Medicare Audit Finds Overpayment, Books In Disarray Hospitals, Doctors Overpaid By $23 Billion

In the first comprehensive audit of Medicare, federal investigators said Wednesday that the government overpaid hospitals, doctors and other health care providers last year by $23 billion, or 14 percent of all the money spent in the standard Medicare program.

The books and records of the Medicare agency and its contractors were in such disarray that they could not be thoroughly audited, said June Gibbs Brown, inspector general of the Department of Health and Human Services. She said there was no way to tell how much of the overpayment resulted from fraud.

The estimate of improper payments, based on an exhaustive review of a sample of actual claims, is substantially higher than prior estimates by health policy experts. It tends to confirm the suspicions of elderly people who say their Medicare bills are riddled with errors.

The report said the government had no reliable way to prevent or detect improper Medicare payments.

Auditors found a $4.5 billion “computation error” in the agency’s estimate of unpaid claims. They found that contractors sometimes mixed up Medicare’s two trust funds, for hospital care and doctors’ services. Other contractors confused amounts owed to the government with amounts owed by the government. The contractors, typically private insurance companies, review claims and pay bills for Medicare.