$42 Billion Saved in Medicare and Medicaid Primarily Through Prevention

By Shantanu Agrawal, M.D. Deputy Administrator and Director, Center for Program Integrity

Today, CMS released a report showing that investments made in program integrity activities – which include stamping out fraud and deterring and reducing other improper payments – pay off for taxpayers and beneficiaries.  From October 1, 2012 through September 30, 2014 (Fiscal Year (FY) 2013 and FY 2014), every dollar invested in CMS’ Medicare program integrity efforts saved $12.40 for the Medicare program.

This means that all our efforts – making sure health care providers enrolled in our programs are properly screened; using predictive analytics to prevent fraud, waste, and abuse; and  coordinating our anti-fraud efforts with our federal and external partners – have resulted in billions of dollars saved in Medicare and Medicaid over the two-year period.

CMS is dedicated to promoting better care, protecting patient safety, reducing health care costs, and providing people with access to the right care, when and where they need it.  This includes continually strengthening and improving Medicare and Medicaid programs that provide vital services to millions of Americans.  We take our responsibility to deliver better care at a better value seriously.

An important part of this mission is to ensure that the resources the nation devotes to health program is used to keep our nation’s seniors and low-income families healthy.  This is why CMS has a comprehensive and robust program integrity strategy that addresses and prevents potentially fraudulent and improper payments in Medicare and Medicaid.  Enhancing program integrity; reducing fraud, waste, and abuse; and tackling all types of improper payments ultimately helps protect current beneficiaries and also protects these programs for future generations.

Medicare and Medicaid Program Integrity Report to Congress

The report highlights CMS’s significant achievements in reducing potentially fraudulent and improper payments.  Total savings from program integrity efforts were nearly $42 billion over the two-year period covered by the report.  This equates to an average savings of $12.40 for each dollar spent on Medicare program integrity alone.  These savings represent funds that remain available to provide needed health care to Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries nationwide and reflect the increasing success of CMS’ efforts to proactively prevent improper payments.

CMS has achieved this impact by using a multifaceted approach, ranging from provider enrollment and screening standards, to use of enforcement authorities, to use of advanced analytics such as predictive modeling. We have previously reported on various outcomes tied to specific programs, some of which can be found here.

More importantly, CMS’s efforts to proactively prevent potentially fraudulent and improper payments from being made have been increasingly effective, moving our efforts away from the “pay-and-chase” method of recovering payments after they had already been made.  In fiscal year 2013, savings from prevention activities represented about 68 percent of total savings.  In fiscal year 2014, the portion of savings from preventing potentially fraudulent and improper payments rose to nearly 74 percent.  This development means that more taxpayer dollars intended to care for the beneficiaries are not being paid at all, avoiding the need to recover improperly paid amounts from health care providers and suppliers.  Preliminary information from FY 2015 indicates that CMS’s program integrity efforts continue to accrue savings of this magnitude and that the portion attributed to prevention continues to increase.  CMS will release FY 2015 numbers later this year.

CMS collaborates with various partners when implementing efforts to prevent or reduce potentially fraudulent payments and to correct improper payments in Medicare and Medicaid.  Assistance from our contractors, state Medicaid agencies, and law enforcement partners are also instrumental in this effort when potentially fraudulent and improper payments result from intentionally fraudulent activities.

CMS remains committed to implementing a robust program integrity strategy to protect beneficiaries from harm and further safeguard taxpayer funds by paying only for appropriate health care items and services.  To this end, CMS continuously evaluates and updates its program integrity strategy.  We welcome input from beneficiaries, providers, suppliers, and others to inform possible future enhancements to our program integrity strategy.  Please contact us at 1-800-MEDICARE (1-800-633-4227) or TTY: 877-486-2048 with your thoughts or to report potentially improper billing.

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