Medicare Program Integrity: Overview and Issues Marjorie Kanof, M.D. Managing Director, Health Care U.S. Government Accountability Office February 22, 2007 1
Overview Introduction to Medicare What is Program Integrity? Who Does What? Funding Role of GAO Issues 2
Introduction Federal program; over $380 billion in fiscal year 2006 Serves over 42 million beneficiaries Administered by the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS) 3
Introduction Medicare has 4 parts: Part A: Hospital Insurance Part B: Supplementary Medical Insurance Part C: Medicare Advantage Part D: Outpatient Prescription Drugs Large and complex program--extremely vulnerable to improper payments. 4
Introduction Distribution of Medicare spending, fiscal year 2006 (Spending for Part C is shown under benefit totals for Parts A and B) 8% 2% 41% 49% Part A Part B Part D Administration 5
What is Program Integrity? Activities aimed at protecting Medicare from: Mistakes Abuse Fraud In November 2006, CMS estimated that Medicare improperly paid providers about $10.8 billion in the fee-for-service part of the program 4.4% of all such payments. 6
What is Program Integrity? Improper payments occur throughout Medicare Part A and Part B payments to institutional providers, including hospitals & skilled nursing homes $6.4 billion in improper payments Durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) small portion of Medicare payments, but high rate of improper payments 7.5 percent ($0.7 billion) Other Part B services includes physicians, laboratory, and ambulance services $3.7 billion paid improperly 7
What is Program Integrity? Program integrity is ensuring correct and proper payment to a legitimate provider for reasonable, medically necessary services that are covered by Medicare and are provided to an eligible beneficiary. 8
What is Program Integrity? Activities to ensure program integrity focus on: Preventing mistakes, abuse and fraud; Detecting problems once they occur; Educating providers on proper billing; Recovering overpayments; Investigating and prosecuting intentional wrongdoers 9
What is Program Integrity? Provider education to inform providers of Medicare s rules and appropriate billing practices Medical review of claims before or after payment Audits of cost reports that hospitals and other institutions submit annually to CMS Medicare secondary payer determinations Benefit integrity to identify and investigate potential fraud 10
What is Program Integrity? Distribution of program integrity funding, fiscal year 2005 10% 17% 21% 23% 29% Audit Medical review Secondary payer Benefit integrity Provider education 11
Who Does What? The Congress Responsible for providing direction to the Medicare program through formal and informal means: Develops legislation on all aspects of the program Through committees of jurisdiction, provides oversight of the program Holds hearings and investigates areas of concern Requests briefings and other information/documents to assure that various parts of the program are running smoothly 12
Who Does What? CMS s Program Integrity Group (PI) has primary responsibility for coordinating CMS s program integrity activities for Part A and Part B CMS s Center for Beneficiary Choices (CBC) has primary responsibility for Part C program integrity activities PI and CBC share responsibility for Part D program integrity activities 13
Who Does What? Other parts of CMS also play a role--examples: The Center for Medicare Management develops payment policy and oversees contractors that review and pay claims CMS regional offices performs outreach with providers and helps law enforcement develop fraud cases 14
Who Does What? Contractors process Part A and Part B claims, and conduct certain program integrity activities: Currently, fiscal intermediaries process most Part A claims Currently, carriers process most Part B claims Under contracting reform, transitioning to: Medicare Administrative Contractors (MACs) to process both Part A and B claims in a particular region Three Durable Medical Equipment Medicare Administrative Contractors (DME MACs) process DMEPOS claims one more will be added. 15
Who Does What? Program Safeguard Contractors (PSCs) Conduct activities to ensure the integrity of paid claims by reviewing claims, analyzing data, and detecting and deterring fraud and abuse Quality Improvement Organizations (QIOs) Review utilization, appropriateness and quality of care in hospitals Data Analysis and Coding (DAC) contractor Analyzes durable medical equipment payments to identify patterns and trends 16
Who Does What? National Supplier Clearinghouse (NSC) Enrolls durable medical equipment suppliers and ensures they meet Medicare standards Coordination of Benefits (COB) Identifies payments that were the responsibility of another insurer Medicare Rx Integrity Contractors (MEDICs) Monitor and analyze date to identify fraud Provide tips to consumers to protect them from fraud Work with law enforcement to enforce Medicare rules 17
Who Does What? Contracting reform mandated in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 must be completed by 2011 A/B MACs will monitor service use across Parts A and B to spot inappropriate claims So far, 1 region has transitioned to an A/B MAC, and 3 regions to DME MACs 18
Who Does What? Other entities responsible for identifying and investigating potential Medicare fraud: HHS Office of Inspector General (OIG) The Federal Bureau of Investigation (FBI) The U.S. Attorneys, within the Department of Justice (DOJ), prosecute Medicare fraud cases. 19
Funding The Health Insurance Portability and Accountability Act of 1996 (HIPAA) Established the Medicare Integrity Program (MIP) Provides dedicated funding to safeguard Medicare HIPAA designated $720 million for MIP in fiscal year 2006; Deficit Reduction Act of 2005 (DRA) increased this amount by $112 million Uses funds for five main activities, plus support such as information technology and storage of records 20
Funding HIPAA authorized the Health Care Fraud and Abuse Control (HCFAC) program Under joint direction of HHS and DOJ Coordinates federal, state and local law enforcement activities to address health care fraud Funds investigations, audits, and other activities In FY 2005, $240 million appropriated from HCFAC for program integrity activities 21
Role of GAO The Government Accountability Office (GAO) Performs financial and programmatic audits of pertinent issues in Medicare Provides the Congress with policy options in addressing Medicare fraud, waste and abuse Testifies at Congressional hearings on the status of the government s efforts to safeguard Medicare 22
Issues Measuring the error rate of improper payments (GAO-07-92, GAO-06-300) Due to methodology changes, unclear the degree to which CMS and its contractors have decreased improper payments Allocation of MIP funding (GAO-06-813) CMS lacks a means to measure the relative effectiveness of its various program integrity activities Instead of distributing funds based on contractor workload or programmatic risk, uses historical basis 23
Issues Quality Standards for DMEPOS Suppliers (GAO-05-656) Medicare has lacked strong standards to prevent unscrupulous suppliers from enrolling in the program. But new quality standards and accreditation requirements may help. Competitive bidding for DMEPOS items (GAO-04-765) Will require CMS to use competition to select suppliers Efforts being phased in beginning in 2007 Could lead to reductions in improper DMEPOS payments. 24
Contact Information Marjorie Kanof, Managing Director (202) 512-7114 or kanofm@gao.gov Sheila K. Avruch (202) 512-7277 or avruchs@gao.gov Visit our website www.gao.gov 25