Kusserow’s Corner: OIG Critical of CMS in Failing to Recover Billions of Dollars in Misspent Funds

Brian Ritchie, HHS Office of Evaluation and Inspections (OEI) Acting Deputy Inspector General (IG), provided testimony before a House oversight committee on the topic of “Medicare Mismanagement: Oversight of the Federal Government Efforts to Recapture Misspent Funds.” The HHS Office of Inspector General (OIG) cited deficiencies in recovering billions of dollars annually in misspent funds, and offered recommendations from their work to rectify the problem. The OIG was critical of both CMS and its contractors in ensuring accurate and appropriate payments for services on behalf of beneficiaries, as well as when inappropriate payments are identified to be collected. The OIG cited improper payments cost tax payers $50 billion a year. The largest program, fee-for-service (FFS), has a reported error rate of over 10 percent that translates to $38 billion a year.

The OIG credited CMS with implementing many of its prior recommendations that resulted in cost saving, improved program operations, and enhanced protection of beneficiaries. But, there many other opportunities for CMS program improvements. The OIG “Compendium of Priority Recommendations” provides a large list of propose actions yet to be acted upon by CMS.

The testimony cited a number of areas where significant improvements in operations and recoveries could be made:

  • From its oversight of the Medicare Part D drug benefit program, the OIG found millions of dollars lost as result of weak safeguard. The investigations uncovered prescription fraud cases involving many millions of dollars. CMS has been provided with a number of recommendations needing actions to better protect beneficiaries and taxpayers from inappropriate prescribing, use, and billing for prescription drugs. These include requiring Part D plans to verify that those prescribing have the authority to do so. The OIG called upon CMS to instruct its program integrity contractors to expand their analysis of prescribers for questionable patterns and give additional guidance on monitoring prescribing patterns.
  • The fraud-ridden home health program was also highlighted. It has been a major area of concern for over a decade. Although CMS has taken many actions to curb fraud and abuse in this area, much remains to be done. The OIG found nearly one-third of home health claims did not meet the requirements for face-to-face encounters with their patients. Also, CMS has not found the means to collect overpayments from home health agencies. OIG also found significant patterns of questionable billing that have resulted in hundreds of millions of dollars in fraud and abuse. Unimplemented OIG recommendations include CMS creating a form that ensures face-to-face encounters with patients; implementing security bonds for home health agencies; and increasing program monitoring of home health.
  • The OIG has urged CMS to make greater efforts to recover billions of dollars in improper payments made, and to address vulnerabilities that lead to fraud and abuse through better payment safeguards. CMS has labeled billions of dollars as uncollectable. Furthermore, the vast majority of overpayments identified by CMS program integrity contractors went uncollected and CMS does not have an adequate system to track these overpayments and their collection status.
  • The OIG notes CMS needs to better address vulnerabilities giving rise to fraud. CMS contractors have been identifying a number of vulnerabilities with CMS acting on most of these, but not all. OIG recommends that CMS improve tracking and monitoring of overpayment collections; expand the type of provider identifiers used to recover overpayments; and address in a more timely manner program vulnerabilities identified by contractors. Finally, CMS needs to evaluate the effectiveness of corrective action measures implemented.
  • OIG called upon CMS to use data more effectively to oversee contractor performance, which includes key performance metrics. It found data used by CMS to oversee ZPICs is not accurate or uniform, limiting the ability to accurately assess performance. ZPIC fraud detection results varied considerably without explanation. The contractors need to have their performance evaluated in a more timely and effective manner.
  • The OIG testimony included criticism of the Medicare appeals system that has completely broken down. Over half of the appeals by providers are sustained, but the backlog of appeals now number in years with questioned costs lingering indefinitely. To fix the system, the OIG calls upon CMS to identify and clarify conflicting policies being interpreted inconsistently; standardize case files and make them electronic; continue increased CMS involvement in appeals; and implement quality assurance process for evaluate ALJ decisions.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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