WASHINGTON — Medicare as managed by the Centers for Medicare and Medicaid Services is on a "fiscally unsustainable" path, making it a "high-risk" program, a top official with the General Accountability Office told members of a House subcommittee last month.
"We have designated Medicare as a high-risk program because its complexity and susceptibility to improper payments, combined with its size, have led to serious management challenges," Kathleen King, director of health care for the GAO, told members of the Committee on Energy and Commerce Subcommittee on Oversight and Investigations March 2.
While CMS has made some inroads in cutting improper payments, those actions have not been significant enough to stabilize the program, according to King. "CMS needs a plan with clear measures and benchmarks for reducing Medicare's risk for improper payments, inefficient payment methods and issues in program management and patient care and safety," she told the subcommittee members.
King said that Medicare covered 47 million beneficiaries in 2010 and had estimated outlays of $509 billion. CMS has estimated $48 billion in improper payments, which did not include those in its Part D prescription drug benefit. Those have not yet been estimated, King said.
"This fiscal pressure heightens the need for CMS to reform and refine Medicare's payment methods to achieve efficiency and savings, and to improve its management, program integrity and oversight of patient care and safety," King said.
One of the GAO's suggestions toward that target: cut oxygen reimbursement further, which warranted a separate report released in February.
"Our examination of payment rates for home oxygen also found that although these rates have been reduced or limited several times, further savings are possible," the health care director said. She repeated the GAO's findings that if Medicare adopted payment rates of the lowest-paying private insurer studied in the report, it could have saved about $670 million of the estimated $2.15 billion it spent on home oxygen in 2009.
Also, she told the subcommittee, Medicare could save money by not automatically paying for oxygen refills.
"We … recommended that CMS remove payment for portable oxygen refills from payment for stationary equipment, and thus only pay for refills for the equipment types that require them."
King noted that CMS had implemented its DMEPOS competitive bidding program and its transfer of fee-for-service claims workload to Medicare Administrative Contractors after some delays — namely, halting the initial Round 1 in 2008 — but said the GAO still had concerns.
"The GAO found pervasive internal control deficiencies in CMS' management of contracts that increased the risk of proper payments," King said. "While the agency has taken actions to address some GAO recommendations for improving internal controls, it has not completely addressed recommendations related to clarifying the roles and responsibilities for implementing certain contractor oversight responsibilities, clearing a backlog of contracts that are overdue for closeout and finishing its investigation of over $70 million in payments GAO questioned in 2007."
King lauded CMS for already taking some actions, such as implementing the Recovery Audit Contractor program to analyze paid claims and identify overpayments for recoupment. But the agency also needs to have corrective action processes in place, she said.
"CMS did not develop an adequate process to address the vulnerabilities to improper payments identified by the RACs and we recommended that it do so," she said, "Without a corrective action process that uses information on vulnerabilities identified by the agency, its contractors and others, CMS will not be able to effectively address its challenges related to improper payments."