIC: zone program integrity contractor:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
July 29, 2011:
The Honorable Thomas R. Carper:
Chairman:
The Honorable Scott P. Brown:
Ranking Member:
Subcommittee on Federal Financial Management, Government Information,
Federal Services, and International Security:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable John McCain:
United States Senate:
The Centers for Medicare & Medicaid Services' (CMS) Medicare Integrity
Program (MIP) is designed to identify and address fraud, waste, and
abuse,[Footnote 1] which are all causes of improper Medicare payments.
An improper payment is any that should not have been made or that was
made in an incorrect amount under statutory, contractual,
administrative, or other legally applicable requirements. Medicare
makes about $500 billion in payments per year and continues to have a
significant amount of improper payments. For example, in fiscal year
2010, the estimated improper payments for Medicare fee-for-service
(Parts A and B) were about $34.3 billion and for Medicare Advantage
(Part C) were about $13.6 billion.[Footnote 2] We have designated
Medicare as a high-risk program since 1990, in part because the
program's complexity and size made it vulnerable to fraud, waste, and
abuse. Since that time, Medicare has grown, and in 2006 a new benefit-
-the Medicare prescription drug benefit (Part D)--was added, making
the task of addressing improper payments in a program of Medicare's
size even greater.
The Office of Management and Budget (OMB) is leading a governmentwide
effort to reduce improper payments. MIP is important to this effort
because of the size of the Medicare program. In fiscal year 2010,
Medicare improper payments represented about 38 percent of all federal
government improper payments.[Footnote 3] MIP was established, and
provided with a dedicated source of mandatory funding from the Federal
Hospital Insurance trust fund,[Footnote 4] in the Health Insurance
Portability and Accountability Act of 1996 (HIPAA)[Footnote 5] to
enhance efforts to address Medicare's vulnerabilities to fraud, waste,
and abuse.[Footnote 6]
MIP is designed to better ensure the integrity of the Medicare program
by identifying and addressing improper payments and helping to prevent
and stop fraud and abuse through several types of activities, such as
educating providers on proper billing practices, auditing reported
costs used to set payments for hospitals and other institutional
providers, and coordinating with law enforcement to target potential
fraud. These activities are generally conducted by contractors working
for CMS.
In 2006, we reported that while funding for MIP had increased over
time, the approach CMS used to allocate funding among MIP activities
had weaknesses.[Footnote 7] Specifically, we found that allocations
for MIP activities were generally based on historical allocation
levels, not on risk for improper payments. We also noted that
programmatic changes in Medicare, particularly the prescription drug
benefit and Medicare contracting reform,[Footnote 8] would affect MIP
funding allocations, and that the allocation approach was not adequate
to address the associated emerging risks for improper payments.
Finally, we found that CMS tracked dollars saved in relation to
dollars spent--a useful quantitative measure that the agency calls
return on investment (ROI)--to assess the effectiveness of some MIP
activities, but did not attempt to objectively measure the
effectiveness of all of its MIP activities. In our 2006 report, we
recommended that CMS develop a method of allocating MIP funding based
not only on the effectiveness of the program's activities but also on
contractor workloads and risk for improper payments.
Since our 2006 report, there have been changes in the funding and
scope of MIP. Congress has appropriated discretionary MIP funding to
supplement existing mandatory funding, in part to address increased
responsibilities because of the addition of the Medicare prescription
drug benefit. You requested that we report on how effectively CMS is
using its MIP funding to address program integrity. Specifically, this
report will examine (1) how CMS used its MIP funding to support the
program's activities from fiscal year 2006 through fiscal year 2010,
(2) how CMS assesses the effectiveness of MIP, and (3) the factors CMS
considers when allocating MIP funding.
To determine how CMS used its MIP funding to support the program's
activities from fiscal year 2006 through fiscal year 2010, we analyzed
CMS budget documents and conducted interviews with officials from
CMS's Office of Financial Management (OFM) and officials who manage
each of the MIP activities (whom we refer to as MIP activity
managers). To determine the reliability of the budget data, we
interviewed officials in OFM about the reconciliation process between
CMS's budget and the accounting systems and reviewed an example of
CMS's monthly reconciliation report. We determined that the data were
sufficiently reliable for our purposes.
To determine how CMS assesses the effectiveness of MIP,[Footnote 9] we
conducted interviews with the Deputy Administrator for CMS's Center
for Program Integrity (CPI), the Director of the Medicare Program
Integrity Group, MIP activity managers, and officials from OFM and
CPI. We also interviewed officials from the Department of Health and
Human Services (HHS) responsible for departmentwide program integrity
efforts. We reviewed relevant documents that described specific
processes CMS employs for determining whether MIP and its individual
activities have been effective and compared these processes against
GAO's criteria on agency strategic planning and performance
measurement.[Footnote 10] We examined CMS's method for calculating the
MIP ROI and interviewed MIP activity managers and OFM officials about
the data sources and methods used to calculate the ROI figures.
To describe the factors CMS considers when allocating MIP funding, we
reviewed MIP budget request documents for funded subactivities within
the MIP activities for fiscal year 2010.[Footnote 11] We also
interviewed CMS officials, including those from OFM, as well as MIP
activity managers, the Director of the Medicare Program Integrity
Group, and the Deputy Administrator for CPI.
We conducted this performance audit from May 2010 through July 2011 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
MIP Funding:
CMS has indicated that the primary principle of program integrity is
to pay claims correctly.[Footnote 12] MIP is designed to address
fraud, waste, and abuse, including improper payments, by (1)
preventing fraud through effective enrollment of providers and through
education of providers and beneficiaries; (2) detecting potential
improper billing early through, for example, medical review and data
analysis of claims; (3) coordinating closely with partners, including
contractors and law enforcement agencies; and (4) implementing fair
and firm enforcement policies.
HIPAA established mandatory funding for MIP that ensured a stable
funding source for Medicare program integrity activities from the
Federal Hospital Insurance trust fund not subject to annual
appropriations. The amount specified in HIPAA rose for the first few
years and then was capped at $720 million per year in fiscal year 2003
and future years. CMS received increased and additional mandatory
funding for MIP from the Federal Hospital Insurance trust fund in
fiscal year 2006 under the Deficit Reduction Act of 2005 (DRA) and, in
addition, received discretionary funding beginning in fiscal year 2009.
On March 23, 2010, the Patient Protection and Affordable Care Act
(PPACA) was signed into law. It included provisions that will provide
MIP with a portion of an additional $350 million, to be shared with
the Department of Justice (DOJ) and HHS, for fiscal year 2011 through
fiscal year 2020 for health care fraud and abuse control efforts.
[Footnote 13] It also increases funding for MIP each year by the
percentage increase in the consumer price index for all urban
consumers.
MIP Activities:
MIP currently has eight activities, and each of these has multiple
subactivities. As we reported in 2006, CMS undertook five original MIP
activities required by HIPAA:
* Benefit Integrity. Aims to deter and detect Medicare fraud by
conducting proactive data analysis of claims to identify patterns of
fraud and taking other steps to determine whether fraud could be
occurring. Potential fraud cases are documented and referred to law
enforcement agencies.
* Provider Audit. Includes desk reviews, audits, and final settlement
of institutional provider cost reports, such as those submitted by
hospitals and skilled nursing facilities, which are used to establish
payment rates.
* Medicare Secondary Payer (MSP). Identifies when beneficiaries have
primary sources of payment--such as employer-sponsored health
insurance, automobile liability insurance, or workers' compensation
insurance--that should pay claims that were mistakenly billed to
Medicare. MSP also involves recovering improper payments associated
with such claims.
* Medical Review. Includes both automated and manual prepayment and
postpayment reviews of individual Medicare claims to determine whether
the services are provided by legitimate providers to eligible
beneficiaries and are covered, medically reasonable, and necessary.
* Provider Outreach and Education. Provides training for providers,
such as hospitals and physicians that serve Medicare beneficiaries, on
appropriate billing practices to comply with Medicare rules and
regulations.
