On March 9, 2011, United States Government Accountability Office (GAO) Directors Kathleen M. King and Kay L. Daly testified before a subcommittee of the Senate Committee on Homeland Security and Governmental Affairs about recently enacted laws and past CMS actions taken to reduce improper payments in the Medicare and Medicaid programs. The testimony focused on five strategies that the GAO believes are important to reducing Medicare and Medicaid fraud, waste and abuse and improper payments: provider enrollment and screening; prepayment reviews; focusing post payment reviews on vulnerable areas; improving contractor oversight; and addressing identified program vulnerabilities. Of particular importance to providers and suppliers, however, was the directors’ testimony about the GAO’s recommendations for how CMS can further reduce improper payments and insight into CMS’s future plans in the five areas discussed. The GAO reported that according to estimates by CMS, Medicare improperly paid almost $48 billion in FY 2010 (excluding Medicare Part D), and the federal share of Medicaid improper payments in FY 2010 was approximately $22.5 billion.
With respect to postpayment claim reviews, the GAO commented that CMS had not implemented its recommendation that contractors conduct postpayment reviews on claims submitted by home health agencies with high rates of improper billing identified in prepayment reviews. The GAO testified that CMS informed the GAO in February 2011 that its contractors (such as Recovery Audit Contractors known as RACs) are developing strategies that may involve home health agency postpayment reviews. In addition, according to the GAO’s testimony, the Medicare Part C and Medicaid RAC programs created by PPACA are moving toward implementation. CMS informed the GAO that it has awarded a Part D RAC task order for one year beginning in January 2011, with 4 option years, and 55 state Medicaid agencies have already submitted their plans to CMS for their respective Medicaid RAC programs. Fourteen of the states have requested some form of an exception from the program.
On the issue of contractor oversight, the directors stated that CMS informed the GAO in February 2011 that CMS is working to implement PPACA’s requirements that contractors report performance statistics to HHS and OIG upon request. CMS expects to finalize performance statistics for the Part D RACs this year and performance statistics for states to require of Medicaid RACs by the end of this month.
In addition, the GAO expressed concern that CMS has not sufficiently developed a robust process for addressing vulnerabilities that are identified through contractor audits. The GAO recommended that CMS develop and implement policies and procedures to evaluate RAC findings to identify vulnerabilities and then take actions to correct the vulnerabilities. According to the GAO, CMS agreed with the GAO’s recommendations and stated that the agency requires its contractors to consider and evaluate RAC-identified vulnerabilities. CMS also responded that it is working to address vulnerabilities that were identified in the demonstration program. CMS informed the GAO in 2011 that it intends to hold state Medicaid programs responsible for addressing vulnerabilities identified by the Medicaid RACs.