Electronic health record technology gets positive physician reviews 

The U.S. Government Accountability Office ("GAO") has designated Medicare as a high-risk program, in part because its complexity makes it particularly vulnerable to fraud.  Fraud involves an intentional act or representation to deceive with the knowledge that the action or representation could result in gain.  The deceptive nature of fraud makes its extent in the Medicare program difficult to measure in a reliable way, but it is clear that fraud contributes to Medicare’s fiscal problems. Reducing fraud could help rein in the escalating costs of the program.

This statement focuses on the progress made and steps that remain to be taken by the Centers for Medicare & Medicaid Services ("CMS")—the agency that administers Medicare--to implement recent legislation and GAO’s past recommendations to prevent or reduce fraud in Medicare.  It is based on relevant GAO products issued from April 2004 through April 2012 using a variety of methodologies, such as analyses of Medicare claims, review of relevant policies and procedures, and interviews with officials.  In April 2012, GAO also received updated information from CMS on agency actions.

The CMS has made progress in implementing several key strategies that GAO identified in prior work as helpful in protecting Medicare from fraud; however, some actions that could help combat fraud remain incomplete.

Provider Enrollment: GAO’s previous work found persistent weaknesses in Medicare’s enrollment standards and procedures that increased the risk of enrolling entities intent on defrauding the program. CMS has strengthened provider enrollment—for example, in February 2011, CMS designated three levels of risk—high, moderate, and limited—with different screening procedures for categories of providers at each level. However, CMS has not completed other actions, including implementation of some relevant provisions of the Patient Protection and Affordable Care Act (PPACA). Specifically, CMS has not (1) determined which providers will be required to post surety bonds to help ensure that payments made for fraudulent billing can be recovered, (2) contracted for fingerprint-based criminal background checks, (3) issued a final regulation to require additional provider disclosures of information, and (4) established core elements for provider compliance programs.

Pre- and Post-payment Claims Review: GAO had previously found that increased efforts to review claims on a prepayment basis can prevent payments from being made for potentially fraudulent claims, while improving systems used to review claims on a post-payment basis could better identify patterns of potentially fraudulent billing for further investigation. CMS has controls in Medicare’s claims processing systems to determine if claims should be paid, denied, or reviewed further by comparing information on claims with information on providers and Medicare coverage and requirements. These controls require timely and accurate information about providers that GAO has previously recommended that CMS strengthen. GAO is currently examining CMS’s use of prepayment edits to implement coverage and payment policies and CMS’s new Fraud Prevention System, which uses analytic methods to examine claims before payment. CMS could better use post-payment claims review to identify patterns of fraud by incorporating prior GAO recommendations to develop plans and timelines for fully implementing and expanding two information technology systems it developed. These systems are a central storehouse of Medicare and other data and a Web portal to the storehouse with tools for analysis.

Robust Process to Address Identified Vulnerabilities:  Having mechanisms in place to resolve vulnerabilities that lead to erroneous payments is critical to effective program management and could help address fraud. Such vulnerabilities are service- or system-specific weaknesses that can lead to payment errors—for example, providers receiving multiple payments as a result of incorrect coding. GAO has previously identified weaknesses in this process, which resulted in vulnerabilities being left unaddressed. GAO is evaluating the current status of the process for assessing and developing corrective actions to address vulnerabilities.

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Report from the U.S. Government Accountability Office ("GAO") on Medicare Part D: Changes in Utilization Similar for Randomly Reassigned and Other Low-Income Subsidy Beneficiaries

Report GAO-11-546R, published June 22, 2011
Full Report (PDF, 21 pages) Accessible Text


