Medicare Program Integrity:

Contractors Reported Generating Savings, but CMS Could Improve Its Oversight

GAO-14-111: Published: Oct 25, 2013. Publicly Released: Nov 25, 2013.

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kingk@gao.gov

 

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What GAO Found

The Centers for Medicare and Medicaid Services (CMS) paid its Zone Program Integrity Contractors (ZPIC) about $108 million in 2012. ZPICs reported spending most of this funding on fraud case development, primarily for investigative staff, who in 2012 reported conducting about 3,600 beneficiary interviews, almost 780 onsite inspections, and reviews of more than 200,000 Medicare claims.

ZPICs reported that their actions resulted in more than $250 million in savings to Medicare in calendar year 2012 from actions such as stopping payment on suspect claims. ZPICs also reported taking other actions to protect Medicare funds, including having more than 130 of their investigations accepted by law enforcement for potential prosecution, and working to stop more than 160 providers from receiving additional Medicare payments in 2012. However, CMS lacks information on the timeliness of ZPICs' actions--such as the time it takes between identifying a suspect provider and taking actions to stop that provider from receiving potentially fraudulent Medicare payments--and would benefit from knowing if ZPICs could save more money by acting more quickly.

ZPICs generally received good ratings in annual reviews, with five of six eligible for incentive awards. CMS follows some best practices for ZPICs' oversight, but the agency does not clearly link ZPIC performance to agency program integrity goals. The majority of the measures CMS uses to evaluate ZPICs relate to the quality of their work because, according to CMS officials, quality is the most important element. However, evaluation of such measures, while a best practice, does not connect ZPIC work to agency performance measures. For example, CMS aims to increase the percentage of actions taken against certain high risk Medicare providers--work central to ZPICs--but does not explicitly link ZPICs' work to the agency's progress toward that goal, another best practice that would allow the agency to better assess the ZPICs' support of CMS's fraud prevention efforts.

Why GAO Did This Study

GAO has designated Medicare as a high-risk program, in part because its size and complexity make it particularly vulnerable to fraud. To help detect and prevent potential Medicare fraud, CMS--the agency within the Department of Health and Human Services (HHS) that administers the Medicare program--contracts with ZPICs. These contractors are to identify potential fraud, investigate it thoroughly and in a timely manner, and take swift action, such as working to revoke suspect providers' Medicare billing privileges and referring potentially fraudulent providers to law enforcement.

GAO examined (1) ZPIC contract costs and how ZPICs use those funds, (2) the results of ZPICs' work, and (3) the results of CMS's evaluations of ZPICs' performance and aspects of CMS's evaluation practices. To do this, GAO examined ZPIC funding, contracts, and related documents; data on ZPICs' workloads, investigations, and results; and CMS evaluations of ZPICs as well as federal standards for performance measurement. GAO also interviewed CMS and ZPIC officials.

What GAO Recommends

GAO recommends that CMS collect and evaluate information on the timeliness of ZPICs' investigative and administrative actions, and develop ZPIC performance measures that explicitly link ZPICs' work to Medicare program integrity performance measures and goals. GAO requested comments from HHS on the draft report, but none were provided.

For more information, contact Kathleen King at (202) 512-7114 or kingk@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: CMS reported its effort to address this recommendation is ongoing. The agency reported that CMS had instituted a new evaluation process for the ZPICs in 2012, and a key component of this process is evaluating the appropriateness of the administrative actions taken and timeliness of the implementation. CMS stated that it will continue to explore and identify the most efficient manner and begin to collect, evaluate, and analyze information that will provide data which will allow an assessment of the length of time involved to initiate administrative actions. As of January 2014, the agency had instituted an enhanced evaluation process for ZPICs and the projected completion date for the enhanced evaluations is Nov. 11, 2014.

    Recommendation: To help ensure that CMS's fraud prevention activities are effective and that CMS is comprehensively assessing ZPIC performance, the Administrator of CMS should collect and evaluate information on the timeliness of ZPICs' investigative and administrative actions, such as how soon investigations are initiated after ZPICs identify potential fraud and how swiftly ZPICs initiate administrative actions after identifying potentially fraudulent providers.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

  2. Status: Open

    Comments: This recommendation remains open. CMS concurred with the recommendation and reported in June 2014 that as of December 2013, it had explored the development of ZPIC and Program Safeguard Contractor (PSC) performance measures that link to the agency's program integrity performance measures and targets for the related GPRA goal--in instances where such links may be appropriate. The agency's response noted that CMS believes it is essential that ZPICs and PSCs maintain an objective approach to their fraud work, especially with respect to cases that are developed and referred to law enforcement. Additionally, the agency stated that ZPICs and PSCs must pursue cases on their merits and not be perceived as pursuing cases in order to achieve a targeted savings outcome. It went on to say that CMS uses GPRA goal metrics as a means to assess agency progress in achieving overall objectives and in developing GPRA Goals for the Presidents 2015 budget CMS did not include any that were directly related to assessing contractor performance. CMS further stated that the Agency's current GPRA goals were not designed to measure ZPIC ZPIC/PSC performance, that assessing ZPIC/PSC performance based on these goals would be improper, and that current GPRA goals are not good measures of ZPIC/PSC success. Regarding this response, GAO is not suggesting that the Agency's current GPRA goals were, or should be, designed to measure ZPIC, ZPIC/PSC performance. Instead, as our report indicates, CMS officials reported that ZPICs are the primary actors for one of the agency's Medicare fee-for-service performance measures for determining progress toward the GPRA goal of fighting fraud and working to eliminate improper payments: increasing the percentage of providers who are identified as high risk against whom CMS takes administrative actions. CMS's fiscal year 2014 target for this performance measure is to increase the percentage of administrative actions taken for these high-risk providers from 27 percent to 36 percent. In light of federal standards that state that entities should link performance measurements to goals and objectives, along with CMS officials' statement that ZPICs contribute to accomplishing the goal noted above, we continue to recommend that CMS explicitly link ZPIC performance measures to agency program integrity measures or goals. Therefore, this recommendation remains open.

    Recommendation: To help ensure that CMS's fraud prevention activities are effective and that CMS is comprehensively assessing ZPIC performance, the Administrator of CMS should develop ZPIC performance measures that explicitly link their work to the agency's Medicare fee-for-service program integrity performance measures and targets for its GPRA goal of fighting fraud and working to eliminate improper payments.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

 

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