Kelly Kennedy, USA TODAY
WASHINGTON -- The Medicare system may never collect more than $543 million in overpayments made in 2010, a federal inspector general's report released Tuesday shows, because Medicare entered only a summary of each bill in its new system.
The new accounting system for the Center for Medicare Services (CMS) and systems used by Medicare contractors did not extract data automatically, the report said, so information about providers and contractors was lost. Medicare officials, the report said, determined it would require thousands of hours to re-enter data on health care providers into the new system.
The lack of accurate information also makes it difficult to determine where the errors were made, who might be defrauding the system and which providers have re-entered the system under a new name while still owing the government money, according to the report by the Department of Health and Human Services inspector general.
Overpayments occur when the government pays a provider too much after a billing error. There was a combined $9.6 billion in overpayments for Medicare Parts A and B in 2010.
The report found that Medicare provided detailed information on only seven of 39 delinquent contractors the inspector general asked for, or about $69 million of the unrecovered money. Some contractors told the inspector general that many providers aren't notified of overpayments if the government doesn't provide basic information, such as good mailing addresses for the providers.
Investigators found that Medicare should have used an automated system to extract the provider data to make it accessible for the new Medicare accounting system.
"Reducing the incidence of overpayments is a high priority for CMS," agency spokesman Brian Cook said. "Even as an overpayment is designated 'currently not collectible,' we continue to aggressively pursue repayment, including through our own internal processes, referral to the Department of Treasury and extended repayment schedules."
Medicare has improved its method of limiting overpayments before they are made, wrote Marilyn Tavenner, Medicare's administrator, in a letter to the inspector general.
Information about some Medicare providers has fallen through the cracks, the report said, because some providers have changed addresses and not given updated information to the government. In other cases, the inspector general recommended Medicare use tax identification numbers to collect overpayments from providers who have resumed business without paying previous bills.
CMS said it's the responsibility of the provider to enter correct address information in the new system. In the past, the government mailed checks to providers. However, providers receive payment through direct deposits into their banking accounts, which means they might not be as concerned about making sure their address is correct in the system as they had been in the past.