GAO

United States General Accounting Office

Report to Congressional Requesters

September 2000 MEDICARE 

IMPROPER 

PAYMENTS

While Enhancements 

Hold Promise for 

Measuring Potential 

Fraud and Abuse, 

Challenges Remain

GAO/AIMD/OSI-00-281

Page 1 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Contents

Letter 3

Appendixes Appendix I: Objectives, Scope, and Methodology 38

Appendix II: Definitions and Examples of Common Types of 

Potential Fraud and Abuse Referrals 40

Appendix III: Comments From the Health Care Financing 

Administration 43

Appendix IV: GAO Contacts and Staff Acknowledgments 50

Tables Table 1: Techniques for Detecting Potential Fraud and Abuse 16

Table 2: Comparison of HCFA Efforts to Measure Medicare Improper 

Payments 24

Table 3: Methodologies for Estimating Medicare Improper Payments 28

Figures Figure 1: Fraud Investigation Database Statistics for Cases Referred, 

1993 Through April 2000 14

Figure 2: Sources of Common Fraud and Abuse Referrals, 1993 

Through April 2000 18
Contents

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Abbreviations

BBA Balanced Budget Act of 1997

CERT Comprehensive Error Rate Testing

CMN Certificate of Medical Necessity

CPT Current Procedural Terminology

DME Durable Medical Equipment

DOJ Department of Justice

EDP Electronic Data Processing

FBI Federal Bureau of Investigation

EOMB Explanation of Medical Benefits

FID Fraud Investigation Database

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HIPAA Health Insurance Portability and Accountability Act

IDPA Illinois Department of Public Aid

MFRP Model Fraud Rate Project

MSP Medicare as Secondary Payer

OI Office of Investigations

OIG Office of Inspector General

PEPP Payment Error Prevention Program

PPS Prospective Payment System

PRO Peer Review Organizations

PSC Program Safeguard Contractor

SSA Social Security Administration
Page 3 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

United States General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-285653 Letr

September 15, 2000

The Honorable John R. Kasich

Chairman

Committee on the Budget

House of Representatives

The Honorable Saxby Chambliss

Chairman

Task Force on Health

Committee on the Budget

House of Representatives

This report responds to your requests that we review the Health Care 

Financing Administration’s (HCFA) efforts to enhance the measurement of 

improper payments in the Medicare fee-for-service program. On July 12, 

2000, we testified1

 before the Committee’s Task Force on Health in which 

we described HCFA’s efforts and provided recommendations for improving 

the usefulness of future improper payment measurements. As discussed in 

our recent report on improper payments across the federal government,2

causes of improper payments—that is, payments made for unauthorized 

purposes or excessive amounts—range from inadvertent errors to outright 

fraud and abuse. In its report on the review of fiscal year 1999 Medicare 

fee-for-service claims, the Department of Health and Human Services 

(HHS) Office of Inspector General (OIG) classified improper payments 

they identified into one of four types of errors: (1) insufficient or no 

documentation, (2) lack of medical necessity, (3) incorrect coding, and 

(4) noncovered or other errors. 

As steward for the Medicare program, the Health Care Financing 

Administration (HCFA), an operating division within HHS, is accountable 

for how it spends Medicare dollars and is responsible for safeguarding 

against improper payments. Identifying the extent of improper payments 

and their causes, including those attributable to potential fraud and abuse, 

1

Medicare Improper Payments: Challenges for Measuring Potential Fraud and Abuse 

Remain Despite Planned Enhancements (GAO/T-AIMD/OSI-00-251, July 12, 2000).

2

Financial Management: Increased Attention Needed to Prevent Billions in Improper 

Payments (GAO/AIMD-00-10, October 29, 1999).
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is the first step toward implementing the most cost-effective ways to 

reduce losses. Recognizing that improper payments are a drain on the 

program’s financial resources— resources intended to provide essential 

health care services to millions of elderly and disabled Americans, HCFA 

has designated ensuring the integrity of the Medicare program a top 

priority. Moreover, in its priority management objective of verifying that the 

right person is getting the right benefit, the Office of Management and 

Budget recognizes that measuring the extent of improper payments and 

addressing their underlying causes are essential elements for ensuring that 

program payments are made correctly.

In conjunction with its audit of HCFA’s annual financial statements since 

1996, the HHS OIG has conducted a nationwide study to estimate Medicare 

fee-for-service improper payments.3

 The statistically projectable results 

cited in the OIG’s study have provided valuable insights regarding the 

extent of Medicare vulnerabilities. Results from the most recent study 

indicate that, of the $169.5 billion in fiscal year 1999 Medicare fee-forservice claim payments, an estimated $13.5 billion, or about 8 percent, was 

paid improperly. The magnitude of these estimated improper payments has 

led to considerable concern regarding HCFA’s efforts to protect Medicare 

dollars as well as the need to obtain a better understanding of the nature 

and extent of the problems.

To demonstrate a commitment to improving payment safeguards, in 

January 2000, HCFA reaffirmed its goal of reducing the Medicare fee-forservice payment errors to 5 percent or less by the year 2002, about a 3 

percent or $5 billion reduction from fiscal year 1999 levels. However, 

without definitive information on the extent of improper payments, 

including those attributable to potential fraud and abuse,4

 HCFA’s ability to 

fully measure the success of its efforts remains limited. Accomplishing this 

3

The Chief Financial Officers Act of 1990, as expanded by the Government Management 

Reform Act of 1994, requires 24 major departments and agencies, including HHS, to prepare 

and have audited agencywide financial statements. Major “components” of these 24 

agencies, such as HCFA, may also be required to have audited financial statements.

4

Because the ultimate determination of fraud and abuse involves legal proceedings that 

often take several years to resolve, using information about the causes of improper 

payments as soon as practical to develop ways to address root causes would help to 

improve the effectiveness of management efforts to increase accountability over federal 

assets. Attributing the cause of improper payments to potential fraud and abuse recognizes 

this limitation but still provides program managers and others meaningful, timely 

information to develop the most effective solutions.
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goal will depend, in part, on HCFA’s ability to further develop improper 

payment measures to enable it to more effectively focus specific corrective 

actions. In response to this need, HCFA has begun three projects intended 

to enhance its understanding of improper payments and help it develop 

targeted corrective actions.

Given the importance of Medicare to millions of beneficiaries and concerns 

about the financial health of the program, you asked us to identify 

structural problems that exist in the Medicare claims processing system 

which contribute to inherent vulnerabilities resulting in erroneous 

Medicare payments. Further, you asked us to focus our review on (1) what 

HCFA proposals have been designed or initiated to measure Medicare 

improper payments and (2) the status of these proposals and initiatives and 

how will they enhance HCFA’s ability to comprehensively measure 

improper Medicare payments and the frequency of kickbacks, false claims 

(for example, billing for services not provided), and other inappropriate 

provider practices.

Results in Brief Since 1990, we have designated Medicare as a high-risk program,5

recognizing that the size of the program, its rapid growth, and its 

administrative structure continue to present vulnerabilities that challenge 

HCFA’s ability to safeguard against improper payments, including those 

attributable to fraud and abuse. Due to the broad nature of health care 

fraud and abuse, a variety of detection methods and techniques—such as 

contacting beneficiaries and providers and performing medical records 

reviews, data analyses, and third party verification procedures—are being 

utilized to uncover suspected health care fraud and abuse. Efforts to 

measure the extent of improper payments, and ultimately to stem the flow 

of Medicare losses, depend upon the use of an effective combination of 

these techniques.

The OIG’s study to measure the extent of Medicare fee-for-service improper 

payments was a major undertaking and, as we recently reported,6

 the 

development and implementation of the methodology (referred to as 

“current methodology”) it used as the basis for its estimates represent 

significant steps toward quantifying the magnitude of this problem. It is 

5

High-Risk Series: An Update (GAO/HR-99-1, January 1999).

6

Efforts to Measure Medicare Fraud (GAO/AIMD-00-69R, February 4, 2000).
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important to note, however, that this methodology was not intended to and 

would not detect all potentially fraudulent schemes perpetrated against the 

Medicare program. For example, because the methodology generally 

assumes that medical records received for review are valid and thus 

represent actual services provided, improper payments supported by 

falsified documentation may go undetected. Rather, it was designed to 

provide users of HCFA’s financial statements with an initial estimate of 

Medicare fee-for-service claims that may have been paid in error and has 

served as a performance measure for the program. However, given the size 

and complexity of the Medicare program, the usefulness of this estimate as 

a tool for targeting specific corrective actions is limited. 

HCFA has initiated three projects designed to enhance its ability to 

measure the extent of Medicare fee-for-service improper payments. Two of 

these projects are designed to improve the precision of future improper 

payment estimates and help develop corrective actions to reduce losses; 

however, like the current methodology, they are not specifically designed 

to identify and measure the extent of improper payments attributable to 

potential fraud and abuse. The third project, while still in the concept 

phase, will test the viability of using a variety of investigative techniques to 

develop a potential fraud and abuse rate. Expanding the scope of these 

projects to include additional potential fraud and abuse identification 

techniques would enhance HCFA’s ability to more comprehensively 

measure the nature and extent of Medicare fee-for-service improper 

payments and the usefulness of these efforts for developing solutions.

Determining the most appropriate combination of improper payment 

identification techniques to incorporate into measurement efforts requires 

careful evaluation. Some techniques may be challenging to implement, 

such as contacting beneficiaries due to difficulties in locating them. 

