Medicare and Medicaid Designated High Risk

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Medicare and Medicaid Designated High Risk

The General Accounting Office (GAO) recently updated its list of government programs at high risk of waste, fraud and abuse. Medicare again made the dubious list where it has remained a prominent fixture since the report first started in 1999. This year the GAO also added Medicaid.

Medicare earned its high-risk designation by improperly paying about $13.3 billion in fee-for-service Medicare claims last year, up from $12.1 billion in 2001. Despite the increase, the Department of Health and Human Services (HHS) reports that the overall rate of improper Medicare payments “remained steady,” as a portion of the total Medicare fee-for-service budget, at about 6.3%. According to HHS, “improper payments” are those that do not comply with all Medicare laws and regulations. The government’s audit process does not determine the cause of the error.

Medicaid made the list with the help of a large number of state governments. According to the GAO, for more than a decade states have used various financing loopholes to inappropriately generate excessive federal Medicaid matching funds. States would create the illusion of making large Medicaid payments to certain providers, such as county health facilities, in order to generate federal matching payments. Through electronic fund transfers the payments would be returned to the state, sometimes for purposes other than Medicaid. With the closing of these loop-holes, the Congressional Budget Office estimates that the growth of Medicaid payments for 2002 to 2003 will be 6.4% — less than half of the 13.2% growth rate from 2001–2002. States, however, now face serious funding shortfalls that TSCL fears may adversely impact many Notch Babies and low-income seniors. (See “Legislative Update: As More Seniors Fall Below Poverty Level, the Safety Net Is Shrinking” at http://www.tscl.org/NewContent/101827.asp.)

Source: “Major Management Challenges and Program Risks Department of Health and Human Resources,” General Accounting Office, January 2003, GAO-03-10. “The Budget and Economic Outlook 2004-2013,” The Congressional Budget Office, January 2003. “Medicare Improper Payments Rate Remains Stable,” Department of Health and Human Services, January 24, 2003.

For a related story, see “Record Medicare Fraud Settlement Announced” http://www.tscl.org/NewContent/101805.asp.

May 2003