Review of Fiscal Year 2001 Medicare Error Rate At Empire Medicare Services

EXECUTIVE SUMMARY:

The objective of this aspect of the review was to assess claims processing operations at Empire Medicare Services (Empire) that contributed to the preparation of the fiscal year (FY) 2001 combined financial statements for the Centers for Medicare & Medicaid Services (CMS).  A separate report (CIN A-02-01-01022) has been issued on the CFO review of accounting controls and financial activity at Empire.  Both audits evaluated the controls and operations at Empire for the second and third quarters of 2001, January 1, through March 31, 2001 and April 1, through June 30, 2001, respectively.  This review identified claims processing matters that require corrective actions in order to comply with applicable laws and regulations and prevent material misstatement of the CMS financial statements.  Specifically, our review of 1,661 sample claims identified 163 claims that did not comply with Medicare laws and regulations.  These errors were detected through medical review of supporting documentation and detailed testing by the Office of Inspector General (OIG) auditors.  Contributing significantly to the errors noted during the course of the review was the fact that provider records did not completely and accurately support amounts reimbursed by Medicare.