Since 2006, CMS has begun three additional MIP activities:
* Medicare-Medicaid Data Match Project (Medi-Medi). Was added to MIP
by DRA.[Footnote 14] DRA provided this activity with its own dedicated
funding source through a separate appropriation. Medi-Medi is a joint
effort between CMS and states that participate voluntarily to identify
providers with aberrant Medicare and Medicaid billing patterns through
analyses of claims for individuals with both Medicare and Medicaid
coverage.
* Part C and D Oversight. Consists of subactivities to address
improper payments in Medicare Parts C and D. CMS began this activity
in fiscal year 2006.
* Other Medicare Fee-For-Service. Consists of a variety of
subactivities related to Medicare fee-for-service not captured by the
other activities, such as support for pilot programs and enhancements
to CMS data systems that CMS officials told us will allow for better
analysis. CMS began these subactivities in fiscal year 2009.
CPI is the CMS component responsible for oversight of all of CMS's
program integrity efforts, including MIP, and is led by a deputy
administrator. Formed in April 2010, CPI was created to enable CMS to
pursue a more strategic and coordinated program integrity approach and
to also allow the agency to build on and strengthen existing program
integrity efforts. CPI has targeted several program areas to help
identify, evaluate, and focus resources and projects. These areas are
prevention, detection, recovery, and transparency and accountability.
MIP is led by the Director of the Medicare Program Integrity Group
within CPI. However, the MIP activity managers and their staff members
are not all located within CPI. There are MIP activity managers
located in CPI, the Center for Medicare,[Footnote 15] and OFM. For
example, while the Benefit Integrity activity is managed by CPI, the
Medical Review activity is managed by CMS's Provider Compliance Group
within OFM. See appendix I for an organizational chart that identifies
the CMS components responsible for the oversight of MIP activities.
CMS uses a variety of contractors to perform MIP activities, including
a Comprehensive Error Rate Testing (CERT) contractor, an MSP
contractor, Medicare administrative contractors (MAC), Medicare drug
integrity contractors, the National Supplier Clearinghouse, program
safeguard contractors, and zone program integrity contractors (ZPIC).
For example, the MACs conduct provider audits, prepayment and
postpayment review of Medicare claims, and some provider outreach and
education. See appendix II for more information on these contractors
and appendix III for the activities they perform.
Funding Allocation Process:
MIP's activity managers and Director participate in a process to
recommend funding allocations for MIP's activities through the Budget
Small Group.[Footnote 16] The MIP activity managers submit budget
request documents to the MIP Budget Small Group to help guide the
funding allocation process. The MIP Budget Small Group weighs each
request and submits a draft MIP budget request to the CMS Chief
Financial Officer and Chief Operating Officer. Following review by
these officials, the MIP budget request goes to the CMS Administrator,
who reviews the request and makes any desired changes. The MIP budget
request is integrated into the agency's entire proposed budget, which
is sent to the Secretary of Health and Human Services. A proposed
budget for the entire department goes to OMB for consideration on the
President's behalf. Adjustments may be made by OMB or the President
before a final version is submitted to Congress, thus beginning the
congressional appropriation process.
Performance Measurement:
One way that agencies examine the effectiveness of their programs is
by measuring performance as mandated by the Government Performance and
Results Act of 1993 (GPRA), as amended by the GPRA Modernization Act
of 2010.[Footnote 17] GPRA is designed to improve the effectiveness of
federal programs by establishing a system to set goals for program
performance and to measure results. Specifically, GPRA requires
federal agencies to prepare multiyear strategic plans, annual
performance plans, and annual performance reports that provide
information on progress achieved. To meet GPRA requirements for fiscal
year 2011, CMS established the following:
* Five high-level strategic objectives, which included the objective
of "accurate and predictable payments."
* Agencywide GPRA goals, which included three specific to MIP. An
agency's goals should flow from its strategic objectives and be
limited to the vital goals that reflect the highest priorities of an
agency.[Footnote 18]
* Performance measures, which included three specific to MIP, such as
reducing the percentage of improper payments made under the Medicare
fee-for-service and Part C program. Performance measures are generally
more numerous than the GPRA goals and are used to measure progress
toward the goals and objectives.
PPACA established additional reporting requirements for MIP. PPACA
requires that MIP contractors provide the Secretary of Health and
Human Services or the HHS Inspector General, upon request, performance
statistics.[Footnote 19] These performance statistics may include the
number and amount of overpayments recovered, the number of fraud
referrals, and the ROI of activities the contractor undertakes. The
act also requires the Secretary to evaluate MIP contractors at least
once every 3 years and submit an annual report to Congress on the use
of funds for MIP and the effectiveness of the use of those funds.
[Footnote 20]
Increased MIP Funding and Contractor Consolidation Have Enabled CMS to
Expand the Program from Fiscal Year 2006 through Fiscal Year 2010:
CMS used increased funding it received in fiscal years 2006 through
2010 to expand MIP. From fiscal year 2006 through 2010, CMS received
mandatory HIPAA funding along with new DRA funding, and additional
discretionary funding in some years, to supplement its existing
program integrity activities and support two new activities--Part C
and D Oversight activities and Medi-Medi. Additionally, the agency was
able to realize savings in some MIP activities, in part, because of
the consolidation of claims administration contracts. CMS
redistributed some of these savings to Part C and D Oversight and
Benefit Integrity activities.
Increased Funding Enabled CMS to Provide Additional Support to
Existing Program Integrity Activities and Fund New Oversight
Activities:
CMS received additional MIP funding during fiscal years 2006 through
2010 that was used to support new activities or existing activities
not previously supported by MIP. These activities included Part C and
D Oversight, Medi-Medi, and Other Medicare Fee-For-Service activities.
During fiscal year 2006 through fiscal year 2010, CMS received the
maximum amount of mandatory funding stipulated under HIPAA, $720
million per year, as well as additional discretionary and DRA
mandatory funding. (See figure 1.)
Figure 1: Medicare Integrity Program Appropriated Funding for Fiscal
Years 2006 through 2010:
[Refer to PDF for image: stacked vertical bar graph]
Fiscal year: 2006;
Discretionary: $0;
Deficit Reduction Act - mandatory funding: $112 million;
Health Insurance Portability and Accountability Act - mandatory
funding: $720 million;
Total: $832 million.
Fiscal year: 2007;
Discretionary: $0;
Deficit Reduction Act - mandatory funding: $24 million;
Health Insurance Portability and Accountability Act - mandatory
funding: $720 million;
Total: $744 million.
Fiscal year: 2008;
Discretionary: $0;
Deficit Reduction Act - mandatory funding: $36 million;
Health Insurance Portability and Accountability Act - mandatory
funding: $720 million;
Total: $756 million.
Fiscal year: 2009;
Discretionary: $147 million;
Deficit Reduction Act - mandatory funding: $48 million;
Health Insurance Portability and Accountability Act - mandatory
funding: $720 million;
Total: $915 million.
Fiscal year: 2010;
Discretionary: $220 million;
Deficit Reduction Act - mandatory funding: $60 million;
Health Insurance Portability and Accountability Act - mandatory
funding: $720 million;
Total: $1.0 billion.
Source: Centers for Medicare & Medicaid Services.
[End of figure]
Prior to fiscal year 2006, CMS used mandatory HIPAA funding for the
five original program activities--Benefit Integrity, Provider Audit,
Provider Outreach and Education, Medical Review, and MSP. From fiscal
year 2006 through fiscal year 2010, CMS continued to use mandatory
HIPAA funding predominantly to support the five existing program
integrity activities. In addition, beginning in fiscal year 2006, CMS
received mandatory DRA funding, which it used to support two new MIP
activities--Medi-Medi and Part C and D Oversight. DRA provided funding
for Medi-Medi activities of $12 million in fiscal year 2006, which
increased to nearly $60 million by fiscal year 2010. CMS officials
told us that the Medi-Medi funding was used to support the ZPICs that
work directly with the states on the Medi-Medi project.[Footnote 21]
State participation is voluntary, and states do not directly receive
MIP funding.
