	CMS Faces Challenges in Implementing Strategies to Prevent Fraud, Waste, and Abuse

GAO has identified key strategies to help CMS address challenges it faces  in preventing fraud, waste, and abuse, and ultimately to reducing improper  payments. These strategies are: (1) strengthening provider enrollment  processes and standards, (2) improving pre-payment review of claims,   (3) focusing post-payment claims review on most vulnerable areas,   (4) improving oversight of contractors, and (5) developing a robust  process for addressing identified vulnerabilities. In the course of our  work, we have found that CMS has made progress in some of these areas,  and recent legislation may provide it with enhanced authority. Checking the background of providers at the time they apply  to become Medicare providers is a crucial step to reduce the risk of  enrolling providers intent on defrauding or abusing the program. Improving Pre-Payment Review of Claims

Pre-payment reviews of claims are essential to helping ensure that  Medicare pays correctly the first time; however, these reviews are  challenging due to the volume of claims. This is a valuable addition to the program’s  safeguards, but additional pre-payment controls, such as using thresholds  for unexplained increases in billing, could further enhance CMS’s ability to  identify improper claims before they are paid. Focusing Post-Payment Claims Review on Most Vulnerable Areas

Post-payment reviews are critical to identifying payment errors to recoup  overpayments. We recommended that CMS require that physicians receive a  statement of services beneficiaries received based on the physicians’  certification, but to date, the agency has not taken action. Improving Oversight of Contractors

Because Medicare is administered by contractors, such as drug plan  sponsors, overseeing their activities to address fraud, waste, and abuse  and prevent improper payment is critical. All drug plan sponsors are  required to have programs to safeguard the Medicare prescription drug  program from fraud, waste, and abuse. CMS’s oversight of these programs  has been limited but is expanding. Developing a Robust Process for Addressing Identified Vulnerabilities

Having mechanisms in place to resolve vulnerabilities that lead to  improper payment is critical to program management, but CMS has not  developed a robust process to specifically address identified  vulnerabilities that lead to improper payment. As we reported in March 2010, CMS did not establish an adequate process  during its initial recovery audit contracting demonstration or in planning  for the national program to ensure prompt resolution of identified  improper payment vulnerabilities. CMS concurred with this recommendation. Medicare Part D: CMS Oversight of Part D Sponsors’ Fraud and Abuse  Programs Has Been Limited, but CMS Plans Oversight Expansion.
Why GAO Did This Study

GAO has designated Medicare as a high-risk program since 1990, in part because the program's size and complexity make it vulnerable to fraud, waste, and abuse. Fraud represents intentional acts of deception with knowledge that the action or representation could result in an inappropriate gain, while abuse represents actions inconsistent with acceptable business or medical practices. Waste, which includes inaccurate payments for services, also occurs in the Medicare program. Fraud, waste, and abuse all can lead to improper payments, overpayments and underpayments that should not have been made or that were made in an incorrect amount. In 2009, the Centers for Medicare & Medicaid Services (CMS)--the agency that administers Medicare--estimated billions of dollars in improper payments in the Medicare program. This statement, will focus on challenges facing CMS and selected key strategies that are particularly important to helping prevent fraud, waste, and abuse, and ultimately to reducing improper payments, including challenges that CMS continues to face. It is based on nine GAO products issued from September 2005 through March 2010 using a variety of methodologies, including analysis of claims, review of relevant policies and procedures, stakeholder interviews, and site visits. GAO received updated information from CMS in June 2010.

What GAO Found

GAO has identified challenges and strategies in five key areas important in preventing fraud, waste, and abuse, and ultimately to reducing improper payments.

What GAO Recommends

GAO has made recommendations in these areas. CMS has made progress in some of these areas, and recent legislation may provide the agency with enhanced authority. However, CMS faces continuing challenges. 1. Strengthening provider enrollment process and standards. Checking the background of providers at the time they apply to become Medicare providers is a crucial step to reduce the risk of enrolling providers intent on defrauding or abusing the program. In particular, GAO has recommended stricter scrutiny of providers identified as particularly vulnerable to improper payments to ensure they are legitimate businesses. 2. Improving pre-payment review of claims. Pre-payment reviews of claims are essential to helping ensure that Medicare pays correctly the first time. GAO has recommended that CMS further enhance its ability to identify improper claims through additional automated pre-payment claim review before they are paid. 3. Focusing post-payment claims review on most vulnerable areas. Post- payment reviews are critical to identifying payment errors and recouping overpayments. GAO has recommended that CMS better target claims for post payment review on the most vulnerable areas. 4. Improving oversight of contractors. Because Medicare is administered by contractors, overseeing their activities to address fraud, waste, and abuse is critical. GAO found that CMS's oversight of prescription drug plan sponsors' compliance programs has been limited. However, partly in response to GAO's recommendation, CMS oversight of these programs is expanding. 5. Developing a robust process for addressing identified vulnerabilities. Having mechanisms in place to resolve vulnerabilities that lead to improper payment is vital to program management, but CMS has not developed a robust process to specifically address these. GAO has recommended that CMS establish an adequate process to ensure prompt resolution of identified improper payment vulnerabilities.