HCFA comes under fire for lax oversight of carriers

Two recent General Accounting Office (GAO) reports and a heated debate in the House Commerce Committee could mean that further changes are in the works regarding the Health Care Financing Administration's (HCFA) oversight of its Medicare contractors.

According to the GAO, HCFA's oversight of its 64 Medicare claims administration contractors has been so weak the agency can't guarantee that contractors are paying providers appropriately. "HCFA still does not regularly check contractors' internal management controls, management and financial data, and key program safeguards to prevent payment errors," says the GAO. In fact, HCFA's headquarters does not even set oversight priorities, but instead cedes that responsibility almost entirely to regional office reviewers.

In a separate report, the GAO says every major investigation by the OIG, Federal Bureau of Investi ga tion, and U.S. Department of Justice it reviewed was triggered by the filing of a qui tam action by a current or former employee. In none of those cases had HCFA detected the contractors' fraudulent activity.

HCFA has begun to take steps to improve its oversight, but the GAO concludes it is too early to tell whether those measures will address the "fundamental problems."

The reports were released on July 14 as part of a hearing of the House Commerce Committee. At that hearing, committee chairman Tom Bliley (R-VA) alleged that HCFA's poor oversight of Medicare carriers is wasting "billions of dollars" and jeopardizing the integrity of the Medicare program. He vowed to initiate major changes in HCFA's oversight function.

George Grob, deputy director of the Health and Human Services Office of Inspector General (OIG), underscored Bliley's comments by noting that in addition to the nine civil settlements and two criminal convictions his office already has under its belt, that office is now actively investigating no fewer than 21 former or current contractors.

Grob told the committee his office has found significant "weaknesses and vulnerabilities" throughout those operations. "Of all the problems we have observed," Grob asserts, "perhaps the most troubling has to do with contractor's own integrity, [including] misusing government funds and actively trying to conceal their actions, altering documents and falsifying statements that specific work has been performed."

In some cases, Grob says contractors used "bogus documents to falsely demonstrate superior performance for which Medicare rewarded them with bonuses and additional contracts." In other cases, he says, carriers simply turned off system edits designed to prevent inappropriate payments.

Alissa Fox, executive director for legislative policy at the Blue Cross Blue Shield Association in Washington, DC, acknowledges that some carriers have committed fraudulent acts but cautions against any sort of legislative overreaction. "We think everybody in this process needs to do a better job," she says. "That means Congress, HCFA, and our plans. There are plenty of issues that can be identified in all three camps."

Fox argues that HCFA already may have created more oversight headaches for itself with its handling of the Medicare Integrity Program, in which HCFA is awarding contracts to private companies to conduct medical review of claims. "The best way to manage this program is to have one contractor with a single point of accountability," she says. "If you start fragmenting the operations — having one entity conduct claims processing and another conduct medical review — there are going to be problems. HCFA’s going to have to sit on top of all these different contractors to make sure that a single claim is being processed properly. And that kind of thing leads to a lot of finger-pointing."