Review of Medicare Payments for Services Provided to Incarcerated Beneficiaries

EXECUTIVE SUMMARY:

Generally, Medicare payments cannot be made for medical services to Medicare beneficiaries who are incarcerated. This final report points out, however, that the Medicare program is extremely vulnerable to such payments because the Health Care Financing Administration (HCFA) does not identify Medicare beneficiaries who are in prison, making it virtually impossible for Medicare contractors to prevent improper payments. To date we have identified $32 million in potentially improper Medicare fee-for-service payments for calendar years 1997 through 1999 by Medicare contractors to providers on behalf of 7,438 incarcerated beneficiaries. To minimize the risk of improper payments we recommended that HCFA take procedural and systematic measures to obtain data from the Social Security Administration (SSA) which identifies incarcerated SSA beneficiaries, and design and implement system controls in Medicare's enrollment data base and common working file to alert contractors when a Medicare claim is submitted for services to an incarcerated beneficiary. Officials of the Health Care Financing Administration agreed with the intent of our recommendations, but hesitate to fully commit to implementing systems controls at this time because they believe further study is necessary to determine the most appropriate source of incarcerated beneficiary data for their use.