Summary: Medicare's soaring expenditures underscore the need for the government to fund and manage the program judiciously. Among the many problems plaguing Medicare management, two stand out. First, the Health Care Financing Administration (HCFA), the agency that oversees Medicare, does not have an effective, national strategy to protect the program from making erroneous or wasteful payments. Second, budget constraints have led to the underfunding of the types of payment controls that prevent or detect losses due to waste, fraud, and abuse. For example, Medicare failed to adequately investigate complaints of fraud and abuse telephoned in by Medicare beneficiaries, little was done initially to claim more than $250 million in overpayments owed by hospitals, Medicare paid an estimated $2 billion in claims that may have been the responsibility of other health insurers, and loose controls over who can bill Medicare have allowed profiteers to exploit the program through fraud and abuse. GAO believes that Congress should continue to pursue modifying budget procedures so that funding for safeguards could be increased without having to cut spending elsewhere. In addition, GAO believes that HCFA needs to develop a national strategy to manage the Medicare safeguard program. This would entail assessing the appropriateness and effectiveness of individual contractors' controls and developing ways to ensure that controls that have proven effective are implemented nationwide.
