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GAO suggests ways to fight Medicaid fraud, improve Medicare audits

June 1, 2015
by Lois A. Bowers, Senior Editor
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The Centers for Medicare & Medicaid Services (CMS) will issue guidance for screening deceased beneficiaries and provide more-complete data for screening Medicaid providers in accordance with the recommendations in a recently released report from the Government Accountability Office (GAO). The guidance will be state-specific, according to the GAO.

Thousands of Medicaid beneficiaries and hundreds of providers were involved in potentially improper or fraudulent payments during fiscal year 2011, the most-recent year for which reliable data were available in four selected states, according to the GAO report, released May 29. The federal agency studied Arizona, Florida, Michigan and New Jersey because they were among the states with the highest enrollment of Medicaid beneficiaries, at 9.2 million, and accounted for 13 percent of all fiscal year 2011 Medicaid payments.

The GAO said it conducted the study because Medicaid is a significant expenditure for the federal government and the states, with total federal outlays of $310 billion in fiscal year 2014. CMS reported an estimated $17.5 billion in potentially improper payments for the Medicaid program in 2014.

In the four states studied by the GAO:

  • Payments totaling at least $18.3 million on behalf of about 8,600 beneficiaries were made concurrently by two or more states.
  • Medicaid benefits totaling about $9.6 million were sent to 200 beneficiaries after they had died.
  • About 50 providers were excluded from federal healthcare programs, including Medicaid, for a variety of reasons that included patient abuse or neglect, fraud, theft, bribery or tax evasion.

The GAO noted that, since 2011, CMS has taken steps to make the Medicaid enrollment process more rigorous and data-driven, but gaps remain in beneficiary-eligibility verification guidance and data-sharing. For instance:

  • CMS currently does not require states to periodically review Medicaid beneficiary files for deceased individuals more than once a year, nor does the agency specify whether states should consider using the more-comprehensive Social Security Administration Death Master File in conjunction with state-reported death data when doing so. As a result, states may not be able to detect individuals who have moved to and died in other states, or to prevent the payment of potentially fraudulent benefits to individuals using these identities.
  • CMS allows states to use Medicare’s enrollment database—the Provider Enrollment, Chain and Ownership System (PECOS)—to screen Medicaid providers, but the agency has not provided full access to all information in PECOS, such as ownership information, that states report is needed to effectively and efficiently process Medicaid provider applications.

The GAO emphasized that the results of its research cannot be generalized to all states.

MAC audits

Based on recommendations in another report, released June 1, CMS will analyze whether alternative approaches could help improve the performance of Medicare administrative contractors (MACs). In fiscal year 2013, MACs processed almost 1.2 billion claims totaling more than $363 billion in Medicare payments, according to the GAO.

The June 1 report noted that CMS had planned to reassess whether the cost-plus-award-fee contract structure it uses was still appropriate for the MAC once a baseline cost and level of effort had been established. Several other contracting approaches could be introduced within or in addition to the cost-reimbursement structure currently used, the GAO maintained. Without formally assessing the potential benefits and risks of alternative contracting approaches, CMS may be missing opportunities to enhance MACs’ efficiency and effectiveness, the report concluded.

As of February, 16 MACs administered claims submitted by Medicare providers and suppliers. Twelve of them administered Medicare Part A and Part B claims for home health and hospice care as well as inpatient hospital care, outpatient physician and hospital services, among other services, in specific jurisdictions. Four MACs administered claims for durable medical equipment.

MACs have developed Internet-based provider portals to reduce expenditures on telephone-based provider customer service, the GAO found, but in an effort to maintain a competitive advantage over other MACs, contractors have hampered further improvements in efficiency and effectiveness by not sharing some innovations or operational improvements with other contractors.