NCPA - National Center for Policy Analysis

Additional Actions Needed to Improve Eligibility Verification of Providers and Suppliers

July 29, 2015

Due to Medicare's size, complexity and susceptibility to mismanagement, the Government Accountability Office (GAO) states that Medicare is a high-risk program for improper payments in testimony to Congress.

To bill for services provided to Medicare, the Center for Medicare and Medicaid Services (CMS) requires prospective providers and suppliers to be listed in a centralized database that includes their enrollment information. CMS uses enrollment-screening procedures to prevent ineligible or fraudulent providers into the database.

CMS will determine whether addresses listed are vacant or invalid using the United States Postal Service address-management tool, Google Maps and conducting physical site visits.

The GAO found weaknesses in two of four enrollment-screening procedures. Procedures used to verify provider practice locations and those used to verify licensure status may have resulted in improper payments to thousands of ineligible providers and suppliers.

Thousands of questionable locations were in the database. Out of 105,234, 22 percent were estimated to be ineligible based on a random sample. Around 3,200 locations are estimated to be vacant. One provider was using a mailbox-rental store and received $592,000 from Medicare.

To help improve CMS's enrollment screening the GAO made two recommendations:

  • Modify the software to include specific flags to identify questionable location addresses in the database used by CMS.
  • Revise CMS guidance for verifying practice locations to conduct research beyond phone calls.

All physicians applying to participate in Medicare must hold an active license in the state they are practicing and self-report adverse action from a state medical board, including crimes against persons, financial crimes and other health-care felonies. Unreported actions were not always identified and 47 physicians with adverse actions have been paid $2.6 million by Medicare.

There were 38 deceased providers and suppliers that were paid $80,700 by Medicare after their date of death.

Seto J. Bagdoyan, "Additional Actions Needed to Improve Eligibility Verification of Providers and Suppliers," Government Accountability Office, July 22, 2015.

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