Medicare fraud costs $1 billion in 2009

Study: Problems with Medicare contractors persist


December 16, 2011

MIAMI (AP) — Private contractors that are supposed to guard against Medicare fraud paid claims submitted in the names of dead providers or for unnecessary medical treatments, which were among problems estimated to cost more than $1 billion in 2009, according to an inspector general report released Friday.

Federal health officials contract with private companies to process and pay Medicare claims and investigate fraud. The U.S. Department of Health and Human Services inspector general examined how effectively several types of fraud contractors are investigating an estimated annual $60 billion in Medicare fraud.

The report found 62 areas vulnerable to fraud during a 2009 investigation. The most common were related to billing and coding, such as paying a claim even though it had an incorrect code or a provider who billed for an excessive number of services. Another common issue included bills that used the identification numbers of dead providers.

The contractors were asked to estimate how much the problems might cost, but they only accounted for one-third of the issues, which alone were estimated at $1.2 billion, the report showed. It’s unclear why contractors didn’t estimate the full amount.

Federal health officials were notified of the problems, but 77 percent of them remained unresolved nearly two years later, according the U.S. Department of Health and Services inspector general report.

The Centers for Medicare and Medicaid Services stressed that it’s addressing all the issues raised in the report, but said resolving them is complicated. Changes in one part of the system may create problems for other parts of the system that could affect providers. Some problems may also require statutory changes.

The contractors have been submitting reports highlighting potential fraud since 2007. But federal health officials did not begin developing procedures to deal with it until 2010 and still lack a process to make sure the problems are resolved, the report said.

The agency has been criticized for lax oversight of Medicare contractors in the past. Lawmakers have mandated the agency add various types of contractors over the years so the system has grown into a complex labyrinth that experts say is less than ideal.

Last month, an inspector general report showed another set of Medicare fraud contractors were using inaccurate and inconsistent data that makes it difficult to catch bogus bills submitted by crooks. The report found repeated problems among the fraud contractors over a decade and systemic failures by federal health officials to adequately supervise them.