CQ Roll Call
January 11, 2013

Lawmakers Call on CMS To Heed OIG Report on Medicare Fraud, Abuse

A bipartisan group of senators is calling on the Obama administration to improve a program designed to detect and deter Medicare fraud and abuse, following a report that questioned its effectiveness.

The report, from the Department of Health and Human Services Office of Inspector General, found that the program responsible for preventing waste and fraud in Medicare Advantage and the Medicare prescription drug program has been unsuccessful. Four senators — Thomas R. Carper, D-Del.; Tom Coburn, R-Okla.; Finance Committee Chairman Max Baucus, D-Mont.; andOrrin G. Hatch of Utah, ranking Republican on the Finance panel — issued a press release Thursday responding to the report. They urged Centers for Medicare and Medicaid Services officials to quickly implement the Inspector General’s recommendations and to be more aggressive about rooting out fraud and abuse.

“Budgets are tight, and we can’t afford to lose taxpayer dollars to waste and fraud,” said Baucus.

“Given Medicare Parts C and D’s $190 billion annual expenditures, CMS needs to be much more aggressive about detecting waste, fraud and abuse,” Coburn said.

The report found that the Medicare Drug Integrity Contractor program referred only 223 investigations on Medicare Part D to law enforcement. Most of those cases came from external sources, such as a fraud hotline. Only 21 of those investigations were discovered through internal means, such as research and analysis.

The MEDIC program has an annual budget of $14 million.

In Medicare Advantage, only 19 fraud cases were referred to law enforcement, and of those, two came from internal means. The report looked at activities from April 2010 to March 2011 and is the first review of MEDIC’s efforts in Medicare Advantage.

“I personally have a hard time believing that in the multi-billion Medicare Advantage program there were only 19 cases of fraud detected during the course of a year that warranted referring to law enforcement,” said Carper.

Part of MEDIC’s lack of effectiveness comes from its lack of access to Medicare data and inability to share information, the report said. CMS has not yet built a database to collect all Medicare Advantage data.

“The lack of a centralized Part C data repository hinders the MEDIC’s ability to identify and investigate Part C fraud,” the report said.

“It is simply unacceptable that CMS does not have the tools in place to effectively weed out waste fraud and abuse within Medicare, a program whose fiscal future is already at risk,” said Hatch.

The OIG recommended that CMS share centralized data on Medicare Advantage with the group, and CMS agreed.

The report also found that MEDIC cannot share information with other program integrity contractors and is prevented from directly obtaining information from pharmacies, providers and pharmacy benefit managers.

The OIG recommended that CMS clarify policies on when MEDIC can share information and also that it enhance the group’s monthly workload reporting requirements so that CMS can have better oversight. CMS agreed with both those recommendations.

CMS partially agreed with recommendations to require plan sponsors to refer potential fraud incidents to MEDIC and to look at ways to help MEDIC recover payments when law enforcement does not accept a referred case.

CMS did not agree with the OIG recommendation that CMS give MEDIC the authority to directly obtain information from pharmacies, physicians and pharmacy benefit managers.

“Investigators must be able to access the necessary resources to stop fraud before it starts,” Baucus said.