Further, efforts to measure improper payments may seem expensive, and 

maximizing the value of administrative resources used to accomplish this 

task will depend on HCFA’s ability to apply the most effective detection 

techniques most efficiently. Given the size and vulnerability of the Medicare 

program, however, these represent prudent, needed investments toward 

creating more sophisticated controls to help ensure program integrity.

HCFA has been a leader among other federal agencies in its efforts to 

measure the extent of improper payments and we support the efforts it has 

taken thus far. Further, considering the challenges associated with 

identifying and measuring improper payments, the HCFA projects 

discussed in this report represent important steps toward advancing the 
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usefulness of its improper payment measurement efforts. However, we 

believe HCFA’s efforts to measure Medicare fee-for-service improper 

payments can be further enhanced with the use of additional fraud 

detection techniques. Accordingly, we are making recommendations 

designed to assist HCFA in its efforts to further enhance its ability to 

measure the extent of losses emanating from Medicare fee-for-service 

payments. In comments on a draft of this report, HCFA generally agreed 

with our conclusions and recommendations. Further, HCFA also discussed 

a number of efforts underway to promote program integrity along with 

challenges HCFA faces in implementing additional fraud detection 

techniques. 

Scope and 

Methodology

To fulfill our objectives, we analyzed the current methodology and HCFA’s 

three planned projects related to improper payment measurement; related 

documents discussing the methodologies, designs, planned steps, and time 

frames for implementation of these initiatives; our reports; and relevant 

HHS OIG reports. We also interviewed HCFA officials and other recognized 

experts in health care and fraud detection in academia, federal and state 

government, and the private sector on the various types of improper 

payments and the techniques used to identify and measure them. We 

requested comments on a draft of this report from the HCFA Administrator 

or her designee. We have incorporated any changes as appropriate and 

have reprinted HCFA’s response in appendix III. We performed our work 

from November 1999 through June 2000 in accordance with generally 

accepted government auditing standards. See appendix I for a more 

detailed discussion of our objectives, scope, and methodology.

Background The Medicare program provides health care coverage to people 65 and over 

and to some disabled persons.7

 With total benefit payments of $201 billion 

in fiscal year 1999, Medicare enrollment has doubled since 1967 to nearly 

40 million beneficiaries today. Beneficiaries can elect to receive Medicare 

benefits through the program’s fee-for-service or managed care options. 

With benefit payments of $169.5 billion in fiscal year 1999 and about 85 

percent of participating beneficiaries, the fee-for-service option represents 

7

The 1965 legislation establishing Medicare originally covered people 65 and over. 

Legislation in 1972 broadened the program to cover certain disabled people and those with 

permanent kidney failure.
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the most significant part of the program. The managed care option 

accounts for the remaining $37 billion and 15 percent of participating 

beneficiaries. The program comprises two components: Hospital Insurance 

or Medicare Part A covers hospital, skilled nursing facility, home health, 

and hospice care; Supplementary Medical Insurance, or Part B, covers 

physician, outpatient hospital, home health, laboratory tests, durable 

medical equipment (DME), designated therapy services, and some other 

services not covered by Part A.

HCFA has primary responsibility for administering the Medicare program. 

HCFA’s administration of the Medicare fee-for-service program is 

decentralized. Each year, about 1 million providers enrolled in the program 

submit about 900 million fee-for-service claims to over 50 Medicare 

contractors for payment. In addition to processing these claims, 

contractors help administer the Medicare program by managing the billions 

of dollars used to pay those claims, protecting Medicare from fraud and 

abuse, and providing education and services to beneficiaries and providers. 

Ensuring the integrity of the Medicare fee-for-service program is a 

significant challenge for HCFA and its Medicare claims administration and 

program safeguard contractors8

 and peer review organizations (PROs).9

They are HCFA’s front line defense against inappropriate payments, 

including fraud and abuse, and should ensure that the right amount is paid 

to a legitimate provider for covered and necessary services provided to 

eligible beneficiaries. Except for inpatient hospital claims, which are 

reviewed by the PROs, Medicare contractors perform both automated and 

manual prepayment and postpayment medical reviews of Medicare claims. 

Various types of pre- and postpayment reviews are available to contractors 

to assess whether claims are for covered services that are medically 

necessary and reasonable. These include automated reviews of submitted 

claims based on computerized edits within contractors’ claims processing 

systems, routine manual reviews of claims submitted, and more complex 

8

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 authorized HCFA 

to contract with entities for reviews of providers of Medicare services. Contracts with these 

entities, referred to as program safeguard contractors, are for the performance of medical 

review, utilization review, fraud review, cost report audit, and other program integrity 

support efforts.

9

PROs are independent physician organizations that review medical services provided to 

Medicare beneficiaries in settings such as acute care and specialty hospitals and ambulatory 

surgical centers for unreasonable, unnecessary, and inappropriate care.
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manual reviews of submitted claims based on medical records obtained 

from providers.

In addition to performing medical reviews of provider claims, Medicare 

contractors employ fraud units specifically responsible for preventing, 

detecting, and deterring Medicare fraud and abuse. They accomplish these 

tasks by identifying program vulnerabilities; proactively identifying 

incidents of fraud that exist within their service areas; and taking 

appropriate actions on cases identified, including making referrals to law 

enforcement officials. Also, fraud units develop and determine the factual 

basis of allegations of fraud made by beneficiaries, providers, and other 

sources. 

Recent enactment of two legislative reforms—The Health Insurance 

Portability and Accountability Act in 1996 (HIPAA), P.L. 104-191, and The 

Balanced Budget Act of 1997 (BBA), P.L. 105-33—have helped HCFA’s 

efforts to protect against improper payments by providing opportunities to 

enhance Medicare’s antifraud and abuse activities. Specifically, in addition 

to authorizing program safeguard activities to be performed by program 

safeguard contractors, HIPAA established the Medicare Integrity Program, 

which provides HCFA with assured levels of funding for Medicare program 

safeguard activities. The five main types of program safeguard activities 

include (1) medical reviews of claims, (2) determinations of whether 

Medicare or other insurance sources have primary responsibility for 

payment—referred to as Medicare as Secondary Payer (MSP), (3) audits of 

cost reports, (4) identification and investigation of potential fraud cases, 

and (5) provider education and training. Indeed, as we reported in August 

1999,10 total program safeguard expenditures have increased for most of 

these activities since 1995, with medical review experiencing the largest 

overall increase. In that report, we noted that HCFA is emphasizing 

prepayment claims reviews to promote correct claims payment, thereby 

helping to avoid the difficulties of the “pay and chase” activities associated 

with postpayment medical reviews. Similarly, BBA provides HCFA with 

additional opportunities to enhance program integrity by providing HCFA 

more authority to keep dishonest health care providers out of the Medicare 

program, exclude providers who are found to be abusing the program, and 

impose monetary penalties on providers as necessary.

10Medicare: Program Safeguard Activities Expand, but Results Difficult to Measure

(GAO/HEHS-99-165, August 4, 1999).
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HCFA’s commitment to identifying fraud and abuse is articulated in its 

Strategic Plan, which calls for aggressive action to minimize waste, fraud, 

and abuse in the administration of its programs, including Medicare. HCFA 

issued its Comprehensive Plan for Program Integrity in March 1999, which 

is composed of 10 initiatives to focus efforts in two broad areas it considers 

to have significant opportunities for improvement—improving HCFA 

program integrity management and addressing service-specific 

vulnerabilities. These and other initiatives are designed to help HCFA meet 

one of its program integrity goals included in its Annual Performance 

Plan—to reduce the error rate for all Medicare fee-for-service payments to 

7 percent in fiscal year 2000 and 5 percent in fiscal year 2002. 

Medicare Is Vulnerable 

to Fraud and Abuse 

Since 1990, we have designated the Medicare program as a high-risk area, 

and it continues to be one today. Many of Medicare’s vulnerabilities stem 

from the overall size of the program, the broad range of services it 

provides, and its rapid growth as well as other factors—such as previously 

reported weaknesses associated with HCFA’s decentralized administrative 

structure, highly automated claims processing operations, and the 

voluminous, changing billing codes used by providers to claim 

reimbursement—that result in an increased risk of making inappropriate 

payments. These vulnerabilities make the largest health care program in 

the nation a perpetually attractive target for exploitation. Wrongdoers 

continue to find ways to dodge program safeguards. The dynamic nature of 

fraud and abuse requires constant vigilance and the development of 

increasingly sophisticated measures to detect fraudulent schemes and 

protect the program. 

Program Size, Broad Range 

of Services, and Rapid 

Growth Create Inherent 

Vulnerabilities for Improper 

Payments

Annually, about 1 million providers submit about 900 million fee-for-service 

claims to Medicare contractors for payment. These claims cover a vast 

array of services or supplies provided to millions of eligible beneficiaries, 

including inpatient and outpatient hospital, skilled nursing facility, home 

health, hospice, physician, laboratory, and other services and supplies; 

durable medical equipment; and designated therapy. Obviously, performing 

extensive reviews of all claims prior to payment to determine their 

appropriateness would be cost prohibitive and inefficient. Therefore, HCFA 

and its Medicare contractors rely on a combination of computerized edits 

and pre- and postpayment reviews of selected claims to target their efforts 

for detecting those that should not be paid. 
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However, contractors’ efforts to prevent and detect improper payments are 

challenged due to the sheer volume of claims they are required to process 

and the need to pay providers promptly. Recognizing the difficulties 

associated with the “pay and chase” aspects of recovering inappropriate 

payments identified through postpayment reviews, HCFA is moving toward 

more extensive use of prepayment reviews. Yet, despite the increase in 

prepayment reviews performed, claims that should not be paid continue to 

be paid incorrectly. Postpayment utilization and medical record reviews 

may catch some errors but not all—creating opportunities for 

unscrupulous providers and suppliers to defraud the program. For 

example, while performing the current methodology for fiscal year 1998 

claims, OIG auditors identified numerous errors resulting in the improper 

payment of a complex claim submitted by a provider who, according to 

OIG auditors, had a long history of questionable billing practices. Although 

the provider’s claims had been subjected to extensive pre- and 

postpayment reviews, the claim paid in error was submitted during a 

period when focused prepayment reviews of all claims were not in effect. 

