Oversight Subcommittee Continues Effort Against Medicare Fraud and Abuse That Costs Nation Billions Each Year

June 8, 2012

WASHINGTON, DC - The House Energy and Commerce Subcommittee on Oversight and Investigations today continued its efforts to fight Medicare fraud, holding a hearing on “Medicare Contractors’ Efforts to Fight Fraud - Moving Beyond ‘Pay and Chase.’” Medicare fraud costs taxpayers untold billions of dollars each year. To fight fraud, the Centers for Medicare and Medicaid Services (CMS) contracts with a number of private entities to conduct program integrity activities such as preventing, detecting, and recovering fraudulent Medicare payments. The subcommittee examined CMS’ oversight of its Medicare contractors and the agency’s efforts to identify ways to enhance the contractors’ effectiveness at preventing and combating fraud. The subcommittee previously held a hearing on the issue on March 2, 2011.

”CMS, the very agency tasked with administering Medicare and conducting and overseeing anti-fraud efforts, incredibly cannot define the scope of the problem. However, we have heard the estimates: 10% of all health care billings are potentially fraudulent—a $60 to $80 billion drain on federal coffers. Regardless of the ultimate number cited, every dollar lost to fraud is a dollar that should have gone towards the care and well-being of a Medicare beneficiary,” said Oversight and Investigations Subcommittee Chairman Cliff Stearns.

The amount of fraud in the Medicare and Medicaid programs has risen steadily over the last forty years, in spite of promises from numerous administrations to eliminate such fraud. GAO has continually designated Medicare as a “High Risk” since 1990 and Medicaid since 2003.

During the hearing, Robert Vito, HHS Regional Inspector General for Evaluation and Inspections, offered a scathing assessment of CMS’ oversight of its benefit integrity contractors and the effectiveness of the contractors themselves. Vito testified that only a small percentage of estimated fraud is identified by these contractors.  Of what is identified, only a small percentage of that is collected. In 2007, antifraud contractors referred $835 million in overpayments to claim processors for repayment. Of the $835 million referred only 7 percent, or $55 million, was collected.

Vito also elaborated that CMS does not provide its antifraud contractors with timely access to accurate data, which has significantly hindered their effectiveness. Contractors report inaccurate and inconsistent data to CMS, and while OIG found significant differences in fraud detection activities across the antifraud contractors, CMS does not systematically assess the wide variation across contractors and uses few quantitative data to measure performance.

Last December, full committee Chairman Fred Upton, Stearns and other members of the committee requested CMS documents related to the performance of the CMS benefit integrity contractors since 2007. The documents CMS produced show that despite repeated claims that CMS is moving toward a preventative antifraud approach driven by data analysis, only 14 percent of the investigations initiated by contractors in 2011 were a result of proactive data analysis. In fact, since 2008, the number of contactor driven investigations has actually declined by 24 percent. The total number of fraud investigations has also declined precipitously - a 30 percent decreased since 2007.

The HHS Inspector General’s office eloquently summed up the problem while testifying before this subcommittee in June 2001: “Medicare contractors are the heart of the Medicare program…When they don’t function properly, the entire program is jeopardized—those who benefit from it, those who provide care, and those who pay for it all suffer the consequences.” Those statements ring just as loudly in 2012.

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