Additional MIP funding also went toward Part C and D Oversight. DRA
provided CMS with a onetime amount of $100 million in fiscal year
2006, part of which CMS used to perform new Part C and D Oversight. In
fiscal years 2007 and 2008, CMS requested but did not receive
discretionary funding to perform Part C and D Oversight. As a result,
CMS officials told us that mandatory HIPAA funding for MIP was moved
from other MIP activities in fiscal years 2007 and 2008 to the Part C
and D Oversight activity. In fiscal years 2009 and 2010, CMS received
$147 million and $220 million, respectively, in discretionary funding
and used more than half of that funding for Part C and D Oversight. In
fiscal year 2009, CMS used about $85 million of the discretionary
funding (or 58 percent of the $147 million) to perform Part C and D
Oversight that addressed CMS's priority to deter fraud in the Medicare
Part C and D programs. For example, CMS contractors conducted reviews
of health care plans entering the Part C and D programs, and program
and financial audits of the health care plans participating in the
Part C and D programs. In fiscal year 2010, CMS used about $142
million (about 65 percent of the $220 million) to continue performing
Part C and D Oversight. CMS moved the remaining discretionary funding,
about $62 million (42 percent of $147 million) in fiscal year 2009 and
$45 million (20 percent of $220 million) in fiscal year 2010, to the
Other Medicare Fee-For-Service activity. CMS used the funding in the
Other Medicare Fee-For-Service activity, in part, to fund the system
that collects and stores enrollment information for all Medicare
providers and suppliers in a national database.
Contractor Consolidation Enabled the Agency to Redistribute Mandatory
Funding among MIP Activities:
CMS officials stated that contractor consolidations resulted in some
workload efficiencies and cost savings, which enabled the agency to
redistribute some mandatory MIP funding to the Part C and D Oversight
and Benefit Integrity activities. The Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 required CMS to transfer
all Part A and B claims administration work previously conducted by 51
claims administration contractors to MACs. As a result, from fiscal
year 2006 through May 2011, CMS awarded contracts to 15 MACs, which
generally covered larger jurisdictions, and replaced most of the
contracts with previous claims administration contractors. CMS
designed the MAC jurisdictions to achieve operational efficiencies
through consolidation. Further, in response to one of our previous
recommendations,[Footnote 22] CMS also consolidated its postpayment
recovery efforts into one MSP recovery contractor in October 2006,
thereby increasing the efficiency of the MSP activity.[Footnote 23]
CMS officials stated that the operational efficiencies and cost
savings resulting from the contractor consolidations enabled the
agency to decrease mandatory MIP funding to four of the five existing
MIP activities and redistribute those funds to the Part C and D
Oversight and Benefit Integrity activities. Specifically, from fiscal
years 2006 through 2009, CMS redistributed MIP funding from the
Provider Outreach and Education, Medical Review, MSP, and Provider
Audit activities because these activities were less costly with fewer
contractors performing the work. For example, CMS officials told us
that the Provider Outreach and Education activity had less overhead
and other administrative costs with fewer contractors, which resulted
in reduced program expenditures. Provider Outreach and Education
spending decreased from almost $65 million in fiscal year 2006 to
about $42 million in fiscal year 2010--about 35 percent. Provider
Outreach and Education had the largest percentage decrease in MIP
funding. CMS officials stated that another factor in the decrease in
Provider Outreach and Education spending was a realignment of some of
its activities in fiscal year 2007. CMS officials also told us that
under the consolidation into MAC jurisdictions, CMS required only one
medical director for each MAC jurisdiction, instead of having one
medical director for each state, which lowered the cost to perform the
Medical Review activity.[Footnote 24] CMS officials stated that
reduced costs allowed CMS to use some of the newly available MIP
mandatory funding to address other priorities, such as funding Part C
and D Oversight in fiscal years 2007 and 2008, when the agency
received no discretionary funding. In addition, the MSP consolidation
allowed CMS to reduce MIP funding for the MSP activity beginning in
fiscal year 2007, and the agency used the savings to fund other MIP
activities. Based on the funding information provided by CMS, we
estimated that the agency saved about $86 million from fiscal year
2006 through fiscal year 2010 by consolidating contracted functions
within the MSP activity.
Benefit Integrity spending increased as a result of the redistribution
among program activities. For fiscal years 2006 through 2010, Benefit
Integrity had the largest percentage increase in mandatory HIPAA
funding among the original five MIP activities, in part, because of
cost efficiencies from contractor consolidation being redistributed to
this activity. (See fig. 2.) For this period, CMS increased the amount
of mandatory MIP HIPAA funds spent on the Benefit Integrity activity,
from about $125 million in fiscal year 2006 to about $166 million in
fiscal year 2010--about 33 percent. Benefit Integrity funds, among
other subactivities, the work of a CMS contractor responsible for
reviewing enrollment applications from durable medical equipment
suppliers and conducting site visits to confirm these suppliers'
compliance with Medicare regulations. This followed a period when we
and HHS's Office of Inspector General (OIG) had highlighted problems
with fraud in the Medicare program, including problems with suppliers
of durable medical equipment. It also occurred during a period,
starting in 2009, when HHS and DOJ were increasing coordination on
investigating and prosecuting health care fraud through the Health
Care Fraud Prevention and Enforcement Action Team, an initiative that
marshals resources across the government to prevent health care fraud,
waste, and abuse; crack down on those who commit fraud; and enhance
existing partnerships between HHS and DOJ.
Figure 2: Spending for the Medicare Integrity Program Activities for
Fiscal Years 2006 through 2010:
[Refer to PDF for image: stacked vertical bar graph]
Fiscal year: 2006;
Other Medicare Fee-For-Service[A]: $0;
Medicare-Medicaid Data Match Project[B]: $12 million;
Part C and D Oversight[C]: $100.9 million;
Provider Audit[D]: $204.6 million;
Provider Outreach and Education[E]: $64.5 million;
Benefit Integrity[F]: $124.5 million;
Medicare Secondary Payer[G]: $164.1 million;
Medical Review: $159.8 million;
Total: $830.3 million.
Fiscal year: 2007;
Other Medicare Fee-For-Service[A]: $0;
Medicare-Medicaid Data Match Project[B]: $24 million;
Part C and D Oversight[C]: $50.5 million;
Provider Audit[D]: $201.2 million;
Provider Outreach and Education[E]: $46.9 million;
Benefit Integrity[F]: $134.8 million;
Medicare Secondary Payer[G]: $117.7 million;
Medical Review: $165.4 million;
Total: $740.6 million.
Fiscal year: 2008;
Other Medicare Fee-For-Service[A]: $0;
Medicare-Medicaid Data Match Project[B]: $36 million;
Part C and D Oversight[C]: $51.6 million;
Provider Audit[D]: $197.2 million;
Provider Outreach and Education[E]: $42.8 million;
Benefit Integrity[F]: $139.3 million;
Medicare Secondary Payer[G]: $123.3 million;
Medical Review: $162.2 million;
Total: $752.5 million.
Fiscal year: 2009;
Other Medicare Fee-For-Service[A]: $61.9 million;
Medicare-Medicaid Data Match Project[B]: $48 million;
Part C and D Oversight[C]: $127.5 million;
Provider Audit[D]: $201.3 million;
Provider Outreach and Education[E]: $39.6 million;
Benefit Integrity[F]: $160.5 million;
Medicare Secondary Payer[G]: $123.4 million;
Medical Review: $151.2 million;
Total: $913.3 million.