Further, according to OIG auditors, the improper payment occurred as a 

result of the provider altering a previously denied claim in such a manner 

that allowed it to pass through the contractor’s automated prepayment 

edits without being rejected or flagged for manual review.

Since the Medicare program is the fastest growing sector of federal budget 

outlays, these challenges are expected to continue. Currently, Medicare 

accounts for about 10 percent of total federal revenues, and with the 

retirement of the baby boom generation beginning around 2010, Medicare 

is projected to grow rapidly, reaching 24 percent of total federal revenues in 

2050. Therefore, absent improvements over internal controls, the potential 

for additional or larger volumes of improper payments will be present.

Decentralized 

Administrative Structure 

and Inadequate Controls 

Over Operations Foster 

Additional Risks for 

Improper Payments

HCFA’s administration of the Medicare fee-for-service program is 

decentralized and highly automated—relying on the combined efforts of 

numerous external and internal entities and electronic data processing 

(EDP) systems to meet its responsibilities for managing the program 

properly. Managing these combined efforts presents significant challenges 

and places significant reliance on the effectiveness of internal controls. Our 

previous reports as well as those by the HHS OIG have consistently 

expressed concerns regarding the effectiveness of internal controls related 

to HCFA’s oversight of the Medicare program and its EDP systems that 

create an increased risk for improper payments occurring without prompt 

prevention or detection.
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Effective oversight of the over 50 Medicare claims processing contractors 

and their program safeguard efforts is vital to minimize improper payments 

and ensure program integrity. HCFA carries out its oversight 

responsibilities primarily through the efforts of its 10 regional offices. Yet, 

our recent reports as well as recent OIG and financial statement audit 

reports express concerns over the effectiveness of these oversight efforts. 

In July 1999, based on our review of HCFA’s oversight of its claims 

processing contractors, we reported11 that, despite its efforts, HCFA’s 

oversight had significant weaknesses that left the agency without 

assurance that contractors are paying providers appropriately. Further, we 

identified two aspects of HCFA’s organizational structure that created 

problems for overseeing contractors effectively: dispersed central office 

responsibility for contractor activities among seven components and 

indirect reporting relationships between its 10 regional offices and the 

central office units responsible for contractor performance. HCFA has 

developed a contractor strategic plan and reorganized its contractor 

management activities so that all contractors are assigned to one of four 

Consortium Contract Management Offices which, according to HCFA 

officials, have staff with the expertise needed to address contractor 

management and systems issues. These and other measures have been 

designed to improve contractor oversight, but it is too early to determine 

whether these changes have been sufficient to fully address the identified 

weaknesses.

In connection with their audits of HCFA’s annual financial statements, the 

OIG and auditors from independent public accounting firms have 

consistently found numerous weaknesses in the significant data processing 

operations at both HCFA’s central office and various contractor offices. 

These operations process and maintain eligibility systems. To facilitate 

consistency in the processing of fee-for-service claims, contractors use one 

of several “shared” systems which perform various types of edits before 

authorizing the payment of claims. In addition, claims are checked against 

the Common Working File, consisting of seven distributed databases 

maintained throughout the United States, where edits are performed for 

items such as beneficiary eligibility, deductibles and limits, and duplicate 

payments. As a result of their review of critical EDP controls to ensure the 

integrity, confidentiality, and availability of Medicare data, auditors 

concluded that weaknesses exist, such as unauthorized access to “shared” 

11Medicare Contractors: Despite Its Efforts, HCFA Cannot Ensure Their Effectiveness or 

Integrity (GAO/HEHS-99-115, July 14, 1999).
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system source codes and ability to implement local changes to programs 

used to process claims, that do not effectively prevent activities possibly 

leading to improper payments.

Voluminous and Changing 

Billing Codes Can 

Contribute to Inappropriate 

Payments

The use of incorrect billing codes is a problem faced both by public and 

private health insurers. Medicare pays Part B providers a fee for each 

covered medical service identified by the American Medical Association’s 

uniformly accepted coding system, called the physician’s Current 

Procedural Terminology (CPT). To be able to describe so many different 

services, the coding system is voluminous and undergoes annual changes. 

As a result, physicians and other providers may have difficulty identifying 

the codes that most accurately reflect the services and products provided. 

Not only can this lead providers to inadvertently submit improperly coded 

claims, it can make it easier for unscrupulous individuals to deliberately 

abuse the billing system. Due to the huge number of claims processed, the 

integrity of the program, in part, relies on providers (1) being 

knowledgeable of proper billing procedures and (2) only claiming 

medically necessary and covered services or supplies that were actually 

provided to eligible beneficiaries. 

Fraud Schemes Are Diverse 

and Vary in Complexity

The program’s vulnerabilities have been compounded by the emergence of 

organized groups of criminals who defraud and abuse Medicare. This has 

led to an array of fraudulent schemes that are diverse and vary in 

complexity. For example, based on our recent review of seven 

investigations of fraud or alleged fraud, we reported that the criminal 

groups involved had created as many as 160 sham medical entities—such 

as medical clinics, physician groups, diagnostic laboratories, and durable 

medical equipment companies—or used the names of legitimate providers 

to bill for services not provided.12

Medicare contractors and PROs are identifying thousands of improper 

payments each year due to mistakes, errors, and outright fraud and abuse. 

They refer cases of potential fraud and abuse to the OIG and Department of 

Justice (DOJ) so they can investigate further, and if appropriate, pursue 

criminal and civil sanctions. HCFA tracks the cases referred by Medicare 

contractors and PROs to the OIG and DOJ in its Fraud Investigation 

12Criminal Groups in Health Care Fraud (GAO/OSI-00-1R, October 5, 1999).
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Database (FID).13 Figure 1 shows the six most common types of potential 

fraud and abuse cases in the FID and the relative frequency of these cases. 

Definitions of these common types of fraud and abuse and examples are 

provided in appendix II.

Figure 1: Fraud Investigation Database Statistics for Cases Referred, 1993 Through 

April 2000

Source: Prepared by GAO from data in HCFA’s FID. We did not independently verify this information.

13The Fraud Investigation Database is a comprehensive nationwide system devoted to 

Medicare fraud and abuse data accumulation. The system was created in 1995, but contains 

data on potential fraud and abuse referrals going back to 1993.

19%

7% 7% 7%

23%

37%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Service

not

rendered

Medically

unnecessary/

overutilization

Misrepresenting

services/

falsifying

documents/CMNs

Upcoding Fraudulent cost

reporting

Kickbacks/

accepting/

soliciting

bribes

Percentage of cases

Types of Fraud
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We were unable to assess the level of actual or potential program losses for 

the different types of potential fraud or abuse due to the limited financial 

data in the FID. However, HCFA officials told us that while more complex 

types of fraud or abuse, such as fraudulent cost reporting and kickback 

arrangements, may be less frequent than other types, such cases often 

involve significantly greater losses. 

Efforts to Measure 

Potential Fraud and 

Abuse Rely on 

Effective Use of 

Diverse Techniques

Given the broad nature of health care fraud and abuse, efforts to measure 

its potential extent should incorporate carefully selected detection 

techniques into the overall measurement methodology. With billions of 

dollars at stake, health care fraud and abuse detection has become an 

emerging field of study among academics, private insurers, and HCFA 

officials charged with managing health care programs. A variety of 

methods and techniques are being utilized or suggested to improve efforts 

to uncover suspected health care fraud and abuse. Such variety is needed 

because one technique alone may not uncover all types of improper 

payments.

Although the vast majority of health care providers and suppliers are 

honest, unscrupulous persons and companies can be found in every health 

care profession and industry. Further, fraudulent schemes targeting health 

care patients and providers have occurred in every part of the country and 

involve a wide variety of medical services and products. Individual 

physicians, laboratories, hospitals, nursing homes, home health care 

agencies, and medical equipment suppliers have been found to perpetrate 

fraud and abuse. 

Given the increasingly sophisticated and dynamic nature of health care 

fraud and abuse, fraud and abuse detection is not an exact science. No 

matter how sophisticated the techniques or the fraud and abuse audit 

protocols, not all fraud and abuse can be expected to be identified. 

