GAO Pushes HCFA to Expand Fraud and Abuse Detection Projects

Washington

Fraud and abuse are still alive and well in the Medicare program, and while HCFA has initiated efforts to improve how it determines the level of improper payments, they do not go far enough, according to a recently released General Accounting Office report evaluating the agency's fraud and abuse detection programs.

"The HCFA projects discussed in this report represent important steps toward advancing usefulness of its improper payment measurement efforts," states the report, Medicare Improper Payments: While Enhancements Hold Promise for Measuring Fraud and Abuse, Challenges Remain. "However, we believe HCFA's efforts to measure Medicare fee-for-service improper payments can be further enhanced with the use of additional fraud detection techniques."

According to the GAO report, HCFA initiated three projects designed to reduce Medicare payment errors to 5 percent or less by 2002. The projects grew out of a recent Office of Inspector General finding that 8 percent of the $169.5 billion in Medicare claim payments - approximately $13.5 billion - in fiscal year 1999 were improperly paid.

Two of HCFA's projects - the Comprehensive Error Rate Testing Project and the Payment Error Prevention Program - involve much larger random samples of claims compared with the methodology HCFA now uses and therefore are intended to boost the accuracy of improper payment estimates. The third project, the Model Fraud Rate Project, is still being developed and will examine the possibility of using certain investigative methods to calculate potential fraud rates for specific locations or Medicare benefits.

While these projects could make up for some of the shortcomings in the current methodology used to determine Medicare payment errors, the report concludes that they lack key fraud detection techniques, thereby limiting their effectiveness in estimating potential fraud and abuse.

"Collectively, HCFA's projects do not comprehensively attempt to measure potential fraud and abuse or evaluate the specific vulnerabilities in the claims-processing process that may be allowing fraud and abuse to be perpetrated," the report says.

The report makes several recommendations to bolster HCFA's attempts to uncover Medicare fraud and abuse. It suggests additional fraud-detecting techniques, such as visiting providers, collecting medical records and other documents, observing patient activity levels, asking employees about the providers' operations and making contact with Medicare beneficiaries. The report also recommends further assessments of identified improper payments to determine their causes and warns that realizing such objectives will require significant investments of time and effort by many parties.

"The implementation of more extensive detection techniques is bound to be challenging and expensive, so using rigorous study methods and consulting with the people affected, such as beneficiary and provider advocacy groups, are essential steps to ensure success, as well as considering the tangible and intangible benefits of using particular techniques," the report states.

Before resigning as HCFA administrator, Nancy-Ann DeParle responded to the GAO's recommendations, saying the agency agreed with the suggestions and was "developing additional techniques for detecting potential fraud and abuse." She said that unannounced visits to providers might have to be initiated but questioned how they might be viewed by providers. And she noted that "beneficiary contact," as recommended by the GAO, "is unproven as a reliable, valid measure in establishing the probability of fraud."