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Medicare: Excessive Payments for Medical Supplies Continue Despite Improvements

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Report Type Reports and Testimonies
Report Date Aug. 8, 1995
Report No. HEHS-95-171
Subject
Summary:

In fiscal year 1994 alone, Medicare was billed more than $6.8 billion for medical supplies. Congressional hearings and government studies have shown that Medicare has been extremely vulnerable to fraud and abuse in its payments for medial supplies, especially surgical dressings. In one case discussed in congressional testimony in 1994, Medicare paid more than $15,000 in claims for a month's supply of surgical dressings for a single patient, apparently without reviewing the reasonableness of the claims before payments. Until recently, medical suppliers had considerable freedom in choosing the Medicare contractors that would process and pay their claims. Some exploited this freedom by "shopping" for contractors with the weakest controls and highest payment rates. This report discusses the (1) circumstances allowing payment for unusually high surgical dressing claims and (2) adequacy of Medicare's internal controls to prevent paying such claims.

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