However, using a variety of techniques holds more promise for estimating 

the extent of potentially fraudulent and abusive activity and also provides a 

deterrent to such illegal activity. Health care fraud experts and 

investigators have identified techniques that can be used to detect 

fraudulent and abusive activity—techniques currently performed by 

Medicare contractor medical review and fraud units to detect potential 

fraud and abuse in the Medicare fee-for-service program. Table 1 

summarizes the most promising techniques they identified along with some 

of their limitations. 
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Table 1: Techniques for Detecting Potential Fraud and Abuse

Consequently, health care experts and investigators also told us that 

effective detection of potential fraud and abuse necessarily involves the 

application of several of these techniques and considerable analysis, 

especially for the more sophisticated types of billing schemes and kickback 

arrangements. In addition, data on fraud referrals contained in the FID 

indicate that information necessary for identifying potential Medicare fraud 

and abuse comes from a variety of sources, as shown in figure 2. In 

particular, these data and the fraud experts we spoke with suggest that 

Medicare beneficiaries represent a valuable source for detecting certain 

types of potential fraud and abuse, especially services not rendered. HCFA 

officials told us that beneficiary complaints stem largely from the 

beneficiaries’ review of their explanation of Medicare benefit (EOMB) 

Medical record review: Doctors and nurses review medical records to assess whether the services billed were allowable, reasonable, 

medically necessary, adequately documented, and coded correctly in accordance with Medicare reimbursement rules and regulations.

Limitations: Medical reviews may not uncover services that have not been rendered or billing for more expensive procedures when the 

medical records have been falsified to support the claim.

Beneficiary contact: Verify that the services billed were actually received through contacting the beneficiary either in person or over the 

phone, or by mailing a questionnaire. 

Limitations: Beneficiary may be difficult to locate and not be fully aware of, or understand the nature of, all services provided. Contact 

may not reveal collusion between the beneficiary and provider to fraudulently bill for unneeded services or services not received. In some 

instances, medical necessity and quality of care may be difficult to judge. 

Provider contact: Visit provider to confirm that a business actually exists, that the activity observed supports the number of claims being 

submitted by the provider, and that medical records and other documentation support the services billed.

Limitations: Provider contact may not reveal collusion between the provider and beneficiary to fraudulently bill for unneeded services or 

services not rendered. In some instances, medical necessity and quality of care may be difficult to judge. 

Data analysis: Examine provider and beneficiary billing histories to identify unusual or suspicious claims. Provider focused data analysis 

attempts to identify unusual billing, utilization, and referral patterns relative to a provider’s peer group. Beneficiary focused data analysis 

looks for unusual treatment patterns such as visiting several different providers for the same ailment or claims for duplicate or similar 

services.

Limitations: Data analysis may only identify the most flagrant cases of potential fraud and abuse because it relies on detecting unusual 

patterns relative to the norm. Application of additional techniques may be necessary to assess the appropriateness of unusual patterns 

identified.

Third party contact/confirmation: Validate information relied on to pay claims with third parties to assist in identifying potential fraud 

and abuse. For example, verify that a provider is qualified to render medical services to Medicare beneficiaries through contacting state 

licensing boards or other professional organizations. Also, other entities, such as employers, private insurers, other governmental 

agencies (e.g., Internal Revenue Service, Social Security Administration, state Medicaid agencies) and law enforcement authorities 

represent valuable sources in determining the validity of claim payments when the reliability of data from primary sources (e.g., claims 

data, beneficiaries, and providers) is questionable.

Limitations: Does not address utilization patterns, whether services were rendered, the need for services, or quality of services.
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statements received after a provider bills Medicare for health services and 

supplies that are reportedly provided. These findings suggest that potential 

fraud and abuse can only be comprehensively measured by effectively 

applying a variety of investigation techniques using a variety of sources.
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Figure 2: Sources of Common Fraud and Abuse Referrals, 1993 Through April 2000

Type of Referral

7%

18%

13%

16%

20%

21%

30%

28%

18%

28%

17%

13%

11%

10%

10%

10%

8%

40%

19%

27%

44%

7%

5%

9%

11%

18%

9%

13%

18%

42%

6%

24%

8%

13%

7%

0%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Kickbacks/

accepting/soliciting bribes

Fraudulent cost reporting

Upcoding

Misrepresenting services/

falsifying documents/

CMNs

Medically unecessary/

overutilization

Services not rendered

Percentage of Referrals

Beneficiary

Referral

Provider

Fraud Unit

Other

Other contractor/PRO

See the following page for descriptions of referral sources.
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Source: Prepared by GAO from data in HCFA’s FID and interviews with HCFA and contractor officials. 

We did not independently verify information contained in HCFA’s FID.

Beneficiary: A person eligible to receive Medicare payment or

services. This category includes beneficiary telephone, walk-in,

and written complaints.

Referral: A formal submission of a case by various federal

investigators (for example, Federal Bureau of Investigation, Office

of Inspector General, and Health Care Financing Administration).

Provider: Persons or entities, including their employees and

former employees, who provide health care services or supplies to

Medicare beneficiaries.

Fraud Unit: Individuals responsible for preventing, detecting, and

deterring Medicare fraud and abuse. Such a unit is located at each

HCFA contractor.

Other contractor/PRO: In addition to fraud units, Medicare

contractor medical review, claims processing, and audit units

perform a broad range of activities in the identification of fraud,

including reviews of submitted claims and medical records by

medical professionals to assess whether services billed were

allowed, medically necessary, adequately documented, and coded

correctly in accordance with Medicare requirements. In addition,

audits of provider cost reports are performed to determine the

appropriateness of costs reimbursed in connection with the cost

report settlement process.

Other: In addition to the sources listed above, referrals of fraud

and abuse cases are sometimes generated based on leads

obtained via calls made to the OIG Hotline, from media sources, or

other anonymous sources. The OIG Hotline allows employees and

the public to directly report allegations or provide information

regarding problems of possible waste, mismanagement, and

abuse in the Medicare program.

Referral Sources
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Planned HCFA Projects 

Designed to Provide 

Some Improvements 

The inherent vulnerabilities of the Medicare fee-for-service program have 

fueled debate over how extensively the measurement of potential fraud and 

abuse should be pursued to provide information that policymakers and 

HCFA managers need to effectively target program integrity efforts. 

Implementing the current methodology to estimate improper payments is a 

major undertaking and represents an attempt to give HCFA a national 

estimate of payment accuracy in the Medicare program. The current 

methodology focuses on estimating Medicare payments that do not comply 

with payment policies as spelled out in Medicare laws and regulations but 

does not specifically attempt to identify potential fraud and abuse. In 

addition to the current methodology, HCFA has three projects in various 

stages of development that are designed to enhance the capability to 

uncover potential fraud and abuse and help HCFA better target program 

safeguard efforts over the next few years.

Current Methodology Not 

Designed to Measure the 

Full Extent of Potential 

Fraud and Abuse

The primary purpose of the current methodology is to provide an estimate 

of improper payments that HCFA can use for financial statement reporting 

purposes, and to the degree that it can measure improper payments, it has 

served as a performance measure. The OIG is responsible for overseeing 

the annual audit of HCFA’s financial statements, as required by the Chief 

Financial Officers Act of 1990 as expanded by the Government 

Management Reform Act of 1994. The current methodology has identified 

improper payments ranging from inadvertent mistakes to outright fraud 

and abuse. However, specifically identifying potentially fraudulent and 

abusive activity and quantifying the portion of the error rate attributable to 

such activity has been beyond the scope of the current methodology.

The focus of the current methodology is on procedures that verify that the 

claim payments made by Medicare contractors were in accordance with 

Medicare laws and regulations. The primary procedures used are medical 

record reviews and third party verifications. Medical professionals working 

for Medicare contractors and PROs review medical records submitted by 

providers and assess whether the medical services paid for were allowable, 

medically necessary, accurately coded, and sufficiently documented. OIG 

staff perform various procedures including third party verifications to 

ensure that health care providers are in “good standing” with state licensing 

and regulatory authorities and are properly enrolled in the Medicare 

program. They also verify with the Social Security Administration (SSA) 

that the beneficiaries receiving the services were eligible for them.
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The OIG reported that the medical reviews conducted in the current 

methodology have been the most productive technique for identifying 

improper payments—detecting the overwhelming majority of the improper 

payments identified.14 According to OIG officials, medical reviews have led 

to some major prosecutions. In addition, some of the health care fraud 

experts we talked with stated that such medical reviews are most effective 

in detecting unintentional errors. They also told us that medical reviews are 

less effective in identifying potentially fraudulent and abusive activity 

because clever providers can easily falsify supporting information in the 

medical records to avoid detection.

With respect to identifying potentially fraudulent or abusive activities, OIG 

officials indicated that medical reviews performed during the current 

methodology have resulted in referrals to its Investigations Office. 

However, they acknowledge that the current methodology generally 

assumes that all medical records received for review are valid and thus 

represent actual services provided. In addition, they agree that additional 

improper payments may have been detected had additional verification 

procedures been performed, such as (1) confirming with the beneficiary 

whether the services or supplies billed were received and needed and 

(2) confirming the nature of services or supplies provided through on-site 

visits and direct contact with current or former provider employees. 

Recognizing the potential for abuse based on past investigations—such as 

falsified certificates of medical necessity or where beneficiaries are not 

“homebound,” a requirement for receiving home health benefits—the OIG 

has included face-to-face contact with beneficiaries and providers when 

reviewing sampled claims associated with home health agency services. 

Further, during the course of our review, OIG officials stated that they will 

conduct beneficiary interviews when reviewing DME claims selected in its 

fiscal year 2000 study. However, according to OIG officials, they have not 

extended this or certain other techniques to the other numerous types of 

claims included in its annual review because they consider them costly and 

time-consuming. 

Accordingly, the OIG recognizes that the current methodology does not 

estimate the full extent of Medicare fee-for-service improper payments, 

especially those resulting from potentially fraudulent and abusive activity 

for which documentation, at least on the surface, appears to be valid and 

14Improper Fiscal Year 1999 Medicare Fee-For-Service Payments, Department of Health and 

Human Services, Office of Inspector General, February 2000, A-17-99-01999.
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complete. In fact, the OIG testified15 that its estimate of improper payments 

did not take into consideration numerous kinds of outright fraud, such as 

phony records or kickback schemes. To identify potential fraud, the OIG 

also relies on tips received from informants and other investigative 

techniques.

