Medicare Improperly Paid Providers Millions of Dollars for Entitlement-Terminated Beneficiaries Who Received Services During 2010 Through 2012

When the Centers for Medicare & Medicaid Services' (CMS) data systems indicated at the time that a claim was processed that a beneficiary's entitlement to Medicare had been terminated, CMS's controls were adequate to prevent payment for Medicare services. Specifically, CMS had a prepayment edit that flagged claims so that Medicare contractors could deny payments to providers for entitlement-terminated beneficiaries.

When CMS's data systems did not indicate until after a claim had been processed that a beneficiary's entitlement to Medicare had been terminated, CMS's controls were not adequate to detect and recoup the improper payment. Because CMS did not always receive information relating to entitlement-terminated beneficiaries in a timely manner, Medicare payments totaling $18.4 million were made to providers for services rendered to 7,426 such beneficiaries during calendar years 2010 through 2012. CMS did not have policies and procedures to review information for these beneficiaries on a postpayment basis that would have detected improper payments that the prepayment edit could not prevent. Consequently, CMS did not notify the Medicare contractors to recoup any of the $18.4 million in improper payments.

We recommended CMS: (1) ensure that Medicare contractors recoup the $18.4 million in improper payments; (2) implement policies and procedures to detect and recoup improper payments made for Medicare services rendered to entitlement-terminated beneficiaries in cases when entitlement termination information is received on previously paid Medicare claims; and (3) identify improper payments made on behalf of entitlement-terminated beneficiaries after our audit period but before implementation of policies and procedures and ensure that Medicare contractors recoup those improper payments. CMS did not concur with our recommendations.