For more than a decade, the  agency and its contractors have used automated software tools to  analyze data from various sources to detect patterns of unusual activities  or financial transactions that indicate payments could have been made for  fraudulent charges or improper payments. In addition, data on Medicaid claims are stored by the states  in multiple systems and databases, and are not readily available to CMS. Specifically, it intended to incorporate data related to paid claims for all  Medicare Part D data by the end of fiscal year 2006, and for Medicare  Parts A and B data by the end of fiscal year 2007. CMS’s Initiative to Develop and Implement Analytical Tools for Detecting Fraud, Waste, and Abuse

Also in 2006, CMS initiated the One PI program with the intention of  developing and implementing a portal and software tools that would  enable access to and analysis of claims, provider, and beneficiary data  from a centralized source. The agency’s goal for One PI was to support  the needs of a broad program integrity user community, including agency  program integrity personnel and contractors who analyze Medicare claims  data, along with state agencies that monitor Medicaid claims. To achieve  its goal, agency officials planned to implement a tool set that would  provide a single source of information to enable consistent, reliable, and  timely analyses and improve the agency’s ability to detect fraud, waste,  and abuse. These tools were to be used to gather data from IDR about  beneficiaries, providers, and procedures and, combined with other data,  find billing aberrancies or outliers. For example, an analyst could use  software tools to identify potentially fraudulent trends in ambulance  services by gathering the data about claims for ambulance services and  medical treatments, and then use other software to determine  associations between the two types of services. If the analyst found  claims for ambulance travel costs but no corresponding claims for  medical treatment, it might indicate that further investigation could prove  that the billings for those services were fraudulent. According to agency program planning documentation, the One PI  system was also to be developed incrementally to provide access to IDR  data, analytical tools, and portal functionality. CMS planned to implement  the One PI portal and two analytical tools for use by program integrity  analysts on a widespread basis by the end of fiscal year 2009. The  agency engaged contractors to develop the system. The second tool provides users with extended capabilities to  perform more complex analyses of data. While CMS has shown some progress toward meeting the programs’  goals of providing a centralized data repository and enhanced analytical  capabilities for detecting improper payments due to fraud, waste, and  abuse, the current implementation of IDR and One PI does not position  the agency to identify, measure, and track financial benefits realized from  reductions in improper payments as a result of the implementation of  either system. For example, program officials stated that they had  developed estimates of financial benefits expected to be realized through  the use of IDR. The most recent projection of total financial benefits was  reported to be $187 million, based on estimates of the amount of  improper payments the agency expected to recover as a result of  analyzing data provided by IDR. With estimated life-cycle program costs  of $90 million through fiscal year 2018, the resulting net benefit expected  from implementing IDR was projected to be $97 million. However, as of  March 2011, program officials had not identified actual financial benefits  of implementing IDR. Further, until CMS is better  positioned to identify and measure financial benefits and establishes  outcome-based performance measures to help gauge progress toward  meeting program integrity goals, it cannot be assured that the systems  will contribute to improvements in CMS’s ability to detect fraud, waste,  and abuse in the Medicare and Medicaid programs, and prevent or  recover billions of dollars lost to improper payments of claims. Given the critical need for CMS to improve the management of and  reduce improper payments within the Medicare and Medicaid programs,  our report being released today recommends a number of actions that we  consider vital to helping CMS achieve more widespread use of IDR and  One PI for program integrity purposes. Specifically, we are  recommending that the Administrator of CMS  finalize plans and develop schedules for incorporating additional data  into IDR that identify all resources and activities needed to complete  tasks and that consider risks and obstacles to the IDR program; implement and manage plans for incorporating data in IDR to meet  schedule milestones;   establish plans and reliable schedules for training all program integrity  analysts intended to use One PI;   establish and communicate deadlines for program integrity  contractors to complete training and use One PI in their work; conduct training in accordance with plans and established deadlines  to ensure schedules are met and program integrity contractors are  trained and able to meet requirements for using One PI;   define any measurable financial benefits expected from the  implementation of IDR and One PI; and   with stakeholder input, establish measurable, outcome-based  performance measures for IDR and One PI that gauge progress  toward meeting program goals.
Why GAO Did This Study