A secondary benefit that has been derived from the current methodology is 

that it has prompted HCFA into developing additional strategies, as we 

discuss later, for reducing the types of improper payments identified. 

However, HCFA is limited in developing specific corrective actions to 

prevent such payments because the current methodology only produces an 

overall national estimate of improper payments. Having the ability to 

pinpoint problem areas by geographic areas below a national level 

(referred to as subnational), Medicare contractors, provider types, and 

services would make improper payment measures a more useful 

management tool. 

HCFA Projects Enhance 

Error Rate Precision and 

Some Potential Fraud and 

Abuse Detection 

Capabilities

HCFA has two projects that center on providing it with the capability of 

producing improper payment rates on a subnational and provider type 

basis—the Comprehensive Error Rate Testing (CERT) project and the 

surveillance portion of the Payment Error Prevention Program (PEPP). By 

examining more claims, these projects are designed to improve the 

precision of future improper payment estimates and provide additional 

information to help develop corrective actions. However, since the 

methodologies associated with the CERT and PEPP projects incorporate 

techniques for identifying improper payments that are similar to those used 

in the current methodology, the extent to which these two projects will 

enhance HCFA’s potential fraud and abuse measurement efforts is limited. 

HCFA has a third project in the concept phase that will test the viability of 

using a variety of investigative techniques to develop a potential fraud rate 

for a specific geographic area or for a specific benefit type. This project, 

called the Model Fraud Rate Project (MFRP), provides HCFA the 

opportunity to pilot test more extensive detection techniques that, if 

effective, could be incorporated into the other measurement 

methodologies to improve the measurement and, ultimately, prevention of 

15July 17, 1997, testimony of the HHS Inspector General in a hearing before the House 

Committee on Ways and Means, Subcommittee on Health, entitled Audit of HCFA Financial 

Statements.
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potential fraudulent and abusive activity. Table 2 compares the scope and 

potential fraud and abuse detection capabilities of the current methodology 

to the HCFA projects.
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Table 2: Comparison of HCFA Efforts to Measure Medicare Improper Payments

Current methodology Comprehensive Error Rate

Testing

(CERT)

Payment Error

Prevention

Program/Surveillance

(PEPP)

Model Fraud Rate

Project

(MFRP)

Key design

attributes

• First national statistically

valid estimate for all types of

fee-for-service claims,

beneficiaries, and providers

• Includes tests for:

• medical necessity and

reasonableness,

• proper documentation,

• proper coding,

• provider eligibility,

• determination of

whether providers are

subject to current

sanctions or

investigations,

• beneficiary eligibility,

• duplicate payments,

• Medicare as secondary

payer (MSP)

compliance,

• compliance with pricing,

deductible, coinsurance,

and other selected rules

• Test procedures expected to

be similar to current

methodology

• Independent medical review

• Larger sample and on-going

reporting improves

analyses/utility

• statistically valid

national error rates by

contractor, provider

type, benefit category,

and claims processing,

• trend analysis to assist

in targeting of integrity

efforts

• Potential platform for testing

claims software

• Designed to estimate

payment error rates

for inpatient

Prospective Payment

System (PPS) claims

by state

• Larger sample and

frequent reporting

designed to improve

analyses and

targeting of integrity

efforts

• Tests focus on:

• medical necessity

and

reasonableness,

• unnecessary

admissions,

• incorrect

diagnostic

coding,

• some quality of

care measures

• Pilot study to

develop a model

fraud rate

• Scope focused on

specific benefit or

geographic area

• Fraud investigative

techniques will be

used:

• beneficiary

contact,

• medical

records review,

• provider and

beneficiary

profiling,

• investigation of

complaints

• Results to be

categorized under

fraud types and

causes

Limitations for

detecting

potential fraud

and abuse

• Significant reliance on the

integrity of medical records

• Lacks provider-focused data

analysis during testing

• Limited provider or

beneficiary validation

• Not designed to identify

certain types of fraud or

abuse

• Similar to current

methodology

• Similar to current

methodology

• Scope limited to

inpatient PPS

• Plan for

comprehensive

nationwide study

evolving

• Limited provider or

third party

validation

Status • Fourth annual review

completed

• Contract awarded 5/2000

• Phased implementation

designed to be completed by

10/2001

• Contracts completed

3/2000

• Baseline error rates

and first quarterly

report due by 9/2000

• Concept currently

under development

• Pilot testing

projects designed

to be implemented

by 10/2000

Costs • 1999 review $4.7 million • Base year $2 million plus

$4 million annually thereafter

• $7.5 million annually • Not yet determined
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The CERT project focuses on reviewing a random sample of all Part A and 

B claims processed by Medicare contractors each year except inpatient 

Prospective Payment System (PPS) hospital claims. It involves the review 

of a significantly larger random sample of claims and thus, according to 

HCFA officials, allows HCFA to project subnational improper payment 

rates for each Medicare contractor and provider type. It is the largest of the 

projects and is undergoing a phased implementation with a scheduled 

completion date of October 2001. In addition to developing subnational 

error rates, HCFA officials stated that the CERT project will also be used to 

develop performance measures that will assist HCFA in monitoring 

contractor operations and provider compliance. For example, CERT is 

designed to produce a claim processing error rate for each contractor that 

will reflect the percentage of claims paid incorrectly and denied 

incorrectly, and a provider compliance rate that indicates the percentage of 

claims submitted correctly. 

The PEPP project is similar to the CERT project and is designed to develop 

payment error rates for the Part A inpatient PPS hospital claims not 

covered by CERT. PEPP is designed to produce subnational error rates for 

each state and for each PRO area of responsibility. Claim reviews under 

PEPP are designed to be continual in nature, with results reported 

quarterly. HCFA officials stated that the project is the furthest along in 

implementation, with the first quarterly reports expected in September 

2000. The contractors and PROs implementing the project are expected to 

identify the nature and extent of payment errors for these inpatient claims 

and implement appropriate interventions aimed at reducing them. 

After their full implementation, HCFA intends to develop a national 

improper payment rate by combining the results of the CERT and PEPP 

projects. This rate will be compared to the rate produced by the current 

methodology to identify, and research reasons for, any significant variances 

among results. While the national estimate will continue to provide 

valuable information concerning the extent of improper payments, HCFA 

officials state that the availability of reliable estimates at the subnational 

levels contemplated by these efforts will greatly enhance the usefulness of 

these estimates as management tools. For example, based on reports of 

extensive fraud and abuse in Florida by the OIG, HCFA established a 

special satellite office in Miami as part of its Operation Restore Trust in 

1995. This effort has led to numerous investigations and the identification 

of potentially fraudulent and abusive activity emerging and existing in that 

area. Similarly, if implemented correctly, the increased precision 

contemplated with the planned measurement enhancements may indicate 
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various “hot spots” of potential fraud and abuse throughout the country, 

thereby increasing HCFA’s ability to more effectively focus its program 

integrity efforts.

While enhancing the precision of improper payment estimates will offer a 

richer basis for analyzing causes and designing corrective actions, 

conceptually, the MFRP holds the most promise for improving the 

measurement of potential fraud and abuse. However, the Medicare 

contractor assisting HCFA in developing this project is dropping out of the 

Medicare program in September 2000 and has ceased work on the project. 

Efforts to date have focused on developing a potential fraud rate for a 

specific locality and specific type of Medicare service; however, HCFA 

intends to eventually expand the scope of the project to provide a national 

potential fraud rate. As currently conceived, the project involves studying 

the pros and cons of using various investigative techniques, such as 

beneficiary contact, to estimate the occurrence of potential fraud. HCFA 

officials informed us that before the contractor ceased work on this 

project, it conducted a small pilot test using beneficiary contact as a 

potential fraud detection technique that identified some of the challenges 

HCFA will face in implementing this technique. The results of the test are 

discussed later.

HCFA is seeking another contractor to take over implementation of the 

project. The contractor eventually selected will be expected to produce a 

report that identifies the specific potential fraud and abuse identification 

techniques used, the effectiveness of the techniques in identifying potential 

fraud and abuse, and recommendations for implementing the techniques 

nationally. The contractor will also be expected to develop a “how to 

manual” that Medicare contractors and other HCFA program safeguard 

contractors (PSC) can use to implement promising techniques. HCFA 

officials stated that promising techniques identified through MFRP could 

also be exported to the CERT and PEPP projects and the current 

methodology to enhance national and subnational estimates of potential 

fraud and abuse over time.

Expanding the Scope of the 

HCFA Projects Could 

Enhance Measurement of 

Potential Fraud and Abuse

Collectively, HCFA’s projects do not comprehensively attempt to measure 

potential fraud and abuse or evaluate the specific vulnerabilities in the 

claims processing process that may be allowing fraud and abuse to be 

perpetrated. Table 3 shows the limited use of selected identification 

elements among the current methodology and the HCFA projects. The 

MFRP project’s scope, for example, does not include studying the viability 
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of making provider and supplier contact or using third party confirmations 

to detect potential fraud and abuse. 

