Medicare Improper Payments

Challenges for Measuring Potential Fraud and Abuse Remain Despite Planned Enhancements Gao ID: T-AIMD/OSI-00-251 July 12, 2000

Results from a recent Department of Health and Human Services (HHS) Office of the Inspector General (OIG) study indicate that, of the $164 billion in fiscal year 1999 Medicare fee-for-service claim payments, a projected $13.5 billion was paid improperly for reasons ranging from inadvertent errors to outright fraud and abuse. Because the OIG's methodology was not designed to identify all types of potentially fraudulent or abusive activity, it does not estimate the full extent of improper Medicare fee-for-service payments. However, the Health Care Financing Administration (HCFA) has begun three projects that could enhance HCFA's ability to uncover potential fraud and abuse and to determine the extent of the payments attributable to potential fraud and abuse. In addition, the use of carefully selected detection techniques to identify potential fraud could help HCFA arrive at a more comprehensive measurement of improper payments and develop cost-effective internal controls to combat them.

GAO noted that: (1) because it was not intended to include procedures designed specifically to identify all types of potential fraudulent and abusive activity, the current methodology does not provide an estimate of the full extent of improper Medicare fee-for-service payments; (2) HCFA has initiated three projects designed to further its measurement efforts which offer some promise for determining the extent of improper payments attributable to potential fraud and abuse; (3) based on careful evaluation of their effectiveness, performing additional potential fraud identification techniques as part of its efforts to measure improper payments could assist HCFA in arriving at a more comprehensive measurement and, ultimately, develop cost-effective internal controls to combat improper payments; and (4) however, no set of techniques, no matter how extensive, can be expected to measure all potential fraud and abuse.

Recommendations

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