OIG: CMS Not Reducing Medicare, Medicaid Improper Payments

May 25, 2016 - In testimony submitted to House of Representatives Subcommittee on Oversight and Investigations, the Office of Inspector General (OIG) urged the Centers for Medicare & Medicaid Services to work with states to correct gaps in their collection of data on ineligible providers.

Additionally, CMS is not doing enough to help prevent ineligible providers from enrolling in Medicare according to the division of the Department of Health & Human Services.

CMS remains vulnerable to fraud largely because of poor oversight to data on terminated or ineligible providers, the OIG testimony stated. As a result, billions are lost from improper payments each year.

In 2015, HHS reported that Medicare and Medicaid issued about $88.8 billion in improper payments, Maxwell said, almost 99 percent of the $89.8 billion in improper payments that HHS reported for that year. Traditional Medicare fee-for-service improper payments accounted for $43.3 billion, and Medicaid improper payments totaled $29.1 billion.

“The estimated levels of improper payments in these programs indicate that HHS must remain vigilant in its efforts to pay the right provider the right amount for the right service,” Ann Maxwell, assistant inspector general, said.

Not all improper payments are fraud, but they still pose a risk to the financial security of Medicare and Medicaid.

Although HHS has been working to reduce the amount of improper payments, it still is not meeting reporting requirements set by the Improper Payments Elimination and Recovery Act of 2010. In 2015, HHS didn’t fully comply with the legislation because its error rate percentage for Medicare fee-for-service exceeded 10 percent. HHS reported an estimated improper payment rate for the Medicare Fee-for-Service program of 12.1 percent.

Also, in 2015, HHS did not meet its improper payment targets for four programs: Medicare Advantage, Medicaid, Children’s Health Insurance Program (CHIP), and Child Care Development Fund. Although, HHS had set a target of 8.5 percent for the Medicare Advantage program and 6.7 percent for Medicaid, the Medicare Advantage program ended up having an improper payment rate of 9.5 percent while Medicaid had an improper payment rate of 9.8 percent.

OIG called for strong enrollment safeguards to prevent ineligible providers from ever entering Medicare and Medicaid as one way to reduce the amount of improper payments, Maxwell argued.

“The Centers for Medicare & Medicaid Services and States can prevent inappropriate payments, protect beneficiaries, and reduce time-consuming and expensive pay and chase activities by ensuring that providers engaging in fraudulent or abusive activities are not allowed to enroll in Medicare and Medicaid,” Maxwell argued. “Provider enrollment safeguards are important tools in helping prevent improper payments.”

Preventing ineligible providers from entering the Medicare and Medicaid programs also prevents patient harm, Maxwell argued. Unnecessary therapy and excessive medications administered by ineligible providers has led to significant health problems for many patients.

States’ Medicaid programs and CMS can take various steps to help prevent ineligible providers from enrolling in Medicaid and Medicare, Maxwell said.

The Affordable Care Act attempted to improve provider enrollment processes for Medicaid and Medicare by “expanding who gets screened and how they get screened,” Maxwell said. The ACA also authorized screening tools, such as verifying provider information, placing providers in risk categories, increasing site visits, and requiring fingerprinting.  The ACA also requires states to screen providers for risk for fraud, waste, and abuse in a more uniform way.

After reviewing moderate- and high-risk providers, OIG observed that states were not fully implementing ACA screening procedures.

“States with incomplete screening activities enrolled thousands of providers categorized as posing a high or moderate risk to Medicaid without conducting fingerprint-based criminal background checks,” Maxwell said. “This leaves the Medicaid program vulnerable to providers who may be ineligible or who may defraud the program and harm patients in the process.”

OIG recommends that CMS assist states in fully implementing the tools provided to them through the ACA. States should conduct site visits and implement fingerprint-based criminal background checks for high-risk providers. CMS should also work with State Medicaid agencies to improve the collection and verification of provider ownership information to ensure accuracy and completeness, Maxwell said.

OIG recommended that CMS monitor contractors to make sure they are verifying information on enrollment applications. CMS also needs to conduct site visits more. Inspectors that visit sites also need to be trained adequately.

CMS also needs to improve Medicare and Medicaid provider data systems, OIG recommended. OIG has found Provider Enrollment, Chain and Ownership System (PECOS) to be “incomplete and inaccurate,” Maxwell said.

PECOS did not contain all the information needed for CMS to oversee whether its contractors were performing their activities appropriately, OIG observed. PECOS also did not accurately capture all needed data on Medicare providers.

“If PECOS does not accurately and completely capture provider ownership information for Medicare providers, CMS does not know exactly with whom it is doing business, and its ability to provide adequate oversight of the Medicare program is compromised,” Maxwell said.

OIG also observed inaccuracies in a separate database that CMS established for storing information about providers that were terminated from the Medicare and Medicaid programs.

HHS said that the main reason for Medicaid improper payments relates to “States’ difficulties bringing their systems into compliance with new requirements, including requiring screening of providers under a risk-based process prior to enrollment,” Maxwell said.

Dig Deeper:

• GAO: Millions Spent Yearly on Ineligible Medicaid Reimbursements
• Improper Medical Billing for DMEPOS Costs Medicare Billions