HCFA falls short in contractor oversight, auditors say

The Health Care Financing Administration must do a better job overseeing the private contractors it hires to process Medicare payments, according to General Accounting Office and inspector general reports presented Wednesday to the House Commerce Oversight and Investigations Subcommittee.

HHS Deputy Inspector General George Grob said private contractors have fallen short in financial management, in reporting fraud and, most egregiously, in "misusing government funds and actively trying to conceal their actions, altering documents and falsifying statements that specific work was performed."

Grob reported that investigations of contractors have resulted in nine civil settlements and two criminal convictions, while 21 cases are pending.

Subcommittee Chairman Fred Upton, R-Mich., lamented that, despite congressional oversight, "It just seems we haven't done a very good job. We've identified cases, and it persists and it persists and it persists."

Rep. Joe Barton, R-Texas, expressed his frustration, telling HCFA witnesses, "I expect you to take these reports seriously and not shuffle papers."

However, Democrats were quick to note that Republicans had pushed for privatization in a search for efficiency. Rep. Bart Stupak, D- Mich., questioned whether privatizing Medicare processing was any better than what government could do. "At what point do you stop contracting out and say that maybe government isn't as inefficient?" Stupak asked.

Presenting separate reports on HCFA oversight shortcomings and contractor abuses, GAO Chicago Field Office Manager Leslie Aronovitz highlighted detailed recommendations that HCFA should implement to strengthen its control of contractors. "We think HCFA needs to do a lot more things and be a lot more aggressive in overseeing their contractors," Aronovitz said.

HCFA Program Integrity Group Director Penny Thompson noted an audit that showed the agency had cut its payment error rate in half, to about $12.6 billion in fiscal 1998. "We are making substantial progress in fighting fraud, waste and abuse in the Medicare program and ensuring that we pay right," she said.

Thompson emphasized HCFA must do better and said the agency was making changes, including new contractor evaluations, stronger fraud reporting, better training and use of technology.