In this case, let us root the GAO on

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06/18/2012

I like the heat CMS and its contractors are getting for their audit activities as of late.

The lead for this story in Bloomberg Businessweek, based on a recent report from the Government Accountability Office (GAO), pretty much says it all:

“A program to fight fraud in the Medicaid health system for the poor has cost the U.S. at least $102 million in auditing fees since 2008 while identifying less than $20 million in overpayments, investigators found.”

In other words, the government spends about five times more money chasing fraud than it gets back.

The story continues:

“The majority of the audits conducted by 10 companies were discontinued, produced ‘low or no findings’ or were ‘put on hold,’ the GAO, the nonpartisan investigative arm of Congress, said in a report.”

Anecdotally, I’ve heard providers come to these same conclusions not only about CMS’s audit activities, but also about its competitive bidding program. CMS estimates that competitive bidding has saved $202.1 million in its first year. But at what cost?

I’ve never been able to put a finger on exactly how much the agency has spent to not only launch the program but also keep it going. The only thing I’ve seen: a contract for almost $10 million related to creating the DBidS system that providers use to submit their bids.

With this GAO report, the industry has more solid proof that a program meant to save money is actually costing money.

The beauty of all of this is that, at least in the case of this investigation of audit activities for Medicaid, CMS doesn’t disagree that its efforts are penny-wise, pound-foolish.

Peter Budetti, director of program integrity at CMS, told Bloomberg that three of the companies conducting the audits won’t have their contracts renewed and two others will be reassigned. He said:

“The results were extremely disappointing, way below what the expectations had been.”

The ugly of all of this is that, while CMS throws money at finding and collecting overpayments, legitimate providers are too often the ones paying the price. A story in Forbes on the faulty data that CMS is using to set expectations and launch audit activities says:

“Upon reading Ms. Maxwell’s testimony, another vastly different but no less important point emerges:  inaccurate Medicaid claims data can wreak havoc on innocent medical providers. Indeed, for those who counsel health care providers, Ms. Maxwell’s recent testimony is noteworthy not just for what it says about the (in)accuracy of Medicaid data, but also for what it reveals about the extent to which providers have been and will continue to be subjected to unjustified, burdensome and meritless government scrutiny.”

The GAO has never been shy about looking into DME-related issues. In this case, let us root the agency on and hope it now turns its focus on audit activities for Medicare and competitive bidding.