White House Takes Aim At Medicare And Medicaid Billing Errors

The Center for Public Integrity | By Fred Schulte

Published September 3, 2015 at 4:03 AM CDT

In a previously unreleased letter, Office of Management and Budget Director Shaun Donovan told the Dept. of Health and Human Services to devise an action plan for reducing wasteful Medicare and Medicaid payments.

White House budget director Shaun Donovan called for a "more aggressive strategy" to thwart improper government payments to doctors, hospitals and insurance companies in a previously undisclosed letter to Health and Human Services Secretary Sylvia Mathews Burwell earlier this year.

Government health care programs covering millions of Americans waste billions of tax dollars every year through these improper payments, Donovan said in the Feb. 26, 2015 letter.

"While some progress has been made on this front," Donovan wrote, "we believe a more aggressive strategy can be implemented to reduce the level of improper payments we are currently seeing."

Donovan, director of the Office of Management and Budget, went to say that "we must continue to explore new and innovative ways to address the problem and attack this challenge with every tool at our disposal ... ."

Donovan cited problems with traditional Medicare, which pays doctors and hospitals on a fee-for-service basis, as well as Medicare Advantage, its fast-growing, privately run alternative. The private insurance plans are paid a set fee each month for each patient using a billing tool called a risk score.

The White House budget chief also noted in his letter that payment errors rose by $3.1 billion last year in Medicaid, the government health care plan for lower income people, which is jointly funded with the states. In addition, he directed HHS to draw up a plan for getting payments right under the Affordable Care Act. The health law has added millions of people to insurance rolls and is slated to undergo payment-accuracy audits for the first time starting this fiscal year.

A copy of Donovan's letter, which also directs HHS to develop a "comprehensive corrective action plan," was released to the Center for Public Integrity earlier this week through a court order in a Freedom of Information Act lawsuit.

OMB didn't respond to emails and a phone message seeking comment. The Centers for Medicare and Medicaid Services, the branch of HHS which oversees the health programs, didn't immediately respond to a similar request.

The White House dubs payments as improper when they are "made to the wrong entity, in the wrong amount or for the wrong reason." When errors occur, Medicare often pays too much, records show.

A Center for Public Integrity investigation published last year found that officials made nearly $70 billion in improper payments to Medicare Advantage plans from 2008 through 2013, mostly in overbillings triggered by inflated risk scores.

The Center also examined Medicare fee-for-service billing data in a 2012 series that documented how thousands of doctors and other medical professionals steadily billed higher rates over the past decade despite little evidence they were doing more for patients.

In total, Medicare covers more than 50 million Americans, most of them elderly. While most seniors remain on the original plan, Medicare Advantage has proven popular in recent years and enrolled some 17 million people. Both Medicare options are among 13 federal programs singled out as "high-error" due to billing abuse. (Here's a list).

Medicare fee-for-service billing errors increased by 2.62 percent in fiscal 2014, costing $9.7 billion more than the previous year, according to Donovan.

Donovan cited progress in reducing Medicare Advantage payment errors, but said that the government estimate of $12.2 billion in these mistakes for fiscal year 2014 "remains a concern."

Donovan directed health officials to develop a "comprehensive corrective action plan" by April 30 that describes the problem's root causes and sketches out what it would take to clean things up. He also asked for a plan to improve the integrity of the ACA insurance programs, which he also described as a key priority, by May 31 of this year.

It isn't clear whether HHS has yet produced such documents.

The OMB chief suggested HHS work with its Office of Inspector General to help measure the agency's performance. Donald White, spokesman for the inspector general's office, said his unit has been meeting with CMS "to describe joint actions to address program integrity, performance and improper payments."

David A. Lipschutz, an attorney with the Center for Medicare Advocacy, a non-profit law group that helps seniors navigate Medicare, said health plans that make patients appear sicker than they actually are to get higher payments present a "clear example of improper payment that should be vigorously monitored."

But he cautioned that policy makers must be careful about turning the screws too tightly. He said some Medicare providers may "prematurely terminate care or deny services altogether out of fear of being audited and/or due to an overly restrictive interpretation of Medicare coverage guidelines."

This piece comes from the , a nonpartisan, nonprofit investigative news organization. To follow CPI's investigations into Medicare and Medicare Advantage waste, fraud and abuse, go here. Or follow the organization on Twitter: @Publici.