Contacting beneficiaries and checking providers are valuable investigative 

techniques used to develop potential fraud and abuse cases. For example, 

California officials recently visited all Medicaid16 DME suppliers as part of a 

statewide Medicaid provider enrollment effort and found that 40 percent of 

the dollars paid to the suppliers was potentially fraudulent. The on-site 

visits not only helped to identify the fraudulent activity, but also to obtain 

sufficient evidence to support criminal prosecutions for fraud. Since 

Medicare also covers DME supplies for eligible beneficiaries, the problems 

found during this effort indicate that similar risks could exist for potential 

fraud and abuse in the Medicare program.17

16The Medicaid program represents the primary source of health care for medically 

vulnerable Americans, including poor families, the disabled, and persons with 

developmental disabilities requiring long-term care. Medicaid is administered in partnership 

with the states pursuant to Title XIX of the Social Security Act with combined state and 

federal medical assistance outlays in fiscal year 1999 totaling $180.8 billion.

17According to its Comprehensive Plan for Program Integrity, HCFA has begun conducting 

routine on-site visits to DME suppliers seeking to enter the Medicare program as part of its 

provider enrollment process.
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Table 3: Methodologies for Estimating Medicare Improper Payments

Key characteristics

Current

methodology CERT PEPP MFRP

Scope

• Geographical

• Claim type

Nationwide

All

Nationwidea

All but inpatient

Nationwidea

Inpatient only

Evolvingb

Measurement

• Technique used

• Annual claims sample

size

Sampling

5,000 – 8,000

Sampling

100,000+

Sampling

55,000+

Sampling

Not yet determined

Measurement

elements

Classification of errorsc

• Cause

• Type

Claims validation

• Medical record

and claims

processing review

• Beneficiary

contact

d d

• Provider/supplier

contacte

d

• Third party

contact/confirmationf

Identification

elements

• Data analysisg

• Provider

focusedh

• Beneficiary

focused
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a

The CERT and PEPP projects also provide for estimates of improper payments at the subnational and 

provider type levels.

b

The scope of the MFRP is still conceptual. Efforts to date have focused on developing a potential 

fraud rate for specific benefit types and specific localities and to eventually expand efforts to provide a 

national rate.

c

Errors can be classified in many ways; table 3 shows two types of categories. For example, cause 

classifications may include inadvertent billing errors or possible fraud and abuse errors. Type 

categories may include documentation errors or lack of medical necessity errors.

d

Methodology includes face-to-face contact with beneficiaries and providers for home health agency 

claims only.

e

Other than requests for medical records.

f

Third party contact/confirmation, for example, may include contact with state licensing boards or other 

professional organizations to verify provider standing. This example represents only one of the 

numerous methods of utilizing third party confirmation to identify improper payments.

g

See table 1 for a discussion of data analysis techniques for detecting potential fraud and abuse.

h

OIG officials recently told us that each year at the end of the their review, after all data has been 

entered in their national database, they profile each provider type in the claims sample.

Including an assessment of the likely causes of specific payment errors 

could help HCFA better develop effective strategies to mitigate them. The 

current methodology classifies errors by type, such as lack of 

documentation or medically unnecessary services, which is used to show 

the relative magnitude of the problems. Knowing the relative magnitude of 

a problem offers perspective on what issues need to be addressed. For 

example, based on its review of errors identified in the current 

methodology, HCFA recently issued a letter to physicians emphasizing the 

need to pay close attention when assigning CPT codes and billing Medicare 

for two closely related, yet differing, types of evaluation and management 

services. 

Further analysis of identified improper payments that provide additional 

insights into possible root causes for their occurrence is essential for 

developing effective corrective actions. For example, if errors are resulting 

from intentionally abusive activity, specific circumstances or reasons that 

permit the abuse to be perpetrated can be analyzed to develop and 

implement additional prepayment edits to detect and prevent their 

occurrence. In this regard, we have long advocated enhancing automated 

claims auditing systems to more effectively detect inappropriate payments 

due to inadvertent mistakes or deliberate abuse of Medicare billing 

systems.18 Also, developing or strengthening specific enforcement 

18Medicare Billing: Commercial System Could Save Hundreds of Millions Annually

(GAO/AIMD-98-91, April 15, 1998) and Medicare Claims: Commercial Technology Could 

Save Billions Lost to Billing Abuse (GAO/AIMD-95-135, May 5, 1995).
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sanctions offer an additional tool to deter providers or suppliers from 

submitting inappropriate claims.

Likewise, numerous individuals and entities are involved throughout the 

entire Medicare claims payment process, including providers, suppliers, 

employees (caregivers, clerks, and managers), Medicare claims processing 

contractors, HCFA, beneficiaries (and their relatives), and others. 

Interestingly, in its review of Illinois Medicaid payments,19 the Illinois 

Department of Public Aid (IDPA) determined that over 45 percent of the 

errors it identified were inadvertent or caused by the IDPA itself during the 

process of approving services or adjudicating claims, and that 55 percent 

appeared to be caused by questionable billing practices. IDPA officials told 

us that having a clear understanding of the root causes for these errors has 

been instrumental in developing effective corrective actions. Similarly, 

attributing the causes of Medicare fee-for-service improper payments to 

those responsible for them could provide HCFA with useful information for 

developing specific corrective actions.

Certain third party validation techniques are included and have been 

successfully implemented in the current methodology. For example, OIG 

staff confirm a provider’s eligibility to bill the Medicare program by 

contacting state licensing boards to ensure that the doctors billing 

Medicare have active licenses. They also verify with SSA that beneficiaries 

are eligible to receive medical services under the Medicare program. 

However, as currently conceived, none of the HCFA projects include third 

party contact as a potential fraud detection technique. 

Implementing More 

Aggressive Fraud Detection 

Techniques Will Require 

Careful Study and 

Additional Resources

The experiences of recent efforts to apply more aggressive fraud detection 

techniques coupled with our discussions with patient and provider 

advocacy groups indicate that finding successful protocols for 

implementing some detection techniques may require careful study. Our 

review of three studies that have attempted to use beneficiary contact as a 

measurement device—the MFRP and two Medicaid studies in Texas and 

Illinois—indicate that, while useful, it is a challenging technique to 

implement.

19Payment Accuracy Review of the Illinois Medical Assistance Program, Illinois Department 

of Public Aid, August 1998.
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• The initial contractor for the MFRP conducted a small pilot test using 

beneficiary contact to verify Medicare billed services and found that 

making contact was more difficult than anticipated. Telephone contact 

was the most cost-effective approach for contacting beneficiaries, but 

the contractor could reach only 46 percent of them due to difficulty in 

obtaining valid phone numbers and difficulty in actually talking to the 

beneficiary or his or her representative once a valid number was 

located. Using more costly and time-consuming approaches, such as 

mailing written surveys and conducting face-to-face interviews only 

increased the success rate to 64 percent. To maximize the effectiveness 

of these alternative approaches, the contractor noted that it was 

important to obtain valid addresses and ensure that the written survey 

instrument was concise, easy to understand, and easy to complete so 

that the beneficiaries would take the time to respond.

• The state of Texas experienced similar difficulties contacting Medicaid 

recipients in a recent statewide fraud study.20 Telephone numbers for 

more than half of the 700 recipients that the state attempted to contact 

were not available or were incorrect. The state attempted to make faceto-face contact if telephone contact was not possible, and by the study’s 

end, over 85 percent of the recipients were contacted. The state 

concluded that contacting a recipient by telephone is the only costeffective way to verify that services had been delivered. It also found 

that delays in making contact could affect the results since recipients’ 

ability to accurately recall events appeared to diminish over time. 

• For the Illinois Medicaid study, the IDPA found other problems in using 

beneficiary contact as a detection technique in the payment accuracy 

study of its program.21 Department investigators met with almost 600 

recipients or their representatives to verify that selected medical 

services had been received. The investigators found that while recipient 

interviews were an overall useful step in the study’s methodology, they 

did not always produce the desired results. For example, investigators 

found cases where caretaker relatives could not verify the receipt of 

services. They also found other cases where recipients were unaware of 

the services received, such as lab tests, or could not reliably verify the 

receipt of services because they were mentally challenged.

20Final Staff Draft Report on Health Care Claims Study and Comments from Affected State 

Agencies, Texas Comptroller of Public Accounts, December 1998.

21See footnote 19.
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Illinois officials involved with implementing the Medicaid study told us that 

direct provider contact is also challenging. For example, an important 

consideration is whether or not to make unannounced visits. According to 

the Illinois officials, unannounced visits can be disruptive to medical 

practices and inappropriately harm the reputations of honest providers by 

giving patients and staff the impression that suspicious activities are taking 

place. Announced visits, on the other hand, can give the provider time to 

falsify medical records, especially if they know which medical records are 

going to be reviewed. The Illinois officials resolved this dilemma by 

announcing visits 2 days in advance and requesting records for 50 

recipients so it would be difficult for the provider to falsify all the records 

on such short notice. 

Data on fraud referrals included in HCFA’s FID indicates that health care 

providers and beneficiaries represent important sources for identifying 

improper payments, particularly for certain types of potential fraud and 

abuse. Moreover, the application of more extensive fraud detection 

techniques into efforts to measure improper payments will require their 

cooperation. Our discussions with patient and health care provider 

advocacy groups indicated they may oppose the application of more 

extensive detection techniques due to concerns with violating doctorpatient confidentiality, protecting the privacy of sensitive medical 

information, and added administrative burdens. For example, officials from 

the Administration on Aging, an HHS operating division, told us that they 

discourage elders from responding to telephone requests for medical and 

other sensitive information. Similarly, the American Medical Association 

and American Hospital Association emphasize the adverse impact that 

meeting what they consider to be complex regulations and responding to 

regulatory inquiries has on health care providers’ ability to focus on 

meeting patient needs. They also voiced concerns with the added cost that 

would have to be absorbed by providers to comply with even more requests 

for medical information in an era of declining Medicare reimbursements. 

