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Report (OEI-03-10-00310)

02-24-2012
Medicare Advantage Organizations' Identification of Potential Fraud and Abuse

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Summary

WHY WE DID THIS STUDY

The Medicare Advantage (MA) program has become a significant part of Medicare in both cost and enrollment. MA organizations offer plans under Medicare Part C that cover services a beneficiary would receive under Medicare Parts A and B; many plans also offer prescription drug coverage under Part D. MA organizations' efforts to identify and address potential fraud and abuse are crucial to protecting the integrity of the MA program. Prior to this report, no study had examined potential fraud and abuse identified by MA organizations. CMS requires MA organizations to have compliance plans that include measures to detect, correct, and prevent fraud, waste, and abuse. However, CMS does not require MA organizations to report the results of their efforts to identify and address potential fraud and abuse incidents.

HOW WE DID THIS STUDY

We collected and reviewed data from 170 of 188 MA organizations that offered plans in 2009. These MA organizations represented 4,547 plans nationwide and accounted for 94 percent of all Medicare beneficiaries enrolled in MA plans in 2009. We collected and summarized the numbers of potential fraud and abuse incidents, inquiries, corrective actions, and referrals related to these plans in 2009. We also categorized the types of potential fraud and abuse incidents and corrective actions that MA organizations reported.

WHAT WE FOUND

Nineteen percent of MA organizations did not identify any potential fraud and abuse incidents related to their Part C health benefits and Part D drug benefits in 2009. MA organizations that identified potential fraud and abuse in 2009 reported between 1 incident and 1.1 million incidents. Three MA organizations identified 95 percent of the total 1.4 million reported incidents. Differences in the way organizations defined and detected potential fraud and abuse may account for some of the variability in the number of incidents they identified. While CMS requires MA organizations to initiate inquiries and corrective actions where appropriate, not all MA organizations took such steps in response to incidents they identified. Overall, MA organizations sent 2,656 referrals of potential fraud and abuse incidents to other entities for further investigation in 2009.

WHAT WE RECOMMEND

Our findings indicate that MA organizations lack a common understanding of key fraud and abuse program terms and raise questions about whether all MA organizations are implementing their programs to detect and address potential fraud and abuse effectively. Therefore, we recommend that CMS: (1) ensure that MA organizations are implementing programs to detect, correct, and prevent fraud, waste, and abuse, as required in their compliance plans, so that all potential Part C and Part D fraud and abuse incidents are identified; (2) review MA organizations to determine why certain organizations reported especially high or low volumes of potential Part C and Part D fraud and abuse incidents and inquiries; (3) develop specific guidance for MA organizations on defining potential Part C and Part D fraud and abuse incidents and inquiries; (4) require MA organizations to report to CMS aggregate data related to their Part C and Part D antifraud, waste, and abuse activities; (5) ensure that all MA organizations are responding appropriately to potential fraud and abuse incidents; and (6) require MA organizations to refer potential fraud and abuse incidents that may warrant further investigation to CMS or other appropriate entities. CMS concurred with our first, third, and fifth recommendations. CMS did not concur or concurred in part with our second, fourth, and sixth recommendations.

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