'Inappropriate' Medicare Payments Comprised 40% of Government Waste Last Year, GAO Says

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About 40% of last year’s “government waste” was comprised of inappropriate payments made through the Medicare program, reveals a report by the Government Accountability Office (GAO).

Data from the Centers for Medicare & Medicaid Services (CMS) indicate that of the $516 billion remitted to physicians, hospitals, and other health care professionals in 2010, $48 billion in improper payments came from Medicare. The latter ranked at the top of the roster of 70 federal programs tracked by the GAO for improper payments.

Inappropriate payments from fee-for-service Medicare accounted for $34.3 billion of the $48 billion total. The remainder came from Medicare Advantage's managed care program.

But this is just the tip of the iceberg. According to the GAO, the total improper payment could be significantly higher because it was calculated without taking into account any data pertaining to Medicare's outpatient prescription drug program. Overpayment estimates in that program may range from the tens of millions of dollars to more than $5 billion annually, the GAO says.

In a late July testimony before the House Oversight and Government Reform Committee, CMS Deputy Chief Operating Officer A. Michelle Snyder told Congress that the Medicare program is developing a composite error estimate for Part D beginning with the 2011 fiscal year. However, she insisted to lawmakers present that Medicare payment errors frequently stem from billing and administrative mistakes rather than from outright fraud. Such mistakes, she reportedly said, include insufficient documentation, coding errors, and post-care judgments that services rendered had not been deemed reasonable and necessary.

For a complete summary of the GAO report, click here: http://www.gao.gov/products/GAO-11-842T.