GAO: Medicare pays $48B in improper claims each year

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The Government Accountability Office (GAO) has found that, of the $516 billion in Medicare paid to physicians, hospitals and other healthcare providers in 2010, some $48 billion was for improper claims. The same report showed that Medicare accounted for 38 percent of all improper payments found in the federal government last year.

Of 70 programs the GAO tracked for improper payments, Medicare topped the list. Most of the improper payments, $34.3 billion, went to fee-for-service claims. The rest of the $48 billion was paid through the Medicare Advantage managed-care program.

Significantly, the GAO said the numbers could be even higher than projected, because it didn’t include any data regarding Medicare’s outpatient prescription drug program—in which overpayment estimates range from tens of millions of dollars to more than $5 billion.

Improper payment estimates include both overpayments and underpayments, according to the GAO, and causes include inadequate documentation, unnecessary services, coding errors and calculation errors. The GAO said the $48 billion is not an estimate of fraud in Medicare.

“Because the improper payment estimation process is not designed to detect or measure the amount of fraud that may exist, there may be fraud that is not reflected in HHS’ reported estimate,” the GAO reported in a statement. “CMS faces challenges in designing and implementing internal controls to effectively prevent or detect and recoup improper payments.”

The GAO identified five strategies to reduce fraud, waste, abuse and improper payments in Medicare: strengthen provider enrollment standards and procedures; improve prepayment reviews; focus postpayment reviews on vulnerable areas; improve oversight of contracters; and develop a robust process to address identified vulnerabilities.

“While CMS has begun actions in this area, it has not developed a robust corrective action process for vulnerabilities identified by Medicare RACs and GAO as recommended,” the GAO concluded in its statement.