Further, some of the health care experts we talked with cautioned that 

there are practical limits to the amount of potentially fraudulent and 

abusive activity that can be measured. These experts emphasize that no set 

of techniques, no matter how extensive, can be expected to identify and 

measure all potential fraud and abuse. However, despite these concerns, 

compliance with reasonable efforts to ensure that benefits are, in fact, paid 

properly is encouraged by beneficiary advocacy groups. Further, various 

federal laws and regulations put providers and Medicare beneficiaries on
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notice that HHS and HCFA may require and use information from medical 

records for certain purposes.22

In addition to beneficiary and provider contact, the health and fraud 

experts we spoke with told us that validating the information that Medicare 

contractors are relying on to pay claims, including provider and supplier 

assertions concerning the appropriateness of those claims, with third 

parties could also help to identify potential fraudulent or abusive activity. 

The current methodology incorporates such procedures to confirm 

providers’ current standing with state licensing authorities and 

beneficiaries’ eligibility status with SSA. Other sources—such as 

beneficiary employers, beneficiary relatives or personal caregivers, State 

Medicaid agencies, and employees of providers and suppliers—could also 

offer useful information for assessing the appropriateness of claims. 

However, determining the appropriate nature and extent of third party 

verification procedures to incorporate into efforts to measure improper 

payments should be considered carefully. Excluding third party verification 

efforts, and therefore placing greater reliance on the accuracy of data 

developed internally or provided independently, should be based on risks 

determined through analysis of reliable indicators. 

The Comptroller General’s Standards for Internal Control in the Federal 

Government23 stresses the importance of performing comprehensive risk 

assessments and implementing control activities, including efforts to 

monitor the effectiveness of corrective actions to help managers 

consistently achieve their goals. While the annual cost of the current 

methodology and the HCFA projects involve several million dollars, these 

efforts represent a needed investment toward avoiding significant future 

losses through better understanding the nature and extent of improper 

payments—including potential fraud and abuse. As shown in table 2, the 

current methodology costs $4.7 million, not counting the cost of medical 

review staff time at contractors. PEPP is estimated to cost $7.5 million 

annually, and CERT costs are expected to be over $4 million annually once 

fully implemented. While these may seem to be expensive efforts, when 

considered in relation to the size and vulnerability of the Medicare program 

22For example, section 1815(a) of the Social Security Act, 42 U.S.C. § 1395g(a), provides that 

payments shall not be made to any provider unless it furnishes information the Secretary of 

HHS requests to determine the amounts due the provider.

23Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1, 

November 1999).
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and the known improper payments that are occurring, they represent 

prudent, needed outlays to help ensure program integrity. 

In our recent report on improper payments across the federal 

government,24 we discussed the importance of ascertaining the full extent 

of improper payments and understanding their causes to establish more 

effective preventive measures and to help curb improper use of federal 

resources. However, as we recently testified,25 HCFA’s ability to protect 

against fraud and abuse depends on adequate administrative funding. 

Therefore, in developing effective strategies for measuring improper 

payments, consideration of the most effective techniques to apply in the 

most efficient manner is essential to maximize the value of administrative 

resources. While HCFA faces significant challenges for ensuring the 

integrity of the Medicare fee-for-service program, importantly, HCFA can 

use the results of these efforts to more effectively assess corrective 

actions, target high-risk areas, and better meet its role as steward of 

Medicare dollars.

MFRP Holds Some Promise 

for Advancing Potential 

Fraud and Abuse 

Measurement 

HCFA plans to expand its efforts to measure Medicare improper payments 

by assessing the usefulness of performing additional fraud detection 

techniques with the MFRP. Meanwhile, since the current methodology and 

the CERT and PEPP projects do not incorporate the use of some 

techniques considered effective in identifying potential fraud and abuse, 

HCFA’s ability to fully measure the success of its efforts to reduce fraud and 

abuse remains limited.

Health care fraud experts told us that the ability of these projects to 

measure potential fraud and abuse are somewhat dependent on the nature, 

extent, and level of fraud sophistication that may be involved. For example, 

the introduction of beneficiary contact, in conjunction with other 

techniques, should improve the ability to determine whether services were 

actually rendered. However, if the beneficiary is a willing participant in the 

potential fraud and abuse scheme, these additional techniques may not 

lead to an accurate determination.

24Financial Management: Increased Attention Needed to Prevent Billions in Improper 

Payments (GAO/AIMD-00-10, October 29, 1999). 

25Medicare: HCFA Faces Challenges to Control Improper Payments (GAO/T-HEHS-00-74, 

March 9, 2000).
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Conclusions The size and administrative complexity of the Medicare fee-for-service 

program make it vulnerable to inadvertent error and exploitation by 

unscrupulous providers and suppliers. Given the billions of dollars that are 

at risk, it is imperative that HCFA continue its efforts to develop timely and 

comprehensive payment error rate estimates that can be used to develop 

effective program integrity strategies for reducing errors and combating 

fraud and abuse. The current methodology represented a significant first 

step in obtaining such information, but the lack of key fraud and abuse 

detection techniques limit its effective use as a management tool to 

estimate potential fraud and abuse and ultimately achieve important 

program integrity goals. HCFA’s projects could collectively address some of 

the limitations of the current methodology if properly executed, but do not 

appear to go far enough. Expanding the scope of the Model Fraud Rate 

Project to include studying provider visits and a more extensive 

assessment of the cause of improper payments and other promising 

techniques could help HCFA pinpoint additional high-risk areas and 

develop more effective corrective actions. The implementation of more 

extensive detection techniques is bound to be challenging and expensive, 

so using rigorous study methods and consulting with the people affected, 

such as beneficiary and provider advocacy groups, are essential steps to 

ensure success, as well as considering the tangible and intangible benefits 

of using particular techniques. Given the delays and potential challenges 

associated with implementing the Model Fraud Rate Project, substantial 

improvements in the measurement of improper payments, especially those 

stemming from potential fraudulent and abusive activity, will probably not 

be realized for a few years. 

Recommendations To improve the usefulness of measuring Medicare fee-for-service improper 

payments, including those attributable to potential fraud and abuse, we 

recommend that the HCFA Administrator take the following actions:

• Experiment with incorporating additional techniques for detecting 

potential fraud and abuse into methodologies used to identify and 

measure improper payments and then evaluate their effectiveness. For 

example, visiting providers to verify their existence, collecting medical 

records and other documents supporting Medicare payments, observing 

the level of patient activity, and inquiring about the nature of the 

provider’s operations with employees could provide valuable 

information to more accurately assess the appropriateness of claim 

payments and causes of improper payments. Likewise, inquiries with 
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Medicare beneficiaries to verify receipt of and need for services or 

supplies could provide similar insights. In determining the nature and 

extent of additional specific procedures to perform, the overall 

measurement approach should (1) recognize the types of fraud and 

abuse perpetrated against the Medicare program, (2) consider the 

relative risks of potential fraud or abuse that stem from the various 

types of claims, (3) identify the advantages and limitations of common 

fraud detection techniques and use an effective combination of these 

techniques to detect improper payments, and (4) consider, in 

consultation with advocacy groups, concerns of those potentially 

affected by their use, including beneficiaries and health care providers.

• Include in the methodologies’ design, sufficient scope and evaluation to 

more effectively identify underlying causes of improper payments, 

including potential fraud and abuse, in order to develop appropriate 

corrective actions.

Agency Comments and 

Our Evaluation

HCFA’s written comments are reprinted in appendix III. HCFA agreed with 

our recommendations and discussed additional techniques it is developing 

to detect potential fraud and abuse. The Administrator described some 

techniques outlined in this report that HCFA currently performs, such as 

conducting site visits as part of its provider enrollment process as well as 

the challenges associated with their use. Performing these activities in 

conjunction with on-going program integrity efforts is important. However, 

the Administrator’s comments and our report highlight the challenges 

involved in incorporating additional potential fraud and abuse 

identification efforts into initiatives to measure Medicare improper 

payments. Nevertheless, despite the challenges they pose, adding these 

techniques is essential to gain a more comprehensive assessment of the 

nature, extent, and causes of their occurrence. The Administrator also 

provided technical comments, which we incorporated in this report as 

appropriate.

We are sending copies of this report to Representative John M. Spratt, 

Ranking Minority Member of the House Committee on the Budget and 

interested congressional committees. We are also sending copies of this 

report to the Honorable Donna E. Shalala, Secretary, and the Honorable 

June Gibbs Brown, Inspector General, Department of Health and Human 

Services; and the Honorable Nancy-Ann Min DeParle, Administrator, 

Health Care Financing Administration. Copies will be made available to 

others upon request.
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Please contact me at (202) 512-4476 or by e-mail at jarmong.aimd@gao.gov

if you have any questions about this report. Other GAO contacts and staff 

acknowledgements are listed in appendix IV.

Gloria L. Jarmon

Director, Health, Education, and Human Services

Accounting and Financial Management Issues
Page 38 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

Our objectives were to identify structural problems that exist in the 

Medicare claims processing system which contribute to inherent 

vulnerabilities resulting in erroneous Medicare payments and to determine 

(1) what HCFA proposals have been designed or initiated to measure 

Medicare improper payments and (2) the status of these proposals and 

initiatives and how will they enhance HCFA’s ability to comprehensively 

measure improper Medicare payments and the frequency of kickbacks, 

false claims, (e.g., services not provided) and other inappropriate provider 

practices.

