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Policy: Entitlements

IG says flaws in Medicare databases invite fraud and abuse

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Photo - An Inspector General’s report has found Medicare’s databases for processing medical providers “inaccurate”, opening the door for potential waste, fraud and abuse.
An Inspector General’s report has found Medicare’s databases for processing medical providers “inaccurate”, opening the door for potential waste, fraud and abuse.
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On the eve of an historic expansion in the federal role in the healthcare, a government review finds Medicare overwhelmed by new-medical provider information and unable to police its existing databases against the fraudulent use of taxpayer money.

Government investigators found that the data systems used to catalog the records of Medicare providers were riddled with inaccurate or incomplete information. When compared, 97 percent of files studied were inconsistent.

The report, released by the Department of Health and Human Services' Inspector General, focused on two Medicare databases that manage important provider information, the National Plan and Provider Enumeration System (NPPES) and the Provider Enrollment, Chain and Ownership System (PECOS).

The HHS IG found Medicare's databases for processing medical providers "inaccurate," opening the door for potential waste, fraud and abuse.

The systems contain the information and identifiers of healthcare providers enrolled in Medicare and assist the government healthcare system in processing payments to those providers.

The IG report found data in both systems was "often inaccurate and occasionally incomplete, and were generally inconsistent between the two databases."

Nearly half--48 percent--of the files containing identifiers assigned to providers by the Centers for Medicare &Medicaid Services were inaccurate.

PECOS, which is used to process provider information, had inaccuracies in 58 percent of its files. When provider information from both databases was compared, 97 percent of the files had conflicting information, including the addresses of providers that were billing Medicare.

The IG report also found that CMS did not verify most of the information in either database, raising the possibility that fraudulent information had been used to scam the system.

But the IG report found that, while CMS had processes in place to verify provider data, "the manner in which CMS implemented these processes impeded efforts to ensure that the databases contained accurate information."

Faced with surging provider applications to fill the increased role of Medicare, CMS allowed for the suspension of other verification processes that may have caught inaccurate data.

"The suspension of provider enrollment verification activities at a time of increased application volume could have compromised the accuracy and completeness of PECOS data, increasing the vulnerability of the Medicare program to fraud and abuse," the IG report said.

The report also noted that CMS oversight allowed for ineffective safeguards in the verification process and suspended others to expedite the processing of provider information.

The IG report recommended stronger oversight and safeguards after noting that three out of four providers identified inaccurate data in either system.

The IG report, which was released May 29, comes just as the White House touted how the Affordable Care Act's expansion of the government healthcare giant has allegedly ensured its solvency until at least 2026.

Despite the HHS IG's findings, the Obama administration remains optimistc about Obamacare's ability to reduce health care costs and encourage innovation in health care delivery.

A May 31, 2013, statement from the Obama administration cited the Medicare Trustees' annual report, which said the Hospital Insurance Trust Fund's long run actuarial deficit had been cut by more than 70 percent since the ACA became law, helping to project Medicare solvency for two years longer than the 2012 report.

The White House statement also highlighted new care models that incentivize providers to manage costs for Medicare patients.

"And our data and health information technology initiatives are driving a wave of innovation as entrepreneurs and innovators develop and deploy new digital tools to help clinicians deliver better care across the country," the statement said.

No comments were available from CMS regarding the IG report. Go here to read the full report.

Carten Cordell is a reporter for Virginia Watchdog, which is affiliated with the Franklin Center for Government and Public Integrity.

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