Summary: The Health Care Financing Administration (HCFA) paid its Medicare fee-for-service claims administration contractors $1.6 billion in fiscal year 1998 to serve as the program's first line of defense against inappropriate and fraudulent claims. Since 1993, eight contractors have been convicted of criminal offenses, have been fined, or have entered into civil settlements. Several of their employees engaged in improprieties and covered up poor performance to allow contractors to keep their Medicare business. Improper activities included improperly screening, processing, and paying claims; destroying claims; and failing to properly collect money providers owed Medicare. Contractors also falsified their performance results and tried to deceive HCFA and circumvent its performance reviews. HCFA often failed to detect improper activities because it gave contractors too much advance notice of its oversight visits and record reviews. Weaknesses in HCFA's current oversight might allow the same types of activities to continue undetected. GAO believes that HCFA plans to act on recommendations GAO made in July 1999 regarding its contractor management policy and plans, assessment, evaluation, and oversight. Although this will help improve its management and oversight of the contractors, it will not make Medicare less vulnerable to their abuses.
