	CMS Has Improved Key Strategies for Preventing and Recouping Improper Payment, but More Can Be Done

CMS has made progress strengthening provider enrollment procedures  and prepayment controls in the Medicare program to help ensure that  payments are made correctly the first time, but the agency could further  improve upon its efforts by implementing additional enrollment  procedures and prepayment strategies. CMS Has Implemented Certain Enrollment Procedures to Better Screen Providers, but Has Not Completed Others

CMS has implemented certain provider enrollment screening procedures  authorized by the Patient Protection and Affordable Care Act (PPACA)  and put in place other measures intended to strengthen existing  procedures. Further, PPACA authorizes CMS to require fingerprint-based criminal  background checks of providers and suppliers depending on the risks  presented. Although CMS has taken actions to strengthen the provider enrollment  process, we and the OIG have found that CMS has not taken other  actions authorized by PPACA and that could improve screening and  ultimately reduce improper payments. Specifically, we are  assessing the process used to enroll and verify the eligibility of Medicare  providers in Medicare’s Provider Enrollment, Chain, and Ownership  System (PECOS) and the extent to which CMS’s controls are designed to  prevent and detect the continued enrollment of ineligible or potentially  fraudulent providers in PECOS. CMS Has Improved Prepayment Controls, but More Could Be Done to Prevent Improper Payments

CMS has enhanced its efforts to reduce improper payments by improving  prepayment controls, particularly prepayment edits to deny claims that  should not be paid. Such inconsistencies could  have been identified using automated edits. As we recommended, CMS has taken steps to improve the development  of certain prepayment edits that are implemented nationwide. In 2013, we reported that CMS  may be missing opportunities to prevent improper payments because it  has not systematically evaluated MUE limits to determine whether   In  national edits should be revised to reflect more restrictive local limits.addition, we found that CMS and its contractors did not have a system in  place for examining claims to determine the extent to which providers  may be exceeding unpublished MUE limits and whether payments for  such services were proper. HHS agreed with these  recommendations, but as of April 2014, CMS had not implemented them. Postpayment Claims Reviews Have Increased in Recent Years, but More Could Be Done to Increase Consistency across Contractors

Medicare uses four types of contractors to conduct postpayment claims  reviews to identify and recoup overpayments.the same Medicare coverage and payment guidelines. Complex  reviews involve manual examinations of each claim and any related  documentation requested and received from the provider, including paper  files, to determine whether the service was billed properly, and was  covered, reasonable, and necessary. Our prior work has found that the overall number of postpayment claims  reviews has been increasing in recent years, but remains a very small  percentage of total Medicare claims submitted. As a systematic matter, the increase in postpayment claims reviews is  one factor causing backlogs and delays at the third level of the Medicare  appeals process. In July 2013, we reported that the differences in CMS’s postpayment  claims review requirements for the four types of contractors may reduce  the efficiency and effectiveness of claims reviews by complicating  providers’ compliance with the requirements. We are following up on this work with a study reviewing, among  other things, whether CMS has strategies for coordinating postpayment  review contractors’ claims review activities. In conclusion, given the amount of estimated improper payments in the  Medicare program, the imperative for CMS to use all available authorities  to prevent and recoup improper payments is clear. Medicare Program Integrity: Contractors Reported Generating Savings,  but CMS Could Improve Its Oversight. Program Integrity: Further Action Needed to Address Vulnerabilities in  Medicaid and Medicare Programs. Fraud Detection Systems: Centers for Medicare and Medicaid Services  Needs to Ensure More Widespread Use. Improper Payments: Recent Efforts to Address Improper Payments and  Remaining Challenges.
Why GAO Did This Study

Due to its size, complexity, and susceptibility to mismanagement and improper payments, GAO has designated Medicare as a high-risk program. In 2013, Medicare financed health care services for approximately 51 million individuals at a cost of about $604 billion, and reported an estimated $50 billion in improper payments—payments that either were made in an incorrect amount or should not have been made at all. Most of these improper payments were made through the Medicare FFS program, which pays providers based on claims and uses contractors to pay the claims and ensure program integrity.
This statement focuses on the progress made and steps still to be taken by CMS to improve improper payment prevention and recoupment efforts in the Medicare FFS program. This statement is based on relevant GAO products and recommendations issued from 2007 through 2014 using a variety of methodologies. GAO also updated information by examining public documents and, in April 2014, GAO received updated information from CMS on its actions related to laws and regulations discussed in this statement.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS), the agency within the Department of Health and Human Services (HHS) that oversees Medicare, has made progress improving improper payment prevention and recoupment efforts in the Medicare fee-for-service (FFS) program, but further actions are needed.
Provider enrollment . CMS has implemented certain provider enrollment screening procedures authorized by the Patient Protection and Affordable Care Act (PPACA) that address past weaknesses identified by GAO and others. The agency has also put in place other measures intended to strengthen existing procedures, but could do more to improve provider enrollment screening and ultimately reduce improper payments. For example, CMS has hired contractors to determine whether providers and suppliers have valid licenses, meet certain Medicare standards, and are at legitimate locations. CMS also recently contracted for fingerprint-based criminal history checks of providers and suppliers it has identified as high-risk. However, CMS has not implemented other screening actions authorized by PPACA that could further strengthen provider enrollment.
Prepayment controls . In response to GAO's prior recommendations, CMS has taken steps to improve the development of certain prepayment edits—prepayment controls used to deny Medicare claims that should not be paid; however, important actions that could further prevent improper payments have not yet been implemented. For example, CMS has implemented an automated edit to identify services billed in medically unlikely amounts, but has not implemented a GAO recommendation to examine certain edits to determine whether they should be revised to reflect more restrictive payment limits. GAO has found that wider use of prepayment edits could help prevent improper payments and generate savings for Medicare.
Postpayment claims reviews . Postpayment claims reviews help CMS identify and recoup improper payments. Medicare uses a variety of contractors to conduct such reviews, which generally involve reviewing a provider's documentation to ensure that the service was billed properly and was covered, reasonable, and necessary. GAO has found that differing requirements for the various contractors may reduce the efficiency and effectiveness of such reviews. To improve these reviews, GAO has previously recommended CMS examine ways to make the contractor requirements more consistent. CMS reported that it has begun to address these recommendations. Although the percentage of Medicare claims that undergo postpayment review remains very small, GAO has found that the overall number of postpayment claims reviews has been increasing in recent years. HHS has reported that the increase in claims reviews is one factor causing backlogs in the Medicare appeals process.
GAO has ongoing work focused on how CMS could continue its efforts to reduce improper Medicare payments. For instance, GAO is examining the extent to which CMS's provider enrollment system can help prevent and detect the continued enrollment of ineligible providers in Medicare. GAO also has work underway to examine whether CMS has strategies for coordinating postpayment review contractors' claims review activities.