Fiscal year: 2010;
Other Medicare Fee-For-Service[A]: $44.9 million;
Medicare-Medicaid Data Match Project[B]: $58.6 million;
Part C and D Oversight[C]: $149.3 million;
Provider Audit[D]: $179.4 million;
Provider Outreach and Education[E]: $42.1 million;
Benefit Integrity[F]: $165.8 million;
Medicare Secondary Payer[G]: $126.4 million;
Medical Review: $176.3 million;
Total: $942.8 million.
Source: Centers for Medicare & Medicaid Services.
[A] Other Medicare Fee-For-Service includes a variety of Medicare fee-
for-service-related subactivities not captured by other activities.
[B] Medicare-Medicaid Data Match Project is a joint effort between CMS
and states that participate voluntarily to analyze claims for
individuals with both Medicare and Medicaid coverage to identify
providers with aberrant Medicare and Medicaid billing patterns.
[C] Part C and D Oversight includes subactivities designed to address
improper payments in Medicare Parts C and D.
[D] Provider Audit includes desk reviews, audits, and final settlement
of institutional provider cost reports.
[E] Provider Outreach and Education includes training for providers,
such as hospitals and physicians that serve Medicare beneficiaries, on
procedures to comply with Medicare rules and regulations.
[F] Benefit Integrity includes subactivities designed to deter and
detect Medicare fraud by conducting data analysis of claims.
[G] Medicare Secondary Payer includes subactivities designed to
identify claims that were mistakenly billed to Medicare when
beneficiaries have primary sources of payment that should have paid
the claims.
[H] Medical Review includes both prepayment and postpayment reviews of
individual Medicare claims to determine whether legitimate services
are covered, medically reasonable, and necessary.
[End of figure]
Not All MIP Officials Connect MIP Activities with CMS's Goals of
Reducing Improper Payments; Data Used to Calculate ROI Are Flawed:
Although CMS measures MIP effectiveness by using the improper payment
rates for the Medicare fee-for-service, Part C Medicare Advantage, and
Part D prescription drug programs, CMS officials with direct
responsibility for MIP generally do not connect the MIP activities and
the CMS goals of reducing improper payments. CMS added two new GPRA
performance goals for MIP for fiscal year 2012 and is also developing
other performance metrics based on PPACA requirements. One way that
CMS measures MIP effectiveness is ROI, but the data the agency
currently uses to calculate this measure are flawed.
MIP Officials Generally Do Not Connect Program Activities with CMS's
Goals of Reducing Improper Payments:
Three of CMS's GPRA goals for MIP in fiscal year 2012 are to reduce
the improper payment rates in each part of the Medicare
program,[Footnote 25] which could contribute to the governmentwide
effort to reduce improper payments. The GPRA goals, which were also
goals in previous fiscal years, are to reduce the percentage of
improper payments made in the Medicare fee-for-service, Part C
Medicare Advantage, and Part D prescription drug programs. Each goal
has a corresponding performance measure. These goals and related
measures are particularly important because, as part of the
Accountable Government Initiative, the President set goals for federal
agencies to reduce overall improper payments by $50 billion and
recapture at least $2 billion in improper contract payments and
overpayments to health providers by the end of 2012. Because of its
size, Medicare represented 38 percent of the governmentwide fiscal
year 2010 improper payments. Therefore, CMS's actions to reduce
payment errors in Medicare will affect the success or failure of the
governmentwide effort. To respond to the President's goals, as stated
in its performance plan, CMS adopted a target to reduce its improper
fee-for-service error rate from 10.5 percent in fiscal year 2010 to
6.2 percent in fiscal year 2012 and the Part C error rate from 14.1
percent in fiscal year 2010 to 13.2 percent in fiscal year 2012.
Although CMS has established these GPRA goals as an important way to
measure the effectiveness of MIP, our interviews with CMS officials
with direct responsibility for MIP activities indicate that these
officials generally do not connect MIP activities with the CMS goals
of reducing improper payments. Only one of the five MIP activity
managers[Footnote 26] stated that CMS uses the improper payment rates
to assess MIP's overall effectiveness. Some of the remaining four MIP
activity managers told us that they were not aware of any overall CMS
measures of MIP effectiveness. In addition, some MIP activity managers
told us that the improper payment rates did not clearly assess the
work done in their activities. MIP activity managers told us that they
used a number of other performance measures to assess the
effectiveness of the activities for which they had responsibility,
including assessments of individual contractors, survey results
measuring customer satisfaction, feedback from provider associations,
savings from claims processing, funds recovered, and ROI.
The statements by agency officials indicate that CMS has not clearly
communicated to its staff the relationship between the daily work of
conducting MIP activities and the agency's higher-level performance
measures for improper payment reduction. Our prior work has
established that responsibility for meeting performance measures
should be linked directly to the offices that have responsibility for
making programs work. A clearly communicated connection between
performance measures and program offices helps to reinforce program
managers' accountability and ensure that managers keep in mind the
outcomes their organization is striving to achieve.[Footnote 27]
Within MIP, however, activity managers generally did not connect the
activity-specific performance measures they use to assess their
activity's effectiveness and the agencywide GPRA performance goals for
reducing improper payments. Our prior work found that leading
organizations try to link the goals and performance measures for each
organizational level to successive levels and ultimately to the
organization's strategic goals. These leading organizations recognized
that without clearly communicated, hierarchically linked performance
measures, managers and staff throughout the organization will lack
straightforward road maps showing how their daily activities can
contribute to attaining organizationwide strategic goals.[Footnote 28]
CMS Added MIP Performance Goals for Fiscal Year 2012 and Is Developing
Other Metrics Based on PPACA Requirements, but Their Linkage to
Measures Used by MIP Activity Managers Is Not Clear:
In its FY 2012 Online Performance Appendix, CMS added two new MIP
performance goals to the goals related to the improper payment rate
for Medicare fee-for-service, Part C, and Part D, but it is also not
clear how they link with performance measures currently used by MIP
activity managers.[Footnote 29] (See table 1.) The first new
performance goal is related to increasing the number of law
enforcement personnel with training and access to near real-time CMS
data.[Footnote 30] The second new performance goal aims to strengthen
CMS's provider enrollment actions to prevent fraudulent providers and
suppliers from enrolling in Medicare and ensure that existing
providers continue to meet enrollment requirements. The performance
measure associated with this goal will be an increase in the
percentage of Medicare enrollment site visits to "high-risk" providers
and suppliers that result in administrative actions.[Footnote 31] It
is not clear how the revised GPRA goals relate to the performance
measures used by MIP activity managers to assess the effectiveness of
their activities because CMS has not established such a linkage. Such
linkage is helpful to effectively communicate how performance is
measured within the agency.
Table 1: Government Performance and Results Act Performance Goals and
Associated Performance Measures for the Medicare Integrity Program,
Fiscal Year 2012:
Performance goal: Reduce the percentage of improper payments made
under the Medicare fee-for-service program;
Associated performance measure: Reduce the percentage of improper
payments made under the Medicare fee-for-service program to 6.2
percent;
New or existing performance goal: Existing.
Performance goal: Reduce the percentage of improper payments made
under the Part C Medicare Advantage program;
Associated performance measure: Reduce the percentage of improper
payments made under the Part C Medicare Advantage program to 13.2
percent;
New or existing performance goal: Existing.
Performance goal: Reduce the percentage of improper payments made
under the Part D Prescription Drug program;
Associated performance measure: Report a composite error rate for Part
D program that is lower than the composite error rate reported for
fiscal year 2011[A];
New or existing performance goal: Existing.
Performance goal: Increase the number of law enforcement personnel
with training and access to near real-time Centers for Medicare &
Medicaid Services (CMS) systems data;
Associated performance measure: All law enforcement personnel referred
by the Health Care Fraud Prevention and Enforcement Action Team
initiative for training and access to near real-time CMS systems data
receive the training and access[B];
New or existing performance goal: New.
Performance goal: Prevent Medicare fraud and abuse by strengthening
CMS's provider enrollment actions;
Associated performance measure: Fifteen percent of Medicare enrollment
site visits to "high-risk" providers and suppliers result in
administrative actions[C];
New or existing performance goal: New.
