Summary: Medicare's vulnerability to provider exploitation of its billing system stems from a combination of factors: (1) higher-than-market rates for some services, (2) inadequate checks for detecting fraud and abuse, (3) superficial criteria for confirming the authenticity of providers billing the program, and (4) weak enforcement efforts. Various health care management techniques help private payers avoid these problems, but Medicare generally does not use these techniques. The program's pricing methods and controls over utilization have not kept pace with changes in health care financing and delivery. To some extent, the predicament inherent in public programs--the uncertain line between adequate managerial control and excessive government intervention--helps explains the dissimilarity in the ways in which Medicare and private health insurers run their respective "plans." GAO believes that a viable strategy for remedying the program's weaknesses consists of adapting the health care management approach of private payers to Medicare's public payer role. This would entail (1) more competitively developed payment rates, (2) beefed-up fraud and abuse detection that uses modern information systems, and (3) more rigorous criteria for granting authorization to bill the program.
