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Fraud: GAO Concludes CMS Can Do More to Protect Medicare

by Published On: Jul 19, 2012

In Medicare: Important Steps Have Been Taken, but More Could Be Done to Deter Fraud, a report issued on April 24, 2012, the Government Accountability Office (GAO) concluded that the Centers for Medicare and Medicaid Services (CMS) has made progress in implementing several key strategies GAO identified in prior work as helpful in protecting Medicare from fraud.

However, some actions that could help combat fraud remain incomplete. 

Specifically, the GAO focused on 3 areas—provider enrollment, pre- and post-payment claims review and processes for addressing identified vulnerabilities. 

Provider Enrollment

GAO’s previous work found persistent weaknesses in Medicare’s enrollment standards and procedures that increased the risk of enrolling entities intent on defrauding the program. CMS has strengthened provider enrollment—for example, in February 2011, CMS designated three levels of risk—high, moderate, and limited—with different screening procedures for categories of providers at each level. 

However, CMS has not completed other actions, including implementation of some relevant provisions of the Patient Protection and Affordable Care Act (PPACA). Specifically, CMS has not: 

  1. Determined which providers will be required to post surety bonds to help ensure that payments made for fraudulent billing can be recovered.
  2. Contracted for fingerprint-based criminal background checks.
  3. Issued a final regulation to require additional provider disclosures of information.
  4. Established core elements for provider compliance programs. 

Pre- and Post-payment Claims Review

GAO had previously found that increased efforts to review claims on a prepayment basis can prevent payments from being made for potentially fraudulent claims, while improving systems used to review claims on a post-payment basis could better identify patterns of potentially fraudulent billing for further investigation. 

CMS has controls in Medicare’s claims processing systems to determine if claims should be paid, denied, or reviewed further by comparing information on claims with information on providers and Medicare coverage and requirements. 

These controls require timely and accurate information about providers that GAO has previously recommended that CMS strengthen. 

GAO is currently examining CMS’s use of prepayment edits to implement coverage and payment policies and CMS’s new Fraud Prevention System, which uses analytic methods to examine claims before payment. 

CMS could better use post-payment claims review to identify patterns of fraud by incorporating prior GAO recommendations to develop plans and timelines for fully implementing and expanding two information technology systems it developed. 

These systems are a central storehouse of Medicare and other data and a Web portal to the storehouse with tools for analysis.

Robust Process to Address Identified Vulnerabilities

Having mechanisms in place to resolve vulnerabilities that lead to erroneous payments is critical to effective program management and could help address fraud. Such vulnerabilities are service- or system-specific weaknesses that can lead to payment errors—for example, providers receiving multiple payments as a result of incorrect coding. 

GAO has previously identified weaknesses in this process, which resulted in vulnerabilities being left unaddressed. 

GAO is evaluating the current status of the process for assessing and developing corrective actions to address vulnerabilities.


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