Summary: Criminal and civil actions have been taken against at least six Medicare contractors since 1993. Three of the contractors or their employees--BCBS of Illinois, Blue Shield of California, and Pennsylvania Blue Shield--pled guilty to criminal charges and agreed to pay fines and penalties. Investigations of three other contractors--BCBS of Massachusetts, BCBS of Michigan, and BCBS of Florida--resulted in civil settlements only. More than $261 million was assessed against these six contractors. Contractors improperly screened, processed, and paid claims, resulting in additional costs to Medicare; improperly destroyed or deleted claims; failed to recoup overpayments to Medicare providers within the prescribed time and to collect required interest payments; falsified documentation and reports to the Health Care Financing Administration (HCFA) about their performance; and altered or hid files that involved claims that had been incorrectly processed and paid and altered contractor audits of the Medicare providers before HCFA's reviews. The persons GAO spoke with said that these deceptions and improprieties became a way of doing business and went undetected for long periods because HCFA reviews of Medicare contractors relied on information supplied by the contractors. HCFA also gave contractors advanced notices of the files it intended to review, giving contractors ample time to "correct," delete, or hide claim-related documents or redo provider audit and related workpapers before HCFA's review. This system also resulted in contractors deviating from their normal operating procedures during HCFA evaluations in order to deceive HCFA about their accuracy and efficiency in claims processing and customer service. As a result, criminal and other improper activities were discovered only after whistleblowers filed complaints under the False Claims Act.