This testimony discusses the Centers for Medicare and Medicaid Services' (CMS) efforts to protect the integrity of the Medicare and Medicaid programs, particularly through the use of information technology to help improve the detection of fraud, waste, and abuse in these programs. CMS is responsible for administering the Medicare and Medicaid programs and leading efforts to reduce improper payments of claims for medical treatment, services, and equipment. Improper payments are overpayments or underpayments that should not have been made or were made in an incorrect amount; they may be due to errors, such as the inadvertent submission of duplicate claims for the same service, or misconduct, such as fraud or abuse. The Department of Health and Human Services reported about $70 billion in improper payments in the Medicare and Medicaid programs in fiscal year 2010. Operating within the Department of Health and Human Services, CMS conducts reviews to prevent improper payments before claims are paid and to detect claims that were paid in error. These activities are predominantly carried out by contractors who, along with CMS personnel, use various information technology solutions to consolidate and analyze data to help identify the improper payment of claims. For example, these program integrity analysts may use software tools to access data about claims and then use those data to identify patterns of unusual activities by matching services with patients' diagnoses. In 2006, CMS initiated activities to centralize and make more accessible the data needed to conduct these analyses and to improve the analytical tools available to its own and contractor analysts. At the Subcommittee's request, we have been reviewing two of these initiatives--the Integrated Data Repository (IDR), which is intended to provide a single source of data related to Medicare and Medicaid claims, and the One Program Integrity (One PI) system, a Web-based portal and suite of analytical software tools used to extract data from IDR and enable complex analyses of these data. According to CMS officials responsible for developing and implementing IDR and One PI, the agency had spent approximately $161 million on these initiatives by the end of fiscal year 2010. This testimony, in conjunction with a report that we are releasing today, summarizes the results of our study--which specifically assessed the extent to which IDR and One PI have been developed and implemented and CMS's progress toward achieving its goals and objectives for using these systems to detect fraud, waste, and abuse.

What GAO Found

In 2006, CMS initiated the One PI program with the intention of developing and implementing a portal and software tools that would enable access to and analysis of claims, provider, and beneficiary data from a centralized source. The agency's goal for One PI was to support the needs of a broad program integrity user community, including agency program integrity personnel and contractors who analyze Medicare claims data, along with state agencies that monitor Medicaid claims. To achieve its goal, agency officials planned to implement a tool set that would provide a single source of information to enable consistent, reliable, and timely analyses and improve the agency's ability to detect fraud, waste, and abuse. These tools were to be used to gather data from IDR about beneficiaries, providers, and procedures and, combined with other data, find billing aberrancies or outliers. For example, an analyst could use software tools to identify potentially fraudulent trends in ambulance services by gathering the data about claims for ambulance services and medical treatments, and then use other software to determine associations between the two types of services. If the analyst found claims for ambulance travel costs but no corresponding claims for medical treatment, it might indicate that further investigation could prove that the billings for those services were fraudulent. According to agency program planning documentation, the One PI system was also to be developed incrementally to provide access to IDR data, analytical tools, and portal functionality. CMS planned to implement the One PI portal and two analytical tools for use by program integrity analysts on a widespread basis by the end of fiscal year 2009. The agency engaged contractors to develop the system. While CMS has shown some progress toward meeting the programs' goals of providing a centralized data repository and enhanced analytical capabilities for detecting improper payments due to fraud, waste, and abuse, the current implementation of IDR and One PI does not position the agency to identify, measure, and track financial benefits realized from reductions in improper payments as a result of the implementation of either system. For example, program officials stated that they had developed estimates of financial benefits expected to be realized through the use of IDR. The most recent projection of total financial benefits was reported to be $187 million, based on estimates of the amount of improper payments the agency expected to recover as a result of analyzing data provided by IDR. With estimated life-cycle program costs of $90 million through fiscal year 2018, the resulting net benefit expected from implementing IDR was projected to be $97 million. However, as of March 2011, program officials had not identified actual financial benefits of implementing IDR.