To help defray out-of-pocket prescription drug costs for limited or low-income Medicare beneficiaries, the Medicare Part D outpatient prescription drug program offers a low-income subsidy (LIS) for eligible beneficiaries. In 2010, about 9.4 million beneficiaries received the LIS--about 40 percent of the approximately 23 million Medicare Part D beneficiaries in that year. Most of the LIS beneficiaries received the full LIS, thus paying no premiums or deductibles as long as they enrolled in so-called "benchmark" stand-alone prescription drug plans (PDP). Benchmark PDPs are those plans with premiums at or below a specified benchmark for a given geographic region, calculated by the Centers for Medicare & Medicaid Services (CMS), the agency within the Department of Health and Human Services (HHS) that administers the Medicare program. Full LIS beneficiaries may also enroll in other Part D plans--either nonbenchmark PDPs or Medicare Advantage prescription drug plans (MAPD)-- but must pay any difference between the premium of the plan in which they choose to enroll and the benchmark for their region. Because plan premiums can change from year to year and because CMS recalculates the premium benchmarks annually, some PDPs may be benchmark PDPs in one year and not in the following year. In these instances, CMS is required to randomly reassign those LIS beneficiaries who are in plans whose premiums will no longer be at or below the new benchmark the following year into PDPs with premiums that will be at or below the benchmark. Beneficiaries subject to random reassignment can choose to either stay in their current plan or enroll in a new plan prior to being randomly reassigned by CMS, but if they choose either option, and that plan's premium is higher than the new benchmark, they are responsible for paying any premiums above the new benchmark. From 2007--the first year LIS beneficiaries could be randomly reassigned--through 2010, an average of almost 1.3 million LIS beneficiaries has been randomly reassigned into new PDPs each year. Questions have been raised by Medicare beneficiary advisors and others about the benefits of available benchmark PDPs, and some suggest that the random reassignment process may create challenges for affected LIS beneficiaries. For example, according to some advisors, random reassignment may impact LIS beneficiaries' drug coverage. Specifically, beneficiaries may be randomly reassigned by CMS into benchmark PDPs that do not cover the drugs they are taking, requiring them to consult with a medical provider to prescribe a therapeutically equivalent alternate drug. Similarly, they may be randomly reassigned by CMS into benchmark PDPs that impose more or different utilization management (UM) requirements-- such as prior authorization requirements, quantity limits, or step therapy--on certain drugs they are currently taking, thus also requiring the intervention of a medical provider. In addition, there are concerns that random reassignment may lead to changes in pharmacies impacted LIS beneficiaries have access to, which may further impact drug utilization. Congress asked us to examine the features of benchmark PDPs and explore how the random reassignment process may affect beneficiaries' drug utilization. In this report, we describe: 1. how drug coverage and access to pharmacies compared between benchmark and nonbenchmark PDPs from 2007 through 2010; and 2. how changes in drug and pharmacy utilization compared between randomly reassigned and other LIS beneficiaries who were not randomly reassigned from 2007 to 2008.

Drug coverage was somewhat more limited for benchmark compared to nonbenchmark PDPs and became gradually more restrictive for all PDPs from 2007 through 2010, while pharmacy access was comparable. The average number of drugs covered by benchmark PDP formularies was slightly smaller than the average covered by nonbenchmark PDP formularies--about 5 percent smaller in 2010, for example. Benchmark PDPs also imposed UM requirements on a similar to slightly greater share of drugs than other PDPs. For example, benchmark PDPs imposed at least one UM requirement on 28 percent of covered drugs compared with about 26 percent among nonbenchmark PDPs, on average, in 2010. Both benchmark and nonbenchmark PDPs experienced a gradual reduction in the number of drugs covered and a gradual increase in the number of drugs subject to at least one UM requirement from 2007 through 2010. Access to retail and mail order pharmacies was comparable among benchmark and nonbenchmark PDPs, with the average number of pharmacies per plan per state generally increasing during the period for both types of plans. The extent to which randomly reassigned LIS beneficiaries experienced changes in their drug and pharmacy utilization after reassignment was comparable to the extent of such changes among other LIS beneficiaries. Specifically, for drugs they had taken continuously for the full year of 2007, randomly reassigned and other LIS beneficiaries experienced comparable rates of reductions in drug fills, substitutions to therapeutically equivalent drugs, and discontinuations of the drugs in 2008. For example, 32 percent of randomly reassigned LIS beneficiaries experienced a reduction in fills in 2008, compared with 32 percent of LIS beneficiaries who chose new plans and 31 percent of LIS beneficiaries who did not change plans. Additionally, the share of LIS beneficiaries who experienced a change in pharmacies used in 2008 compared to 2007 was comparable across randomly reassigned and other LIS beneficiaries. While we did not identify measurable differences in the rates of utilization changes experienced by randomly reassigned beneficiaries compared to other LIS beneficiaries, beneficiary advisors said that the uniquely vulnerable LIS population may nevertheless experience hardships or inconvenience when changing prescription drug plans. HHS generally agreed with our findings. In particular, HHS stated that it concurred with our principal finding that the extent to which randomly reassigned LIS beneficiaries experienced changes in their drug and pharmacy utilization after reassignment was comparable to the extent of such changes among other LIS beneficiaries. However, HHS noted that our finding concerning the uniquely vulnerable LIS beneficiary population potentially facing particular hardships or inconveniences when changing drug plans was not supported by data in the report. Our report did not associate this finding to our data analyses, but instead noted that based on our discussions with beneficiary advisors, the particular hardships or inconveniences may exist despite our data analysis findings.


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