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GAO High Risk List 2017: Fraud Vulnerabilities in Medicare and Medicaid

GAO High Risk List 2017The Government Accountability Office (GAO) issued a new report in its “High Risk” Series regarding federal programs that are vulnerable to waste, fraud, abuse, and mismanagement, or that need transformation. Medicare and Medicaid are continuously on the GAO High Risk List. The 2017 report recognizes that Congress and CMS have actively tried to reduce the vulnerabilities to fraud and abuse. However, given the size, complexity, and ongoing changes in the Medicare and Medicaid programs, they remain high-risk.

The GAO High Risk List – Medicare 2016

Medicare’s effect on beneficiaries and the U.S. economy includes the following:

  • Estimated expenditure of $696 billion, roughly 3.6 percent of the country’s gross domestic product (GDP);
  • Health care coverage to over 57 million beneficiaries;
  • Payment for roughly 60 percent of the health care costs of beneficiaries enrolled in fee-for-service (FFS), excluding individuals who reside in institutions;
  • Payment to over one million health care providers;
  • Annual payment of over one billion claims submitted by providers;
  • An outsize effect on the federal budget;
  • Spending of approximately 17.8 percent of the $3.9 trillion in federal outlays;
  • Congressional Budget Office projection of a spending increase that will reach $1.3 trillion over the next decade; and
  • A projected increase in Medicare’s share of GDP to 5.6 percent by 2040.

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GAO High Risk Report calls for HHS to do the following:

  1. Require providers who self-refer intensity-modulated radiation therapy services to disclose to their patients that they have a financial interest in the service;
  2. Pay for cancer hospitals exempt from the inpatient prospective payment system (PPS) on the same basis as teaching hospitals, or modify how Medicare pays these providers;
  3. Equalize payment rates for evaluation and management visits between physician office and hospital outpatient settings;
  4. Require Part B drug manufacturers paid at average sales price (ASP) to submit data to CMS, for CMS to collect data on coupon discounts for Part B drugs;
  5. Increase cost-sharing for services that the U.S. Preventive Services Task Force recommends against;
  6. Establish a self-referral flag for advanced imaging services claims and reduce payments for self-referred advanced imaging services;
  7. Improve Medicare Advantage (MA) data review and adjustments for differences in diagnostic coding practices between MA and Medicare fee-for-services; and
  8. Reform dialysis facility low-volume payment adjustment policies.

The GAO High Risk List – Medicaid 2016

Medicaid is designated as a high risk program due to concerns about the adequacy of fiscal oversight. In fiscal year 2016, Medicaid covered an estimated 72.2 million people with outlays of $575.9 billion, $363.4 billion of which the federal government financed. Medicaid allows states significant flexibility to design and implement their programs. However, states vary on whether they elected to expand Medicaid, as allowed under the Patient Protection and Affordable Care Act (PPACA). The PPACA gives states the option to expand Medicaid eligibility to nearly all adults under age 65 with incomes up to 133 percent of the federal poverty level. In 2015, CMS projected that total spending for Medicaid would increase an average of 6.4 percent per year from 2015 to 2024.

A significant challenge for the Medicaid program is the ability to obtain accurate, complete, and timely data for CMS to oversee state Medicaid programs. Improved data would enhance CMS oversight; allowing for improved monitoring of program financing and payments, beneficiary access, and compliance with Medicaid laws and requirements.

GAO High Risk Report identified the following specific vulnerabilities and recommendations:

  1. CMS lacks accurate and timely data to oversee diverse and complex state Medicaid programs and should take steps to improve reporting and oversight of supplemental payments, Section 1115 Medicaid demonstrations, and personal care services programs;
  2. CMS should establish criteria to determine when provider payments are economical and efficient and develop a process to identify and review payments to individual providers;
  3. CMS should ensure that federal funding efficiently and effectively responds to the countercyclical nature of the Medicaid program; and
  4. Congress should consider federal matching formula changes to target variable state Medicaid needs and provide temporary increased federal assistance in response to national economic downturns.

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