Feds whittle down improper payments

Medicare program is biggest beneficiary of data matching, better internal controls

CMS awards $292M Medicare data center contracts

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After much talk about the problem, federal agencies are doing a better job of stopping benefit payments that are inaccurate, duplicative or fraudulent. New applications and processes are able to verify that the right person receives the right payment at the right time.

The government reduced the rate of improper payments under programs such as Medicare, food stamps, unemployment benefits and housing subsidies from 3.2 percent in fiscal 2005 to 2.9 percent in fiscal 2006, even as the number of programs and amount of federal dollars going to those programs increased, according to a recent Office of Management and Budget report.

Data matching is a method that agencies increasingly use to verify application eligibility for federal benefit programs. One widely used database source for matching is the National Directory of New Hires, which the Department of Health and Human Services developed.

“Agencies are looking for opportunities to expand data matching to ensure that self-reported information can be verified as correct before a payment goes out the door,” an OMB spokeswoman said.

Medicare, which accounts for the largest amount of improper payments, experienced the sharpest drop among agencies because of improved processes to ensure that proper medical documentation supports payment claims, the report states. HHS is working with states to have them review the previous year’s payments to hospitals and physicians. By 2010, all states must participate.

HHS is working directly with hospitals and physicians and their associations to communicate the importance of providers responding with the medical documentation quickly, said Lisa Zone, deputy director of the program integrity group in HHS’ Office of Financial Management.

HHS has begun testing the use of electronic health records to speed the documentation of claims. It is conducting a trial project with Empire BlueCross/ BlueShield using electronic health records to select claims and measure errors in processing Medicare claims.

“We are looking at using electronic health records because the more easily providers can submit medical documentation to support their claims, the more likely the agency will get that documentation,” Zone said.

Agencies are assisting one another. The Chief Financial Officers Council is evaluating programs across government for shared risks, said Sheila Conley, HHS’ deputy CFO and leader of the CFO Council’s Improper Payments Transformation Team.

“While the specific requirements of eligibility may be different program by program, they have similarities, such as means-testing,” Conley said. “If you don’t get a handle on eligibility determination, then everything downstream from that is problematic.”

Many officials look to integrated eligibility processing systems as one of the most promising methods of strengthening internal controls and reducing improper payments. An agency can cross-check its information against Internal Revenue Service databases and others to verify the completeness and accuracy of applicants’ incomes.

Other useful approaches are under way. HHS’ Agency for Children and Families developed the Public Assistance Reporting Information System, which performs data matching across state lines. The system is a data verification process set up to prevent recipients from receiving benefits simultaneously in more than one state, Conley said.
Additional proposals to prevent improper paymentsPresident Bush’s fiscal 2008 budget contains new proposals to enforce program integrity and accurate payments. They include:
  • Providing financial incentives to states to aggressively pursue overpayments in the Unemployment Insurance program and improve the accuracy of data in the National Directory of New Hires. Estimated savings: $3.6 billion in  10 years.
  • Clarifying and simplifying eligibility rules for the Internal Revenue Services’ Earned Income Tax and Child Care Credit. Estimated savings: $6.5 billion in 10 years.
  • Implementing a process for the Education Department and IRS to verify reported income on student aid applications to ensure correct Pell grant award amounts. Estimated savings: $3 billion in 10 years.
  • Giving the Social Security Administration tools to conduct improved enforcement of statutory offset programs. Estimated savings: $3.6 billion in 10 years.
Source: Office of Management and Budget

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