MEDICARE FRAUD: GAO Says Contractors Themselves Fraudulent

      A GAO investigation found that six of the contractors employed as the "first line of defense" against Medicare fraud have been forced to pay $235 million "in civil and criminal penalties since 1993," the AP/Los Angeles Times reports. The inspector general's office of the HHS submitted two reports yesterday to a House Commerce subcommittee, revealing contractors' misuse of funds and attempts to conceal their actions. Rep. Thomas Bliley (R-VA), chair of the House Commerce Committee, labeled the findings "deeply disturbing," noting that the agency "routinely gave them advance warning about the dates of any reviews and about the records the agency wanted to review," thereby enabling fraud. But Chris Peacock of the HCFA said contractors' efforts have reduced the Medicare error rate by 50%, returning $1.2 billion to the Medicare trust fund. He also noted that Congress has failed to pass legislation that would "enable Medicare to impose stiffer penalties and make it easier to take work away from contractors who fail to protect Medicare funds." The six contractors were "charged with numerous fraudulent practices, including improperly paying claims, destroying or deleting backlogged claims, failing to recoup money owed Medicare and manufacturing documentation to support claims payments that should have been rejected." The GAO identified three of the 17 contractors as having "integrity problems," the remainder of whom were identified by whistle-blowers and federal investigators. George Grob, deputy inspector general at HHS, noted that "electronic security was so weak at 11 of the 12 contractors that 'we were able to penetrate the security systems and obtain access to sensitive Medicare data.'" While 21 contractors remain under investigation, nine cases have been resolved through settlements and two face criminal convictions (Margasak, 7/14).