Source: GAO analysis of information in CMS FY2012 Online Performance
Appendix.
[A] The Centers for Medicare & Medicaid Services (CMS) is in the
process of developing a composite error rate for Medicare Part D that
takes into account measures of error in four separate parts of the
Part D program.
[B] The Health Care Fraud Prevention and Enforcement Action Team
initiative is an interagency initiative by the Department of Health
and Human Services and the Department of Justice to combine the
resources of the two agencies and focus them toward identifying fraud,
prosecuting criminals, and recovering fraudulently taken taxpayer
dollars.
[C] In a final rule published on February 2, 2011, CMS assigned
provider types to three levels of risk: limited, moderate, and high.
According to CMS, provider types assigned to higher risk levels will
receive greater oversight and review. 76 Fed. Reg. 5, 862 (Feb. 2,
2011).
[End of table]
In addition to expanding the GPRA performance goals, CMS officials
told us that they hired a contractor to develop agencywide performance
metrics in response to PPACA requirements. The performance metrics
being developed by the contractor include performance metrics for MIP.
CMS officials did not provide a date when the new performance metrics
will be completed. According to the Director of the Medicare Program
Integrity Group, the PPACA performance metrics are broader than the
GPRA goals but generally are consistent with the GPRA goals.
In addition to the efforts at CMS to increase program integrity within
the Medicare program, HHS officials told us that they are developing a
departmentwide strategy to address program integrity in all HHS
programs. An official noted that measuring the effectiveness of any
program integrity effort is a challenge. She said it is difficult to
quantify instances where fraud or abuse was avoided because of program
integrity efforts. For instance, Provider Outreach and Education on
proper billing practices is a MIP activity, but it would be difficult
to quantify how much more improper billing would occur without this
education.
CMS Calculates ROI for Most MIP Activities, but the Data CMS Uses in
Its Calculation Have Flaws:
PPACA requires CMS to report annually on the use of funds for MIP and
the effectiveness of the use of those funds. One way that CMS measures
program effectiveness is through calculation of ROI. CMS already
calculates ROI for each MIP activity, with the exception of Provider
Outreach and Education. An overall ROI for MIP is reported to Congress
annually in the agency's budget justification. ROI is calculated as
program savings from the activity divided by program expenditures from
the activity. The Director of the Medicare Program Integrity Group
told us that the current methodology used by MIP for calculating ROI
is likely the method the agency will use to meet the PPACA reporting
requirements.
The data CMS currently uses to calculate the ROI have two flaws.
First, CMS calculates the ROI for each activity in January of each
year for the prior fiscal year, but contractors can change expenditure
data via the submission of additional invoices or corrections through
the time they are audited, which can occur up to 2 years after the end
of the fiscal year. The ROI figures calculated based on this
information are not subsequently updated. When we compared the
expenditure data used to calculate activity-level ROIs and final
expenditure data provided by OFM, we found differences up to $9.7
million. Given that these dollar amounts are used as the denominator
for the ROI, the ROI amounts would likely change if they were updated
with final expenditure data. In the case of the $9.7 million
difference, for example, the difference represented a 6.4 percent
increase in the program expenditures. Second, ROIs for activities
conducted by MACs are potentially inaccurate because MACs have
discretion to direct MIP funding among the activities they perform,
and CMS does not have reliable information to determine the exact
amount spent by each MAC on individual MIP activities.[Footnote 32]
CMS officials told us that they were aware of the issue and were
making changes to the data collection system so that CMS could
calculate actual spending data. As of May 2011, these officials were
unable to estimate when the change to the data collection system would
be implemented.
CMS Considers a Variety of Factors, Including Potential Effect on
Improper Payments, When Allocating Funding:
Decisions about recommendations for how MIP funding should be
allocated among the various activities and subactivities are based on
a variety of factors. Based on the budget request documents we
reviewed, the CMS MIP Budget Small Group may consider any or all of
the following factors:
* prior year's approved funding levels and requested levels for the
current and following fiscal year;
* rationale for the increase or decrease in requested funding;
* description and justification of the subactivity;
* agency performance goals, including the strategic objective and GPRA
goal, that the subactivity is intended to meet; and:
* consequence of not funding the subactivity.
We reviewed 36 budget request documents for subactivities funded in
fiscal year 2010 and found that 11 cited the reduction of the fee-for-
service improper payment rate as the GPRA goal the subactivity was
intended to meet.
It is difficult to determine the factors CMS considers when allocating
MIP funds beyond those listed in the budget request documents. There
is no record of why submitted subactivities were funded or not funded.
Also, CMS has no policies or procedures in place that outline how
decisions about funding allocations should be made for MIP. CMS
officials told us that a subactivity's effectiveness may be discussed
orally at the meetings, though there is no documentation
substantiating this. A budget official in CMS told us that when
allocating MIP funds, the MIP Budget Small Group tries to focus on
where the problems are in each area and then determines how to
efficiently spend the money. For instance, he said that in the past
the process for allocating MIP funding within the Part C and D
Oversight activity had been difficult because the subactivities were
new, and consequently, there were no baseline ROI data available. This
same official said that he thought the allocation process for Part C
and D Oversight would become more data driven as program savings data
become available, which will allow the agency to calculate ROIs for
the Part C and D Oversight subactivities.
Conclusions:
The administration has made reducing the governmentwide improper
payment rate a priority. CMS must play a strong role in this effort
because, even without Part D, Medicare's improper payments constitute
more than a third of total federal government improper payments. As
the CMS program with the goal to reduce Medicare's improper payments,
MIP will be central to the agency's effort to reduce the Medicare
improper payment rates. CMS will need a strong, concerted effort on
the part of staff and contractors working on MIP activities to achieve
the improper payment reduction goals the agency has set for itself,
and MIP staff will need to understand how their work supports these
goals and any additional goals developed in response to PPACA
requirements. Further, a clear focus on reducing improper payments
should be central to MIP budget allocations. Because at least some
information is presented orally at the MIP Budget Small Group
meetings, we cannot determine the extent to which the risk of improper
payments and effectiveness of MIP activities in addressing that risk
are discussed during the process. We continue to believe that
consideration of how MIP activities will reduce the risk of improper
payments and their effectiveness in doing so should be an important
part of the funding process and encourage CMS to make that a priority.
As we noted in our 2006 report, ROI is a useful method for assessing
the effectiveness of MIP activities. However, such reporting is
valuable only if the ROI figures reported are reliable. Currently, the
data used to calculate the ROI are flawed because the ROI calculations
are not updated beyond the end of a fiscal year to account for changes
in MIP expenditure data, and CMS does not currently have a way to
account for the exact amount of MIP funds MACs spend on individual MIP
activities. CMS officials acknowledged the shortcomings of the MAC
expenditure data and noted that they were implementing changes to the
applicable data collection system to more accurately capture MAC
expenditures. Expeditiously completing this task and ensuring that
final expenditure data are used to update ROI calculations will be
essential to ensuring reliability in ROI reporting.
Recommendations for Executive Action:
We are making three recommendations to CMS. To enhance accountability
and sharpen the focus of the agency on reducing improper payments, we
recommend that the Administrator of CMS clearly communicate to staff
the linkage between GPRA and PPACA performance measures related to the
reduction in improper payments and other measures used to determine
the performance of MIP activities.
To enhance the reliability of data used to calculate the MIP ROI, we
recommend that the Administrator of CMS take the following two actions:
* periodically update ROI calculations after contractor expenses have
been audited to account for changes in expenditure data reported to
CMS and publish a final ROI after data are complete and:
* expeditiously complete the implementation of data system changes
that will permit CMS to capture accurate MAC spending data, thereby
helping to ensure an accurate ROI.
