Wednesday, July 25, 2012

Fiscal intermediaries -- paying the fox to guard the henhouse

Why is there so much fraud in the government health care programs?  In part because the government relies on private contractors to act as fiscal intermediaries.  Even the AMA recognizes, in its own cautious way, that fiscal intermediaries are failing the government and taxpayers.  From a recent AMA white paper:
Contractor Oversight

In addition to an overall reduction in the number of federal program integrity audits, the contractors that conduct these audits should be subject to vigorous CMS oversight. While the AMA has worked productively with CMS program integrity audit staff, in general, it appears that many contractors proceed without sufficient CMS guidance or ongoing supervision. 

For example, in June 2012, the Government Accountability Office (GAO) reported that over a five year period, the MIC [Medicaid Integrity Contractors] contractors cost $102 million and returned less than $20 million, resulting in an overall loss to the federal government of $82 million.  Following this report,  CMS committed to end the contracts of three of the five MIC contractors. While we welcome CMS’ response, this report is very troubling and signifies that there is a lack of appropriate oversight by CMS of program integrity auditors.

And see this nugget from the GAO:

The Centers for Medicare & Medicaid Services (CMS) estimated that $21.9 billion (8 percent) of Medicaid’s federal expenditures of $270 billion in fiscal year 2011 involved improper payments, the second highest amount reported by any federal program. Improper payments include those made for treatments or services that were not covered by program rules, that were not medically necessary, or that were billed for but never provided.  Since 2001, we have reported numerous times on improper payments and our concerns about the adequacy of fiscal oversight in Medicaid.  The challenges inherent in overseeing a program of  Medicaid’s size and diversity make the program vulnerable to improper payments.  Because of the program’s risk of improper payments, as well as insufficient federal and state oversight, Medicaid has been on our list of high-risk programs since January 2003.


Here is the AMA white paper.
Program Integrity White Paper


Here is the GAO study.
GAO National Medicaid Audit Program -- CMS Should Improve Reporting and Focus on Audi Collaboration With th...

And here is a recent US House Committee report showing that Medicaid fraud is spreading like cancer.
Uncovering Waste Fraud and Abuse in the Medicaid Program Final 3

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