Summary: With an investment of only $20 million in off-the-shelf commercial software, Medicare could save nearly $4 billion over five years by detecting fraudulent claims by physicians--primarily manipulation of billing codes. On the basis of a test in which four commercial firms reprocessed samples of more than 20,000 paid Medicare claims, GAO estimates that the software could have saved $603 million in 1993 and $640 million in 1994. In addition, GAO estimates that because beneficiaries are responsible for about 22 percent of the payment amounts--mainly in the form of deductibles and copayments--Medicare could have saved an additional $134 million in 1993 and $142 million in 1994. The test results indicate that only a small proportion of providers are responsible for most of the abuses: less than 10 percent of providers in the sample had miscoded claims. GAO summarized this report in testimony before Congress; see: Medicare Claims Billing Abuse: Commercial Software Could Save Hundreds of Millions Annually, by Frank W. Reilly, Director of Information Resources Management in the Health, Education, and Human Services, Education, and Related Agencies, Senate Committee on Appropriations. GAO/T-AIMD-95-133, May 5, 1995 (8 pages).
