GAO blasts Medicaid audit setup

WASHINGTON – An audit program meant to combat Medicaid fraud has cost taxpayers roughly $102 million since 2008 while identifying less than $20 million in overpayments, according to a report released Thursday by the nonpartisan Government Accountability Office.

The National Medicaid Audit Program used incomplete federal data to conduct 1,550 audits, and apparently because of that, the majority of the audits failed to find any fraud, the GAO said at a Senate hearing Thursday.

Yet fraud in Medicare and Medicaid, the federal government’s health insurance programs for elderly, disabled, and low-income Americans, continues to cost taxpayers an estimated $60 billion a year, the Justice Department said.

“We’re running around in a circle and the problem’s getting bigger, not smaller,” Sen. Tom Coburn, R-Okla., said at a Senate Homeland Security Federal Financial Management subcommittee hearing Thursday.

Peter Budetti, deputy administrator at the Centers for Medicare and Medicaid Services (CMS), assured the committee that his office was redesigning the program.

Budetti’s office has stopped initiating audits based on data from its federal Medicaid database, which originally did not even include the names of hospitals or doctors, essential information needed to detect fraud.

Audits that used the incomplete data only identified overpayments 4 percent of the time, the GAO found. Instead, the program is moving toward a “collaborative approach,” where it will use both state and federal data to identify areas of potential fraud. In a round of 32 audits using the new approach, the GAO found more than $12 million in possible overpayments.

The Medicaid Integrity Program, created to oversee and support state anti-fraud efforts, was supposed to identify overpayments to doctors and hospitals. Instead, it spent $82.1 million on unsuccessful audits.

“In many ways, these programs resemble a funnel through which significant federal and state resources are being poured in and limited results are trickling out,” testified Ann Maxwell of the Department of Health and Human Services Inspector General’s office.

To get better results, the audit program should devote resources to improving the quality of Medicaid data and make more data available to states, Maxwell said.

But Carolyn Yocum, health care director at the GAO, blamed the wasted federal dollars on a lack of transparency about expenditures, audit outcomes and program improvements.

“The more transparent CMS is, the more transparent the states are about the issues they’re facing and ways to combat them, the more we have a feedback loop in the process and we can make progress more quickly,” Yocum said.