HHS auditors also found that the contractor, Health Integrity of Easton, Md., rarely uncovers its own leads on potential fraud in Medicare Advantage, with proactive investigations representing 6% of the cases. The other 94% are based on outside tips from external sources.
The findings come after HHS' inspector general's office released four audits last year documenting patterns of questionable diagnoses contained in patient files used to set payment rates for Medicare Advantage plans.
The four previous audits documented $771,000 in actual overpayments in 400 randomly selected patients' files from 2007, and then went on to extrapolate an estimated $598 million in total overpayments were received that year by the four contractors, based on patterns in the sample data.
Health Integrity, whose $28 million, two-year contract with the CMS puts it in charge of discovering such overpayments, declined to comment because a spokesman said the federal contract forbids public statements about the program.
While the CMS has overlapping layers of outside contractors scouring Medicare Parts A and B for fraud, the agency has only Health Integrity to look for problems in Medicare Part C (Medicare Advantage) and Part D (the prescription-drug benefit).
Medicare Parts C and D account for $190 billion in annual spending, yet the audit of Health Integrity's work found that it referred only 245 cases to law enforcement for potential prosecution between April 2010 and March 2011. Of those, only 9% resulted from data analysis initiated by Health Integrity.
“Despite spending more than $24 million over a two-year period, CMS' contractor only discovered through their own initiative 21 cases of fraud that they referred to law enforcement,” Sen. Tom Coburn (R-Okla.) said in a written statement. “Given Medicare Parts C and D's $190 billion in annual expenditures, CMS needs to be much more aggressive about detecting waste, fraud and abuse.”
A CMS official said in an e-mail that the agency has already taken steps to improve enforcement, including giving Health Integrity access to centralized data on the Medicare Advantage program and enhancing the firm's reporting requirements.
“CMS takes this report very seriously, and is committed to ensuring the integrity of Medicare Parts C and D through effective strong oversight of [Health Integrity's] work,” the CMS spokeswoman said in an e-mailed response to questions. “Our goal is to ensure people with Medicare receive quality healthcare while safeguarding taxpayer dollars.”
The inspector general's report noted other weaknesses, including the fact that the company does not have authority to pursue overpayments if a law-enforcement agency like the FBI or a state agency declines to take the case.
In a written response to the audit included in the report, Acting CMS Administrator Marilyn Tavenner noted that any overpayments that are detected in Medicare Part C would actually go back to the health plans, rather than to the CMS.
Clare Krusing, a spokeswoman for industry trade group America's Health Insurance Plans in Washington, said the organization agrees with Tavenner's statements that Medicare Advantage providers have a financial incentive to root out fraud in patient medical records. In fact, the plans are required to implement compliance programs to detect and prevent fraud and abuse, she wrote in an e-mail.