Medicare

The Health Care Financing Administration (HCFA) paid its Medicare fee-for-service claims administration contractors $1.6 billion in fiscal year 1998 to serve as the program's first line of defense against inappropriate and fraudulent claims. Since 1993, eight contractors have been convicted of criminal offenses, have been fined, or have entered into civil settlements. Several of their employees engaged in improprieties and covered up poor performance to allow contractors to keep their Medicare business. Improper activities included improperly screening, processing, and paying claims; destroying claims; and failing to properly collect money providers owed Medicare. Contractors also falsified their performance results and tried to deceive HCFA and circumvent its performance reviews. HCFA often failed to detect improper activities because it gave contractors too much advance notice of its oversight visits and record reviews. Weaknesses in HCFA's current oversight might allow the same types of activities to continue undetected. GAO believes that HCFA plans to act on recommendations GAO made in July 1999 regarding its contractor management policy and plans, assessment, evaluation, and oversight. Although this will help improve its management and oversight of the contractors, it will not make Medicare less vulnerable to their abuses.

GAO noted that: (1) following allegations that they engaged in fraudulent or otherwise improper activities, at least eight Medicare contractors have been convicted of criminal offenses, have been fined, or have entered into civil settlements since 1993; (2) over several years, some of these contractors' employees engaged in improprieties and covered up poor performance to allow contractors to keep their Medicare business; (3) admitted or alleged improper activities included, but were not limited to, improperly screening, processing, and paying Medicare claims, destroying claims, and failing to properly collect money owed to Medicare by providers; (4) in addition, contractors falsified their performance results and engaged in activities designed to deceive HCFA and circumvent its review of contractor performance; (5) these fraudulent and improper activities have adversely affected taxpayers, providers, and beneficiaries; (6) because HCFA gave contractors too much advance notice of its oversight visits and the records that would be reviewed, it often failed to detect improper contractor activities; and (7) HCFA's oversight has other weaknesses that might allow the same types of improper contractor activities to continue undetected.