According to a U.S. Department of Health and Human Services inspector general’s report, which was released on Monday, federal officials are struggling to monitor the effectiveness of fraud detection programs aimed at preventing what amounts to roughly $60 billion per year in fraudulent submissions.

Medicare pay contractors tens of millions of dollars every year to prevent fraudulent claims, but according to the report, contractors often use inaccurate and inconsistent data, making this task more difficult.

Contractors attempt to detect fraudulent claims by looking for sudden increases in certain types of data, including the type of service provided, how much of the service was provided and how much the patient was charged for those services. But the report found that contractors do not use uniform reporting procedures and sometimes provide inaccurate information regarding their performance.

For instance, one contractor reportedly referred only two cases of potential fraud to Medicare officials between 2005 and 2008, while another didn’t refer any during that time period. According to investigators, part of the reason may be that contractors are not paid any contingency fees for such reports. Many critics of the current system agree that the lack of financial incentives genuinely linked to protecting public funds is a deficiency.

Contractors have reported that they have difficulty obtaining data needed to do their job and that access to real-time Medicare claims data is important.

The problem areas identified in the inspector general’s report are apparently not new, and have been addressed in the past. The current fraud contractor system was actually designed to deal with those problems better.

In our next post, we’ll continue looking at this story.

Source: Washington Post, “Report shows federal health officials struggle to monitor myriad of Medicare fraud contractors,” November 13, 2011.