Agency Comments:
We provided a draft of this report to HHS for review, and in its
written comments, HHS concurred with our recommendations. (HHS's
written comments are reprinted in app. IV.) HHS noted that CMS has
expanded its efforts to ensure that GPRA goals become an integral part
of its overall management culture, including management of MIP
activities. In addition, HHS stated that with the introduction of
PPACA, the department is developing performance metrics that are in
addition to, and align with, GPRA goals.
CMS concurred with our recommendation to clearly communicate to staff
the linkage between GPRA and PPACA performance measures related to the
reduction in improper payments and other measures used to determine
the performance of MIP activities. CMS stated that the agency recently
established the position of the Chief Performance Officer to provide
leadership, technical direction, and guidance in the development,
implementation, communication, and operation of a comprehensive, CMS-
wide performance management program. CMS also summarized other agency
activities under way to assess program effectiveness, such as
developing a new online data tool to report on the progress of key
performance indicators, including those related to program integrity.
CMS concurred with our recommendation to periodically update ROI
calculations after contractor expenses have been audited to account
for changes in expenditure data reported to CMS and publish a final
ROI after data are complete. According to CMS, the agency will update
the ROI when there has been a material change in the data used in the
calculation and, at a minimum, will revisit the ROI annually to
account for revisions in contractor cost reports and updated savings
information. CMS also highlighted the complexities of estimating cost
data for the MACs for purposes of the ROI.
CMS also concurred with our recommendation to complete the
implementation of data systems changes that will permit CMS to capture
accurate MAC spending data, thus helping to ensure the accuracy of the
ROI. CMS stated that the agency will convene an internal work group
consisting of staff from several components to explore more efficient
ways to accumulate MAC cost data and calculate ROI performance
statistics. CMS also noted that some changes to the cost reporting
system for contractor cost submissions have already been completed,
particularly in the area of medical review cost reporting. However,
the agency plans to pursue a full assessment of the costs reported
across all of the MIP functions performed by the MACs to ensure that
any additional changes are identified and implemented.
We are encouraged by CMS's plans to implement our recommendations and
believe that doing so will lead to a better understanding by the
agency and Congress of MIP's effectiveness.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to the Secretary of Health and Human Services, Administrator of CMS,
appropriate congressional committees, and other interested parties.
The report also will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions
to this report are listed in appendix V.
Signed by:
Kathleen M. King:
Director, Health Care:
[End of section]
Appendix I: Centers for Medicare & Medicaid Services (CMS) Oversight
of the Medicare Integrity Program:
[Refer to PDF for image: organizational chart]
Top level:
CMS Administrator[A].
Second level, reporting to CMS Administrator:
Center for Program Integrity[A]:
* Medicare Program Integrity Group[A]:
- Benefit Integrity[B];
- Medicare-Medicaid Data Match Project[B];
Center for Medicare[A]:
* Provider Outreach and Education[B];
* Part C and D Oversight[B];
Operations[A]:
* Office of Financial Management[A]:
- Provider Compliance Group[A]:
-- Medical Review[B];
- Financial Services Group[A]:
-- Medicare Secondary Payer[B];
-- Provider Audits[B].
Source: GAO analysis of information from CMS.
[A] CMS components.
[B] Medicare Integrity Program activities.
[End of figure]
[End of section]
Appendix II: Medicare Integrity Program (MIP) Contractors:
MIP contractors include:[Footnote 33]
* The Comprehensive Error Rate Testing (CERT) contractor establishes
error rates and estimates of improper payments for Medicare, which the
Centers for Medicare & Medicaid Services (CMS) uses to assess the
performance of MIP.
* Medicare administrative contractors (MAC)[Footnote 34] perform
medical review of claims, identification and recovery of improper
payments, provider audits, provider education, and screening of
beneficiary complaints related to alleged fraud. MACs use information
generated by the CERT contractors to identify how to target their
improper payment prevention activities. In addition to performing
these program integrity activities, MACs process Medicare claims and
conduct other claims-related activities, such as answering provider
inquiries and recouping overpayments.
* Medicare drug integrity contractors (MEDIC) are tasked with
identifying potential fraud and abuse in Part C and D of the Medicare
program and referring cases to the Department of Health and Human
Services' Office of Inspector General (OIG) or Department of Justice
as necessary. MEDICs are also responsible for auditing the fraud,
waste, and abuse compliance programs that are a requirement for
participation as a Part D provider.
* The Medicare secondary payer (MSP) contractors are responsible for
researching and conducting all MSP claim investigations. In addition
to this role in MIP, the MSP contractor identifies all health
insurance held by Medicare beneficiaries and coordinates the payment
process.
* The National Supplier Clearinghouse is responsible for reviewing
enrollment applications from durable medical equipment suppliers and
conducting site visits to confirm these suppliers' compliance with
Medicare regulations.
* Program safeguard contractors (PSC) perform benefit integrity
subactivities for Parts A and B of Medicare to identify cases of
suspected fraud and take action to ensure that Medicare funding is not
inappropriately paid and that any mistaken payments are identified.
Cases of potential fraud are referred to the Department of Health and
Human Services' OIG.
* Zone program integrity contractors (ZPIC) will eventually be
responsible for performing benefit integrity subactivities for claims
under Parts A, B, C, and D of the Medicare program. CMS is currently
in the process of replacing the PSCs with ZPICs.[Footnote 35]
[End of section]
Appendix III: Contractor Types Performing Medicare Integrity Program
Activities for Fiscal Year 2010:
Activity: Benefit Integrity[B];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Check];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Check];
Program safeguard contractors: [Check];
Zone program integrity contractors: [Check].
Activity: Provider Audit[C];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Check];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Check];
Zone program integrity contractors: [Empty].
Activity: Medicare Secondary Payer[D];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Check];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Check];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Empty].
Activity: Medical Review[E];
Comprehensive Error Rate Testing contractor: [Check];
Medicare administrative contractors: [Check];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Empty].
Activity: Provider Outreach and Education[F];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Check];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Empty].
Activity: Medicare-Medicaid Data Match Project[G];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Empty];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Check].
Activity: Part C and D Oversight[H];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Empty];
Medicare drug integrity contractors: [Check];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Empty].
Activity: Other Medicare Fee-For-Service[I];
Comprehensive Error Rate Testing contractor: [Empty];
Medicare administrative contractors: [Empty];
Medicare drug integrity contractors: [Empty];
Medicare secondary payer contractors[A]: [Empty];
National Supplier Clearinghouse: [Empty];
Program safeguard contractors: [Empty];
Zone program integrity contractors: [Empty].
Source: GAO analysis of Centers for Medicare & Medicaid Services (CMS)
information.
[A] Includes the coordination of benefits contractor, the workers
compensation review contractor, and the Medicare secondary payer
recovery contractor.
[B] Benefit Integrity includes subactivities designed to deter and
detect Medicare fraud by conducting data analysis of claims.
[C] Provider Audit includes desk reviews, audits, and final settlement
of institutional provider cost reports.
[D] Medicare Secondary Payer includes subactivities designed to
identify claims that were mistakenly billed to Medicare when
beneficiaries have primary sources of payment that should have paid
the claims.
[E] Medical Review includes both automated and manual prepayments and
postpayment reviews of individual Medicare claims to determine whether
legitimate services are covered, medically reasonable, and necessary.
[F] Provider Outreach and Education includes training for providers,
such as hospitals and physicians that serve Medicare beneficiaries, on
procedures to comply with Medicare rules and regulations.
[G] Medicare-Medicaid Data Match Project is a joint effort between CMS
and states that participate voluntarily to analyze claims for
individuals with both Medicare and Medicaid coverage to identify
providers with aberrant Medicare and Medicaid billing patterns.
[H] Part C and D Oversight includes subactivities designed to address
improper payments in the Medicare private health plan program (Part C)
and outpatient prescription drug benefit (Part D).
