Medicare Funds Totaling $60 Billion Improperly Paid, Report Finds

Billions of dollars went wasted, according to the GAO.

The report says that the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, estimates that last year some $60 billion of American taxpayer money, or more than 10 percent of Medicare’s total budget, was lost to fraud, waste, abuse and improper payments.

The GAO investigation, obtained by ABC News, follows three previous reports by the agency revealing "a persistent weakness ... that increased the risk of enrolling entities intent on defrauding the Medicare program."

In 2013, an Inspector General report found utilizing addresses as “essential for identifying trends in fraud, waste, and abuse because they were the source of the most inaccuracies and inconsistencies.”

The law says to get paid, Medicare doctors have to bill from the actual office where they practice medicine, but the newly released report continued to find issues with address registration among enrolling physicians. "It's not a new problem," Carper said. "In fact about three years ago, we heard about this problem. The General Accountability Office, GAO, brought this problem, this concern, to us in the Congress."

Going even further back, in 1998, a Senate investigation into Medicare fraud found $6 million in payments to a “business” whose fake address would have been smack in the middle of the Miami Airport.

Congress held a hearing today on the report, with lawmakers demanding once more that taxpayer money isn’t sent to ineligible addresses. The GAO says it has been telling Medicare for years to utilize the United States Postal Service computer program, which can tell Medicare what kind of building is behind the address.

"It's not rocket science," Carper said. "The U.S. Postal Service actually puts out lists that can be purchased by Medicare, lists that say, these are the addresses of pretty much everybody, all the mailing addresses in our country. Medicare can use those to match. We have the ability to work with the postal service to find, is that a real building, is that a real office, or not?"

“Well, I think we have to be very careful," said Shantanu Agrawal, the deputy administrator and director for the CMS Center for Program Integrity. “So we have for example, a provider that might move from one site to another, who is a legitimate provider, and merely forgot to update their enrollment record.”

By law, a provider must update their record within 30 days of moving. Some of the addresses found by the GAO report had been listed for years. ABC News wanted to ask him more, but his aides rushed him away. A request for a follow-up interview was denied, but CMS did send a statement stating that they are committed to protecting the integrity of the program.

CMS added: "Improper payments are not necessarily fraudulent. An improper payment often results from a legitimate service billed by a legitimate provider—the documentation is missing, or the provider made a coding mistake. In fact, 60 percent of the improper payment rate is driven by such documentation issues and not by fraud."

The GAO report also found CMS did not properly check medical licenses for physicians. It found hundreds of physicians who had their licenses revoked for crimes, but not in the state where they were currently billing Medicare. In some cases, doctors who have been convicted of felony health care fraud have been found to have registered their medical licenses in other states and continued to bill Medicare.

Medicare responded to the finding saying they don’t have the authority to cross-check state license revocation or suspension in states where a physician is not set up to bill Medicare.