FWA & Improper Payments in the CMS

Fraud Waste and AbuseIn June 2011, the GAO released the results of its year-long audit of the Centers for Medicare and Medicaid (CMS), a branch of the Health and Human Services (HHS). The majority of the audit focused on the CMS’ progression (or lack thereof) in implementing the latest rendition of its centralized database management system, the Integrated Data Repository (IDR). Conceptually, the IDR makes perfect sense: the establishment of a centralized data warehouse for Medicare and Medicaid claims and transactions should make it easier to detect fraud, waste, and abuse. Additionally, the HHS is in the process of implementing sophisticated software that detects and prevents fraudulent claims before the transactions occur, known as fraud prevent software.

As seems to be the case with virtually every major agency represented in the GAO’s annual reports, the HHS is far behind their goal of building the centralized data warehouse, and even further behind in implementing adequate controls to analyze their data. The lack of foresight and planning that appear to have gone into the HHS’ initiatives would be cause for employment termination at many private businesses.

Major roadblocks impeding the progress of these initiatives include: the existing, non-centralized structure of disparate and relatively specialized data warehouses and their data analysis tools are difficult to integrate while retaining data accuracy, the data analysis programs are being underutilized, the planning of initiatives did not incorporate possible risks that would slow the execution of the initiatives, etc. Our qualm is that these issues fall into one of two categories: inadequate planning, or gross underestimations of the time from project start to completion.

With fiscal year 2010 outlays estimated to be $509 billion for Medicare and $408 billion (a combination of state and federal funds), and with the HHS accountable for roughly an estimated $70 billion in FWA, we believe that stronger action must be taken to ensure HHS meets its planned completion of their various projects.

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