GAO: Extent of Medicare fraud is uncertain

General Accounting Office (GAO) Comptroller David Walker told the House Budget Committee Feb. 16 that that the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has no system in place to identify and measure fraud and abuse in the Medicare program. Walker placed much of the blame on the doorstep of the Health Care Financing Administration’s (HCFA) Medicare contractors, which he says are plagued by financial management and information systems weaknesses. He added that HCFA lacks the authority to increase competition among contractors to enhance performance.

HHS Inspector General June Gibbs Brown did not disagree. In fact, she emphasized that HCFA’s highly touted reduction in payment errors — from an estimated $23.2 billion in 1996 to $12.6 billion in 1998 — is not an accurate gauge of fraud. "While the error rate estimate may include some instances of fraud, it is a payment error estimate and not a fraud estimate," she told the committee. It may detect some fraud, but is not likely to detect sophisticated fraud such as falsification of documents and illegal kickbacks, she added.

"The very nature of fraud makes it very difficult to quantify," says OIG spokeswoman Alwyn Cassil. "An error rate is not a measure of fraud even though everybody tries to use it that way. But rather than putting resources into defining a problem that we all know exists, we want to focus on dealing with it."

Brown added that the OIG has several ongoing investigations into psychiatric services at 10 acute care hospitals and psychiatric hospitals in 10 different states, as well as ambulatory care settings and outpatient rehabilitation facilities.