Watchdog sounds alarm on fraud risks in federal health insurance program

The U.S. Government Accountability Office is warning in a new report that weaknesses in oversight within the federal government’s health insurance program for federal workers may have allowed thousands of potentially ineligible medical providers to receive payments.

The report, released April 29, examined the Federal Employees Health Benefits Program, the nation’s largest employer-sponsored health insurance system, which covers more than 8 million federal employees, retirees and family members at an annual cost of roughly $70 billion.

Federal auditors found that gaps in screening and verification procedures by the Office of Personnel Management and its Inspector General’s office allowed some deceased providers and providers barred from federal health programs to continue participating in the system. 

As many as 2,000 ineligible claims paid

"Taking additional steps to identify providers who are deceased or excluded from other federal programs would help OPM and OPM/OIG prevent fraud and improper payments in the FEHB program," read the report. "For example, comparing death data with FEHB claims could help prevent improper payments or fraud in FEHB claims payments."

According to the report, GAO identified claims linked to approximately 400 deceased providers as well as more than 2,000 claims involving providers excluded from federal programs.

Investigators said the improper claims represented only a small portion of overall payments but highlighted continuing vulnerabilities to fraud and improper spending. The report also found that some insurance carriers administering federal employee health plans failed to consistently notify patients when their providers had been suspended or debarred, despite existing requirements to do so. 

Verification "Isn't always working" GAO says

'"The Office of Personnel Management is responsible for managing fraud risks in the program. But OPM's process for verifying whether health care providers were eligible to provide care under the program isn't always working," the GAO said. 

"For example, our data analyses identified claims from providers who were deceased or excluded from other federal programs for certain violations," the watchdog said. In some cases, providers allegedly continued billing the system months after they lost eligibility.

One case cited in the report involved a provider who had been debarred after a conviction tied to falsified Medicaid counseling records. Auditors said the provider delayed submitting claims for several months, allowing payments to be processed even after the debarment took effect.

GAO issued 15 recommendations aimed at tightening oversight, including stronger procedures for identifying deceased providers, improved data matching with federal exclusion databases and clearer requirements for notifying patients about suspended providers.

The Office of Personnel Management and its inspector general agreed with the recommendations, according to the report.