June 25, 2012

Low Scores for Government Efforts to Clean Up Medicare/Medicaid Fraud

By Gordon Schnell

The Government Accountability Office (GAO), the nonpartisan investigative arm of Congress, just issued a relatively unflattering report on the government’s internal efforts to clean up Medicare and Medicaid fraud.  According to the report, the government makes more than $60 billion in improper Medicare and Medicaid payments every year because of fraud, waste and abuse of the system.  This comes from estimates provided by the Centers for Medicare and Medicaid Services (CMS), the agency within the Health and Human Services Department that oversees these programs.  The scale of these overpayments places Medicare and Medicaid — already on GAO’s watch-list of high-risk programs — among the most wasteful of all federal programs.

The CMS, through its Medicare and Medicaid Integrity Programs, is supposed to rein in this fraud through its various auditing and verification programs, much of which are contracted out to third-parties.  Apparently, it is not doing a very good job.  In fact, in some of these programs, the government is paying out significantly more for these third-party auditors than what these auditors are recovering in overpayments.  In a recent Congressional hearing on the subject, a representative from the Office of Inspector General testified in stark terms about the failure of these programs:

[They] are not effectively accomplishing their missions.  A primary objective for both programs is to identify improper payments for recovery.  However, both programs had low findings of actual overpayments and, as a result, yielded negative returns on investment.  These programs also delivered very few referrals of potential fraud to OIG and our law enforcement partners.  In many ways, these programs resemble a funnel through which significant federal and state resources are being poured in and limited results are trickling out.

The GAO report did point out some bright spots in the CMS Integrity Programs.  However, it concluded that significantly more needs to be done to tackle the irrepressible fraud and waste that currently plagues the Medicare and Medicaid programs.  The whistleblower system is certainly doing its share, returning to the government billions of dollars a year in improper Medicare and Medicaid payments.  And it is doing so with record efficiency, recovering more than $10 for every $1 it spends on whistleblower investigations and follow-up prosecutions.  But with the tens of billions of dollars of fraud associated with these programs every year, the whistleblowers can only get us so far.  The government has to do the rest by tightening its auditing and verification programs and stopping the fraud from happening in the first place, before the overpayments are ever made.  Hopefully, the CMS will get us there soon, before these numbers get even higher.

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