[I] Other Medicare Fee-For-Service includes a variety of Medicare fee-
for-service-related subactivities not captured by other activities.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
July 15, 2011:
Kathleen King:
Director, Health Care:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Ms. King:
Attached are comments on the U.S. Government Accountability Office's
(GAO) draft report entitled: "Medicare Integrity Program: CMS Used
Increased Funding for New Activities But Could Improve Measurement of
Program Effectiveness" (GA0-11-592).
The Department appreciates the opportunity to review this report
before its publication.
Sincerely,
Signed by:
Jim R. Esquea:
Assistant Secretary for Legislation:
Attachment:
[End of letter]
General Comments Of The Department Of Health And Human Services (HHS)
On The Government Accountability Office's (GAO) Draft Report Entitled,
"Medicare Integrity Program: CMS Used Increased Funding For New
Activities But Could Improve Measurement Of Program Effectiveness"
(GAO-11-592):
The Department appreciates the opportunity to review and comment on
this draft report.
In this report, GAO evaluated: 1) how the Centers for Medicare &
Medicaid Services (CMS) used Medicare Integrity Program (MIP) funding
to support the program's activities from fiscal years 2006 through
2010, 2) how CMS assesses the effectiveness of MIP, and 3) factors CMS
considers when allocating MIP funding.
CMS has expanded its efforts to ensure that its Government Performance
and Results Act (GPRA) goals become an integral part of its overall
management culture, including management of MIP activities. We are
dedicated to making our employees aware of our commitment to the use
of performance information to manage our programs and resources,
especially regarding the reduction of improper payments. With the
introduction of the Affordable Care Act (ACA), we are developing
performance metrics that are in addition to, and align with, GPRA
goals. We are working toward a corporate-level perspective of our
performance management program as well as strengthening performance
management coordination throughout our organization.
Creating a strong strategic management framework around what we do
will ensure our success and the accomplishment of our strategic goals.
We will continue to work to ensure that limited resources are used
wisely, operational risks are identified and mitigated, and that
employees are held accountable for achieving results.
In addition, we are committed to identifying improvements to the
current approaches used to allocate MIP funding, as well as, the
process for calculating the Return on Investment (ROI) for MT
activities. We will continue to investigate data collection methods to
ensure accurate accounting of spending information and outcomes
achieved for MIP funded activities.
GAO Recommendation No. 1:
To enhance accountability and sharpen the focus of the Agency on
reducing improper payments, we recommend that the Administrator of CMS
clearly communicate to staff the linkage between GPRA and PPACA
performance measures related to the reduction in improper payments and
other measures used to determine the performance of MIP activities.
CMS Response:
CMS concurs. To improve communication and coordination of performance
measures throughout CMS, we recently established the position of the
Chief Performance Officer (CPO). The role of the CPO is to provide
leadership, technical direction, and guidance in the development,
implementation, communication, and operation of a comprehensive CMS-
wide performance management program. The CPO reports to the Chief
Operating Officer (COO) and Deputy Chief Operating Officer (DCOO) to
bolster its independent, cross-cutting Agency support role.
Our GPRA performance measures are representative of the broad scope of
Agency activities and are used to communicate Agency efforts to
Congress and the public through the Federal budget process. Included
in our GPRA program are numerous program integrity goals that reflect
the publicly stated program integrity mission of the Agency.
As noted in your report, there are many other measures and ongoing
activities apart from the GPRA goals that assess program effectiveness
and are communicated to staff. For example, we have implemented a
state-of-the art project management system to track the status of all
ACA provisions, including those relating to program integrity. It is
widely used by CMS leadership and is a critical tool in helping us
monitor progress, identify areas of risk, and report on performance.
Other efforts include developing a new online data reporting tool that
will report on the progress of key performance indicators, including
those relating to program integrity. In addition, we developed a CMS
strategic plan which aligns with the HHS Strategic Plan goals. The CMS
Strategic Plan highlights CMS' many mission-critical activities,
including those relating to program integrity that support the DHHS
Goal 4 "Fight Fraud and Work to Eliminate Improper Payments." These
goals are discussed during Senior Staff meetings, and the status of
each goal is updated on a monthly basis.
GAO Recommendation No. 2:
To enhance the reliability of data used to calculate the MIP ROI, we
recommend that the Administrator of CMS:
* Periodically update the ROI calculations after contractor expenses
have been audited to account for changes in expenditure data reported
to CMS and publish a final ROI after data is complete.
CMS Response:
CMS concurs. The ROI calculation will be updated when there has been
"a material change" in the data used in the calculation. At a minimum,
CMS will revisit the calculation annually to account for revisions in
contractor cost reports and updated savings information.
The basis for the cost half of the ROI equation is financial
obligations made through the end of the fiscal year. This data
includes the amounts awarded to Medicare Administrative Contractors
(MACs). It should be noted that MAC contracts cross fiscal years. As
such, the amount obligated, the contract award, will not match amounts
expended in a given fiscal year.
The amount in the end of fiscal year obligation data for each MAC
represents the total amount of the contract and is not broken down
into the basic MIP categories. The business proposals of the MACs do
distribute the funding, however, the MACs have authority to reprogram
funds during the year. To account for this reprogramming, actual MAC
expenses incurred during the fiscal year, as reported in their monthly
cost reports, are used as a proxy for obligations.
The cost report data for the same 12 month period as the end of fiscal
year obligation data report is summarized and the percentage of total
cost for each MIP category is determined. This percentage is applied
to the MAC obligations in the SOF in order to allocate the costs for
ROI purposes. FY 2010 was the first year that actual MAC costs were
taken into consideration using this methodology.
GAO Recommendation No. 3:
To enhance the reliability of data used to calculate the MIP ROI, we
recommend that the Administrator of CMS:
* Expeditiously complete the implementation of data system changes
that will permit CMS to capture accurate MAC spending data, thereby
helping to ensure accurate ROI.
CMS Response:
CMS concurs. We recognize that having different periods of
performances and different funding years for each MAC have made it
challenging to compile national cost data on a fiscal year reporting
basis. CMS will convene an internal workgroup consisting of staff from
several components to explore more efficient ways to accumulate MAC
cost data and calculate ROI performance statistics. While some changes
to the cost reporting system for contractor cost submissions have been
completed already, particularly in the area of medical review cost
reporting, CMS will pursue a full assessment of the costs reported
across all of the MIP functions performed by the MACs to assure that
any additional changes are identified and implemented. We believe that
this will support the activity-specific ROI calculations.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
Contact:
Kathleen M. King, (202) 512-7114 or kingk@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, key contributors to this
report were Kay L. Daly, Director; Sheila Avruch, Assistant Director;
Phillip McIntyre, Assistant Director; Sabrina Springfield, Assistant
Director; Lori Achman; Nicole Dow; Emily Loriso; Chelsea Lounsbury;
Roseanne Price; Andrea Richardson; and Jennifer Whitworth.
[End of section]
Footnotes:
[1] Government Auditing Standards defines fraud as a type of illegal
act involving the obtaining of something of value through willful
misrepresentation. Abuse is defined as behavior that is deficient or
improper when compared with behavior that a prudent person would
consider reasonable and necessary business practice given the facts
and circumstances. See GAO, Government Auditing Standards, [hyperlink,
http://www.gao.gov/products/GAO-07-731G] (Washington, D.C.: July 2007).
[2] Medicare consists of four parts. Parts A and B are known as
original Medicare or Medicare fee-for-service. Part A covers hospital
and other inpatient stays. Medicare Part B covers hospital outpatient,
physician, and other services. Part C is Medicare Advantage, under
which beneficiaries receive benefits through private health plans.
Part D is the outpatient prescription drug benefit. These estimates of
improper payments do not fully measure improper payments in Medicare
as a whole because an error rate for Part D will not be available
until November 2011.
[3] This does not include improper payments from Part D because CMS
did not report an improper payments estimate for Part D for fiscal
year 2010.
