Medicare is critical to our nation, providing health coverage for more than 54 million American seniors and disabled individuals. Given its paramount importance, as well as the looming financial insolvency the program faces, it is simply unacceptable that improper payments are continuing to soar in the Medicare program.

These improper payments waste taxpayer dollars while compromising the financial integrity of the Medicare program and undermining our ability to provide needed healthcare services to those who depend on this vital program.

The Senate Special Committee on Aging, on which I serve as Ranking Member, recently held a public discussion on this matter and released a related report. Our report outlines the troubling prevalence of Medicare improper payments, as well as ways that the Center for Medicare and Medicaid Services (CMS), the Agency that administers the Medicare program, should work to improve the auditing process that is supposed to identify those payments that should not be made — due either to error or fraud.

We have known for far too long that the Medicare program is at high risk for improper payments. For decades, the Government Accountability Office (GAO) has identified the program as being susceptible to fraud and improper payments. In 2013, CMS reported an estimated $50 billion in improper payments. This is a trend that must be reversed.
In 2010, Congress passed the Improper Payments Elimination and Recovery Act which required that Secretaries of Departments across the government to take steps to reduce improper payments. As a consequence, improper payments have declined in many federal programs.

Improper payments have, however, soared in the Medicare program. Improper payments in fee-for-service Medicare went from 8.5 percent in 2012 to 10.1 percent last year. That means that more than one out of every ten of these Medicare payments was made incorrectly.

Moreover, these improper payments have increased at a time when CMS has been hiring more contractors to review Medicare claims and conduct audits. The increase in audits has not translated into a reduction in improper payments. In fact, Medicare is currently experiencing its highest improper payment rate in five years.

Doctors, dentists and hospitals are frustrated by multiple audits and claims appeals that are duplicative, confusing, and poor coordinated. Responding to claims of over-payments can be particularly difficult for small community hospitals, often diverting resources from patient care and causing them time and money even when they win on appeal. Most important, these audits are doing little to reduce improper payments.

I have long believed that Medicare must shift from a “pay and chase” strategy to combat fraud and abuse to one that prevents the harm from ever occurring. CMS’s current strategy to reduce improper payments is based on the “pay and chase” model, and focuses on identifying and recovering payments after they have been made. I believe that CMS needs to work more with providers on the front end to make sure that claims are submitted properly. The surest way to reduce improper payments is to prevent them from ever being made in the first place.

Ensuring the financial integrity of the Medicare program is critical to the 54 million older and disabled Americans who depend on it. CMS must do more to combat the unacceptable improper payments.