Through interviews with health care fraud and investigation experts, we 

gained an understanding of the vulnerabilities in the Medicare fee-forservice program that create opportunities for improper payments, 

especially those stemming from fraudulent and abusive activity, and the 

most promising detection techniques to identify these payments. 

Specifically, we talked with officials from the Department of Health and 

Human Service’s Office of the Inspector General (OIG) and Office of 

Investigations (OI), Department of Justice (DOJ), Federal Bureau of 

Investigation (FBI), HCFA’s program integrity group, HCFA’s Atlanta 

Regional Office unit specializing in fraud detection efforts, a Medicare 

claims processing contractor, Association of Certified Fraud Examiners, 

three private health insurance organizations, National Health Care AntiFraud Association, Health Insurance Association of America, three states 

in connection with their Medicaid programs, and two academicians with 

notable fraud investigation experience. We also reviewed various 

documents including HCFA and OIG Fraud Alerts, prior GAO, OIG, and 

other studies on health care fraud and abuse, particularly those related to 

the Medicare fee-for-service program.

We analyzed HCFA’s Fraud Investigation Database (FID) to identify the 

most common types of potential fraud referred to the OI and DOJ for 

further investigation and possible criminal and civil sanctions. We also 

analyzed the FID to determine the most frequent sources for identifying 

potential fraud. The FID was created in 1995, but has data on fraud referral 

going back to 1993. We did not attempt to validate the database.

Through interviews with HCFA Program Integrity Group officials and 

reviews of HCFA documentation, including program integrity plans, project 

descriptions, statements of work, and requests for proposals, we identified 

and determined the status of HCFA projects that could improve the 

measurement of Medicare fee-for-service improper payments.
Appendix I

Objectives, Scope, and Methodology

Page 39 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

To assess the potential effectiveness of the techniques planned for the 

HCFA projects for identifying improper payments attributable to potential 

fraud and abuse, we (1) performed a comparative analysis of common 

types and sources of referrals of fraud and abuse occurring in the Medicare 

program, the types of techniques identified by investigative experts as most 

effective for identifying them, and the extent to which identified techniques 

are incorporated in the respective methodologies and (2) discussed the 

results of our analysis with officials in HCFA’s Program Integrity Group and 

OIG.

To gain an understanding of how the implementation of additional 

procedures to identify and measure improper payments attributable to 

potential fraud and abuse could affect providers, suppliers, and recipients 

of health care services and supplies, we interviewed officials from patient 

and health care provider advocacy groups, including the American Medical 

Association, American Hospital Association, HHS Administration on Aging, 

American Association of Retired Persons, and the Health Care Compliance 

Association. 

We requested comments on a draft of this report from the HCFA 

Administrator or her designee. We have incorporated any changes as 

appropriate and have reprinted HCFA’s response in appendix III. We 

performed our work from November 1999 through June 2000 in accordance 

with generally accepted government auditing standards.
Page 40 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Appendix II

Definitions and Examples of Common Types 

of Potential Fraud and Abuse Referrals ApendxiI

Services Not Rendered As the category indicates, cases involving billing for services not rendered 

occur when health care providers bill Medicare for services they never 

provided. Potential fraud and abuse is usually detected by statements 

received from the provider’s patients or their custodians and the lack of 

supporting documents in the medical records.

For example, a provider routinely submitted claims to Medicare and 

CHAMPUS1

 for cancer care operations for services not rendered or not 

ordered; upcoded procedures, as defined below, to gain improper high 

reimbursement; and double billed Medicare for certain procedures. As a 

result of the fraudulent submissions, the provider allegedly obtained 

millions of dollars to which it was not entitled.

Medically Unnecessary 

Services and Supplies 

and Overutilization

Cases involving medically unnecessary services, supplies, or overutilization 

occur when providers or suppliers bill Medicare for items and services that 

are not reasonable and necessary for the diagnosis and treatment of illness 

or injury or to improve the functioning of a body part. They include 

incidents or practices of provider, physicians, or suppliers of services that 

are inconsistent with accepted sound medical practices, directly or 

indirectly resulting in unnecessary costs to Medicare, improper payments, 

or payments for services that do not meet professionally recognized 

standards of care or are not medically necessary.

For example, a provider ordered magnetic resonance imaging tests and 

neurological tests and investigators questioned whether the tests were 

medically necessary and whether the neurological tests were actually 

performed. Most of the tests were performed on patients who responded to 

the provider’s advertisements in the yellow pages. After a 5 to 10 minute 

consultation, the provider would diagnose almost every patient with the 

same disorder − radiculopathy, a disease involving compression of, or 

injury to the roots of spinal nerves.

1

CHAMPUS, or the Civilian Health and Medical Program of the Uniformed Services, is a feefor-service health insurance program that pays for a substantial part of the health care that 

civilian hospitals, physicians, and others provide to nonactive duty Department of Defense 

beneficiaries.
Appendix II

Definitions and Examples of Common Types 

of Potential Fraud and Abuse Referrals

Page 41 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Misrepresentation of 

Services and 

Products/Falsifying 

Certificates of Medical 

Necessity 

(CMNs)/Other 

Documents

Medicare publishes coverage rules on what goods and services the program 

will pay for and under what circumstances it will pay or not pay for certain 

goods and services. Providers sometimes bill Medicare, showing a billing 

code for a covered item or service when, in fact, a noncovered item or 

service was provided. Further, providers sometimes intentionally falsify 

statements or other required documentation when asked to support 

payments for claimed services or supplies. In particular, investigators have 

determined that falsification of CMNs—documents evidencing 

appropriately authorized health care professionals’ assertions regarding 

the beneficiaries’ needs for certain types of care or supplies, such as home 

health and hospice services or certain durable medical equipment—occur, 

providing unscrupulous providers and suppliers additional opportunities to 

abuse Medicare.

For example, a provider billed for an orthotic knee brace, when in fact the 

provider was providing Medicare beneficiaries with nonelastic 

compression garments and leggings. Although knee orthotics are 

reimbursed by Medicare and Medi-Cal2

 for a total of over $650 per brace, 

the nonelastic compression garment is not reimbursed by Medicare. The 

total billings totaled approximately $332,055.

Upcoding One type of incorrect coding is called “upcoding.” Upcoding cases result 

from health care providers changing codes on claim forms submitted to 

Medicare, causing reimbursements to be paid at higher rates than are 

warranted by the service actually provided. Upcoding can also result from 

providers billing for services actually provided by nonphysicians, which 

would be paid at a lower reimbursement rate.

For example, a provider allegedly submitted false claims for services 

provided by physicians in training and inflated (upcoded) claims in 

connection with patient admissions services. The provider paid the U.S. 

government $825,000 primarily to settle allegations resulting from an audit 

performed by the HHS OIG. The audit was triggered by a lawsuit filed by 

private citizens as authorized by the False Claims Act (31 U.S.C. sections 

3729−3733).

2

The Medicaid program for the State of California is known as the Medi-Cal program.
Appendix II

Definitions and Examples of Common Types 

of Potential Fraud and Abuse Referrals

Page 42 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Fraudulent Cost 

Reporting

Falsifying any portion of the annual report submitted by all institutional 

providers participating in the Medicare program. The report is submitted 

on prescribed forms, depending on the type of provider (e.g., hospital, 

skilled nursing facility, etc.). The cost information and statistical data 

reported must be current, accurate and in sufficient detail to support an 

accurate determination of payments made for the services rendered. 

For example, a provider billed Medicare for hundreds of thousands of 

dollars for personal expenses disguised as legitimate healthcare expenses. 

The personal expenses billed included an addition to a private home, 

vacations, and beauty pageant gowns. The provider was fined over 

$500,000 for the fraudulent billings.

Kickbacks and 

Accepting/Soliciting 

Bribes, Gratuities, or 

Rebates

Section 1128B of the Social Security Act, 42 U.S.C. § 1320a-7b(b), makes it a 

felony to solicit, receive, offer, or pay a kickback, bribe, or rebate in 

connection with the provision of goods, facilities, or services under a 

federal health care program, including Medicare.

For example, a provider agreed to plead guilty to conspiracy, mail fraud, 

and violating the anti-kickback provision and to pay $10.8 million in 

criminal fines in connection with its scheme to defraud Medicare. The 

pleas relate to kickbacks and false Medicare billings made in connection 

with the provider’s receipt of fees from another company for the provider’s 

management of certain home health agencies.
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Appendix III

Comments From the Health Care Financing 

Administration ApendxiI
Appendix III

Comments From the Health Care Financing 

Administration

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Appendix III

Comments From the Health Care Financing 

Administration

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Appendix III

Comments From the Health Care Financing 

Administration

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Appendix III

Comments From the Health Care Financing 

Administration

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Appendix III

Comments From the Health Care Financing 

Administration

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Appendix III

Comments From the Health Care Financing 

Administration

Page 49 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud
Page 50 GAO/AIMD/OSI-00-281 Measuring Potential Medicare Fraud

Appendix IV

GAO Contacts and Staff Acknowledgments ApendxiIV

GAO Contacts Kay Daly, (202) 512-9312

Jim Kernen, (404) 679-1938

Acknowledgments In addition to those named above, Shawn Ahmed, Aditi Archer, Bill Hamel, 

Don Hunts, and Meg Mills made key contributions to this report.

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