[4] Mandatory funding refers to budget authority that is provided in
laws other than appropriation acts and the outlays that result from
such budget authority. In contrast, discretionary funding refers to
funding provided in and controlled by appropriation acts. Financial
transactions for Medicare Part A operate through the Federal Hospital
Insurance trust fund. The main source of income for Medicare's Federal
Hospital Insurance trust fund is taxes on wages and self-employment
income.
[5] Pub. L. No. 104-191 §§ 201(b), 202, 110 Stat. 1936, 1993 (codified
at 42 U.S.C. §§ 1395i(K)(4), 1395ddd).
[6] Before 1996, Medicare program integrity activities were subsumed
under Medicare's general administrative budget and performed, along
with general claims processing functions, by insurance companies under
contract with CMS. The level of funding available for program
integrity activities during this period was constrained by the need to
fund ongoing Medicare administrative activities and provisions in the
Budget Enforcement Act of 1990, which required reductions in
discretionary spending for other programs, such as immunizations or
job training, in order to increase Medicare's administrative budget.
Pub. L. No. 101-508, title XIII, 104 Stat. 1388, 1388-573-1388-630. In
the early and mid-1990s, we reported that such funding constraints had
reduced Medicare contractors' ability to conduct program integrity
activities.
[7] GAO, Medicare Integrity Program: Agency Approach for Allocating
Funds Should Be Revised, [hyperlink,
http://www.gao.gov/products/GAO-06-813] (Washington, D.C.: Sept. 6,
2006).
[8] As mandated under the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, CMS has been replacing about 50 claims
administration contractors with 19 Medicare administrative contractors
(MAC). Pub. L. No. 108-173, § 911, 117 Stat. 2066, 2378 (codified at
42 U.S.C. § 1395kk-1). These MACs process and pay claims, answer
questions from Medicare providers, and implement Medicare coverage
rules. CMS plans to further consolidate the number of contractors from
19 to 14 during the next round of contract awards and transitions over
the next several years.
[9] Effectiveness is the extent to which an activity fulfills its
intended purpose or function.
[10] GAO, Executive Guide: Effectively Implementing the Government
Performance and Results Act, [hyperlink,
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June
1996).
[11] CMS provided us with 49 MIP budget request documents (which are
called glossaries by CMS) for subactivities that requested MIP funding
for fiscal year 2010. Of the 49 budget request documents we received,
13 were for subactivities that were not ultimately funded. Therefore,
we did not include these 13 requests in our review. We also received
budget request documents for MIP-funded information technology
subactivities, but did not include these in our analysis because they
are assessed for funding through a separate process.
[12] For the purposes of this report, we consider program integrity a
component of the effective and efficient administration of government
programs, which are entrusted with ensuring that taxpayer dollars are
spent wisely. Efforts to ensure Medicare program integrity include
processes directed at reducing payment errors to Medicare providers as
well as activities to prevent, detect, investigate, and ultimately
prosecute health care fraud.
[13] Pub. L. No. 111-148, § 6402(i), 124 Stat. 119, 760, as amended by
the Health Care and Education Reconciliation Act of 2010, Pub. L. No.
111-152, § 1303, 124 Stat. 1029, 1057.
[14] Medicaid is a joint federal-state health care program for certain
low-income individuals.
[15] The Center for Medicare serves as CMS's focal point for the
formulation, coordination, integration, implementation, and evaluation
of national Medicare program policies and operations.
[16] The process of using "small groups" to make funding allocation
decisions is used throughout the agency for all CMS programs and
activities.
[17] Pub. L. No. 103-62, 107 Stat. 285, as amended by Pub. L. No. 111-
352, 124 Stat. 3866 (2011).
[18] GAO, Agencies' Annual Performance Plans Under the Results Act: An
Assessment Guide to Facilitate Congressional Decisionmaking,
[hyperlink, http://www.gao.gov/products/GAO/GGD/AIMD-10.1.18]
(Washington, D.C.: February 1998).
[19] Pub. L. No. 111-148, § 6402(j) 124 Stat. at 762 (codified at 42
U.S.C. § 1395ddd(c)(4)).
[20] 42 U.S.C. § 1395ddd(i). This report is due 180 days after the end
of each fiscal year, beginning in fiscal year 2011.
[21] ZPICs perform benefit integrity subactivities for claims under
Parts A, B, C, and D of the Medicare program.
[22] See GAO, Medicare Secondary Payer: Improvements Needed to Enhance
Debt Recovery Process, [hyperlink,
http://www.gao.gov/products/GAO-04-783] (Washington, D.C.: Aug. 20,
2004). In this report, we recommended that CMS improve the efficiency
of MSP payment recovery by consolidating its efforts under fewer
contracts.
[23] Formerly, the identification and recovery of funds due to MSP
issues was one of several activities conducted by about 50 claims
administration contractors.
[24] Medical Review spending decreased from fiscal year 2006 to fiscal
year 2009, and then increased in fiscal year 2010. According to CMS
officials, Medical Review costs were reduced, from almost $160 million
in fiscal year 2006 to about $151 million in fiscal year 2009,
partially as a result of the contractor consolidation. However,
Medical Review spending increased in fiscal year 2010 to $176.3
million--up about 17 percent from fiscal year 2009. CMS officials told
us that the increased spending was for information technology to
support Medical Review and a change in the funding method for the CERT
program that calculated the fee-for-service improper payment rate.
[25] Centers for Medicare & Medicaid Services, FY 2012 Online
Performance Appendix, [hyperlink,
http://www.cms.gov/performancebudget/] (accessed Feb. 14, 2011).
[26] Of the eight MIP activities, only Other Medicare Fee-For-Service
does not have an activity manager. One person serves as the activity
manager for Provider Audit and MSP, and one person serves as the
activity manager for Benefit Integrity and Medi-Medi.
[27] [hyperlink, http://www.gao.gov/products/GAO/GGD/AIMD-10.1.18], 11.
[28] [hyperlink, http://www.gao.gov/products/GAO/GGD-96-118], 24.
[29] CMS, FY 2012 Online Performance Appendix.
[30] Law enforcement personnel include agents from the HHS OIG, DOJ
Assistant U.S. Attorney, Federal Bureau of Investigation, and OIG
Railroad Retirement Board. As part of the Health Care Fraud Prevention
and Enforcement Action Teams (HEAT) initiative, law enforcement
personnel involved with HEAT use CMS data to examine claims payment
data for aberrancies, to identify suspicious billing patterns, and to
conduct surveillance of target providers and suppliers under
investigation for potentially fraudulent practices. HEAT is an
interagency partnership between HHS and DOJ in seven areas across the
country focused on health care fraud.
[31] In a final rule published on February 2, 2011, CMS assigned
provider types to three levels of risk: limited, moderate, and high.
According to CMS, provider types assigned to higher risk levels will
receive greater oversight and review. Medicare, Medicaid, and
Children's Health Insurance Programs; Additional Screening
Requirements, Application Fees, Temporary Enrollment Moratoria,
Payment Suspensions and Compliance Plans for Providers and Suppliers,
76 Fed. Reg. 5,862 (Feb. 2, 2011).
[32] Because MACs are involved with multiple aspects of Medicare
operations, they received funds to conduct aspects of each of several
MIP activities. In fiscal year 2010, they received about $207 million
for MIP activities, or about 22 percent of the total MIP funds spent.
[33] Although they are not supported by MIP funds, recovery audit
contractors also were created by the statute establishing MIP.
Recovery audit contractors are private organizations that contract
with CMS to identify and collect improper payments in the Medicare fee-
for-service program.
[34] MACs are replacing the fiscal intermediaries and carriers.
Historically, fiscal intermediaries performed claims administration
functions for Medicare Part A and Part B claims to hospitals, other
institutions, and home health agencies, and carriers performed claims
administration functions for Medicare Part B providers.
[35] In May 2011, an official from CMS informed GAO that CMS was in
the midst of transitioning work from the PSCs to the ZPICs. An October
2008 CMS press release stated that the MEDICs would also transition to
ZPICs, but CMS officials could not confirm whether this transition
would take place.
[End of section]
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