	Background

The complexity of the environment in which CMS and its contractors operate the Medicare program cannot be overstated. About 50 Medicare claims administration contractors carry out the day-to- day operations of the program and are responsible not only for paying claims but for providing information and education to providers and beneficiaries that participate in Medicare. HIPAA earmarked increased funds for the prevention and detection of health care fraud and abuse and increased sanctions for abusive providers. Based on the agency’s estimates, MIP saved the Medicare program more than $16 for each dollar spent in fiscal year 2000. DOJ has placed a high priority on identifying patterns of improper billing by Medicare providers. DOJ investigates cases that have been referred by the HHS OIG and others to determine if health care providers have engaged in fraudulent activity, and it pursues civil actions or criminal prosecutions, as appropriate. As a result, providers are concerned that they may inadvertently violate Medicare billing rules. Last year, HCFA conducted a one-time limited survey of contractors to determine the number of physicians subject to complex medical reviews in fiscal year 2000. CMS’ Oversight of Contractors Is Key to Balancing Program Safeguards and Provider Concerns

CMS’ oversight of its contractors is essential to ensuring that the Medicare program is administered efficiently and effectively. Historically, the agency’s oversight of contractors has been weak, although it has made substantial improvements in the past 2 years.
What GAO Found

In fiscal year 2000, Medicare made more than $200 billion in payments to hundreds of thousands of health care providers who served nearly 40 million beneficiaries. Because of the program's vast size and complexity, GAO has included Medicare on its list of government areas at high risk for waste, fraud, abuse, and mismanagement. GAO first included Medicare on that list in 1990, and it remains there today. GAO has continually reported on the efforts of the Health Care Financing Administration -- recently renamed the Centers for Medicare and Medicaid Services (CMS) -- to safeguard Medicare payments and streamline operations. CMS relies on its claims administration contractors to run Medicare. As these contractors have become more aggressive in identifying and pursuing inappropriate payments, providers have expressed concern that Medicare has become to complex and difficult to navigate. CMS's oversight of its contractors has historically been weak. In the last two years, however, CMS has made substantial progress. GAO has identified several areas in which CMS still need improvement, especially in ensuring that contractors provide accurate, complete, and timely information to providers on Medicare billing rules and coverage policies.