On March 23, 2010, the Patient Protection and Affordable Care Act  (PPACA) was signed into law.   Provider Audit. Consists of subactivities to address  improper payments in Medicare Parts C and D. CMS began this  activity in fiscal year 2006. Increased MIP Funding and Contractor Consolidation Have Enabled CMS to Expand the Program from Fiscal Year 2006 through Fiscal Year 2010

CMS used increased funding it received in fiscal years 2006 through 2010  to expand MIP. Increased Funding Enabled CMS to Provide Additional Support to Existing Program Integrity Activities and Fund New Oversight Activities

CMS received additional MIP funding during fiscal years 2006 through  2010 that was used to support new activities or existing activities not  previously supported by MIP. 1.) Not All MIP Officials Connect MIP Activities with CMS’s Goals of Reducing Improper Payments; Data Used to Calculate ROI Are Flawed

Although CMS measures MIP effectiveness by using the improper  payment rates for the Medicare fee-for-service, Part C Medicare  Advantage, and Part D prescription drug programs, CMS officials with  direct responsibility for MIP generally do not connect the MIP activities  and the CMS goals of reducing improper payments. These goals and related measures are particularly important  because, as part of the Accountable Government Initiative, the President  set goals for federal agencies to reduce overall improper payments by  $50 billion and recapture at least $2 billion in improper contract payments  and overpayments to health providers by the end of 2012. Although CMS has established these GPRA goals as an important way to  measure the effectiveness of MIP, our interviews with CMS officials with  direct responsibility for MIP activities indicate that these officials generally  do not connect MIP activities with the CMS goals of reducing improper  payments. The statements by agency officials indicate that CMS has not clearly  communicated to its staff the relationship between the daily work of  conducting MIP activities and the agency’s higher-level performance  measures for improper payment reduction. CMS Added MIP Performance Goals for Fiscal Year 2012 and Is Developing Other Metrics Based on PPACA Requirements, but Their Linkage to Measures Used by MIP Activity Managers Is Not Clear

In its FY 2012 Online Performance Appendix, CMS added two new MIP  performance goals to the goals related to the improper payment rate for  Medicare fee-for-service, Part C, and Part D, but it is also not clear how  they link with performance measures currently used by MIP activity  managers. CMS Calculates ROI for Most MIP Activities, but the Data CMS Uses in Its Calculation Have Flaws

PPACA requires CMS to report annually on the use of funds for MIP and  the effectiveness of the use of those funds. One way that CMS measures  program effectiveness is through calculation of ROI. CMS Considers a Variety of Factors, Including Potential Effect on Improper Payments, When Allocating Funding

Decisions about recommendations for how MIP funding should be  allocated among the various activities and subactivities are based on a  variety of factors. It is difficult to determine the factors CMS considers when allocating MIP  funds beyond those listed in the budget request documents. As the  CMS program with the goal to reduce Medicare’s improper payments,  MIP will be central to the agency’s effort to reduce the Medicare improper  payment rates. As we noted in our 2006 report, ROI is a useful method for assessing the  effectiveness of MIP activities. Currently, the data used to calculate  the ROI are flawed because the ROI calculations are not updated beyond  the end of a fiscal year to account for changes in MIP expenditure data,  and CMS does not currently have a way to account for the exact amount  of MIP funds MACs spend on individual MIP activities. Expeditiously  completing this task and ensuring that final expenditure data are used to  update ROI calculations will be essential to ensuring reliability in ROI  reporting. To enhance  accountability and sharpen the focus of the agency on reducing improper  payments, we recommend that the Administrator of CMS clearly  communicate to staff the linkage between GPRA and PPACA  performance measures related to the reduction in improper payments and  other measures used to determine the performance of MIP activities. Cases of potential fraud are referred to the Department of  Health and Human Services’ OIG. Appendix III: Contractor Types Performing Medicare Integrity Program Activities for Fiscal Year 2010

	Comprehensive

Benefit Integrity includes subactivities designed to deter and detect Medicare fraud by conducting  data analysis of claims.
Why GAO Did This Study

The Medicare program makes about $500 billion in payments per year and continues to have a significant amount of improper payments--almost $48 billion in fiscal year 2010. The Centers for Medicare & Medicaid Services' (CMS) Medicare Integrity Program (MIP) is designed to identify and address fraud, waste, and abuse, which are all causes of improper payments. MIP's authorizing legislation provided funding for its activities and subsequent legislation provided additional funding. GAO was asked to report on how effectively CMS is using MIP funding to address Medicare program integrity. GAO examined (1) how CMS used MIP funding to support the program's activities from fiscal years 2006 through 2010, (2) how CMS assesses the effectiveness of MIP, and (3) factors CMS considers when allocating MIP funding. GAO analyzed CMS budget and other documents, interviewed CMS officials, and examined the agency's method of calculating return on investment (ROI), a performance measure used by CMS to measure the effectiveness of MIP activities.

What GAO Found

CMS used the increase in total MIP funding received, from $832 million in fiscal year 2006 to $1 billion in fiscal year 2010, to expand MIP's activities. The additional funding supported oversight of Medicare Part C (Medicare benefits managed through private plans) and Part D (the outpatient prescription drug benefit) and agency efforts to examine the claims of Medicare beneficiaries who also participate in Medicaid--a joint federal-state health care program for certain low-income individuals. CMS officials also reported that CMS was able to move some funding from activities, such as provider audit, to other activities because of savings achieved from consolidating contractors. The largest percentage increase from this redistribution went to benefit integrity activities, which aim to deter and detect Medicare fraud through proactive data analysis and coordination with law enforcement. Although CMS has reported that the agency measures MIP's performance with goals related to reductions in the improper payment rates for Medicare fee-forservice, Part C, and Part D, CMS officials with direct responsibility for MIP generally do not connect measurements of effectiveness of MIP activities with the CMS goals of reducing improper payments. These goals to reduce improper payments, which were reported as goals previously and for fiscal year 2012, are particularly important in light of the President's Accountable Government Initiative, which aims to reduce overall improper payments by $50 billion by the end of 2012. In interviews with GAO, CMS officials with direct responsibility for implementing MIP activities generally did not connect the measurement of effectiveness of MIP activities with these CMS goals to reduce improper payments and instead cited other measures of effectiveness. This suggests that CMS has not clearly communicated to its staff the relationship between the daily work of conducting MIP activities and the agency's improper payment reduction performance goals. Because MIP will be central to CMS's efforts to reduce Medicare improper payments, MIP staff need to understand how their work supports these goals. In addition, the Patient Protection and Affordable Care Act requires CMS to report annually on the use of funds for MIP and the effectiveness of the use of those funds. One way that CMS already measures MIP effectiveness is ROI, which CMS calculates as savings from an activity in relation to expenditures. CMS calculates ROI for most of its MIP activities, but the data it uses have two flaws. First, ROI calculations are not updated when program expenditure data, a key component in the ROI calculation, are updated, which may lead to an incorrect ROI. Second, CMS does not have reliable information to determine the amount of MIP spending by activity for one type of contractor that received about 22 percent of total MIP funding in fiscal year 2010. It will be important for CMS to correct these flaws to ensure reliability in ROI reporting. CMS considers a variety of factors when allocating MIP funding. Based on a review of the documents submitted to justify funding of specific MIP activities, CMS may consider the prior year's funding level, the consequence of not funding, and the performance goal that the activity is intended to meet.

What GAO Recommends

GAO recommends that CMS communicate the linkage between MIP activities and the goals for reducing improper payments and that CMS expeditiously improve the reliability of data used to calculate ROI. The Department of Health and Human Services concurred with these recommendations.