Medicare remains on GAO's high-risk list

Despite improvements, Medicare has once again been placed on the Government Accountability Office’s high-risk list – a designation the program has held since 1990.

The GAO’s high-risk report, which identifies government operations that are high risk because they have greater vulnerabilities to fraud, waste, abuse and mismanagement, or the need for transformation to address economy, efficiency or effectiveness challenges, is updated biennially and was released Thursday.

[See also: HHS and DOJ report record healthcare fraud recoveries in 2012]

Continued high levels of incorrect and fraudulent Medicare payments are among the reasons Medicare remains on the GAO’s high-risk list. Of the $555 billion Medicare paid out to cover beneficiaries in 2012, the federal government paid out about $44 billion in incorrect or fraudulent Medicare payments, the GAO noted in its report.

CMS has taken steps to improve Medicare’s integrity and reform payments, according to the GAO. For instance, CMS has developed a payment error rate that it can measure for each part of the program and has also taken steps to reduce improper payments, such as by applying some of the new provider enrollment requirements in the Affordable Care Act and certain payment controls.

Although CMS has made progress in measuring and reducing improper payment rates in different parts of the program – such as in the hospital, office visit and drug sectors – it has yet to demonstrate sustained progress in lowering the error rates overall.

“Because the size of Medicare relative to other programs leads to aggregate improper payments that are extremely large, continuing to reduce improper payments in this program should remain a priority for CMS,” the GAO said in its report.

[See also: Healthcare fraud recoveries set record in 2012]

CMS has also applied reforms to reward quality and efficiency to payment systems in the traditional Medicare fee-for-service (FFS) program and Medicare Advantage plans and has introduced efforts to better manage costs, including a competitive bidding program for durable medical equipment (DME), and actions to better oversee nursing quality care and management of contracts. Additionally, the agency has made headway on a number of the GAO’s earlier recommendations, such as nursing home and contract oversight, but more action is needed, the GAO concluded, including to:

1. Establish an effective physician profiling system to support use of value-based modifiers.

2. Develop and apply approaches to identify self-referred claims, reduce payments to recognize efficiencies achieved when the same provider refers and provides the service and take steps to assure the appropriateness of service provision.