GAO Releases High-Risk Update on Medicare Program

Yesterday, the Government Accountability Office (GAO) released a report of testimony before the Subcommittee on Oversight and Investigations from the House of Representatives Committee on Energy and Commerce. The report and testimony provided the GAO’s 2011 High-Risk Series update on the Medicare program – the first GAO high-risk update on the program since 2009. The GAO report notes that CMS estimates improper payments for fiscal year 2010 Medicare fee-for-service and Medicare Advantage totaled almost $48 billion.

The report outlines the GAO’s specific recommendations for CMS in order to address four significant challenges to the Medicare program:

Challenge 1: Reform and refine Medicare’s payment methods to achieve efficiency and savings

• GAO Recommendation: Although CMS has implemented payment reforms and provided feedback to physicians on resource use, CMS need to enhance its feedback to ensure that physician fees recognize efficiencies when certain services are furnished together. CMS should target services with the greatest potential for savings, including oxygen and imaging services. The GAO recommends front-end approaches to better ensure appropriate payments, such as revisions to locality payments and prior authorization requirements for imaging services.

 Challenge 2: Improve program management

• GAO Recommendation: The GAO reports pervasive internal control deficiencies in CMS’s management of contracts that increased the risk of improper payments. CMS should clarify the roles and responsibilities for implementing contractor oversight responsibilities, clear a backlog of contracts that are overdue for closeout, and finish its investigation of over $70 million in questionable payments.

 Challenge 3: Enhance program integrity 

• GAO Recommendation: CMS should develop an adequate process to address vulnerabilities to improper payments identified by Recovery Audit Contractors (RAC). CMS should also address additional GAO recommendations designed to reduce improper payments, including one recommendation to conduct postpayment reviews of claims submitted by home health agencies with high rates of improper billing.

Challenge 4: Improve oversight of patient care and safety

• GAO Recommendation: Weaknesses in survey methodology and guidance for surveillance could understate care quality problems. While the GAO also reported that CMS’s current approach for funding state surveys of Medicare-participating facilities is ineffective, the GAO acknowledged the steps taken by CMS to implement nursing home oversight recommendations.

For a summary of these recommendations and to view the full GAO testimony report, please click here.