March 1, 2011 / 5:15 AM / 9 years ago

Lawmakers question Medicare payment contractors

WASHINGTON (Reuters) - Democratic U.S. senators on Tuesday expressed concern that companies hired to help pay and oversee medical claims under the Medicare health insurance program may have costly conflicts of interest.

A patient waits in the hallway for a room to open up in the emergency room at a hospital in Houston, Texas, July 27, 2009. REUTERS/Jessica Rinaldi

Subsidiaries of WellPoint Inc, Hewlett Packard Co’s EDS Corp., now called HP Enterprise Services, and other companies have “numerous relationships” that raise concern, the lawmakers’ staff wrote in memo released on Tuesday.

Congressional staffers said they looked at those and several other Medicare contractors hired by the government to monitor the bills that doctors and other healthcare providers send the government after treating Medicare patients.

The staffers said some companies had “clear financial relationships” such as being a subsidiary of another company charged with actually paying out a claim and processing it.

HP Enterprise Services spokeswoman Ericka Floyd told Reuters its subsidiaries had no conflict of interest and “have different scopes of work that do not overlap.”

WellPoint spokeswoman Kristin Binns said the company “is confident that it is fully compliant” with Medicare’s conflict of interest rules.

The Centers for Medicare and Medicaid Services, an agency of the Department of Health and Human Services, oversees Medicare, the federal program that provides health insurance to about 47 million elderly and disabled Americans. It uses private companies for a range of activities from billing services to drug benefits.

“We need a thorough examination of relationships between the contractors paying Medicare claims and their related corporate entities in charge of overseeing those same payments to make sure taxpayer dollars aren’t being wasted,” Senate Finance Committee Chairman Max Baucus said in a statement.


The staffers’ findings come as both houses of Congress this week prepare to look at healthcare waste and fraud.

On Wednesday, the Senate Finance Committee, the House of Representatives Energy and Commerce Committee and the House Ways and Means Committee all plan to question Obama administration officials and others about Medicare and Medicaid fraud as well as abuse affecting private insurers. Medicaid is the state-federal health insurance program for the poor.

Overall, incorrectly overpaying healthcare providers is estimated to cost the federal government nearly $50 billion a year while abuse costs about $60 billion, according to the staff findings.

Such lost revenue is a major concern for lawmakers struggling to pass the federal government’s budget while grappling with a soaring deficit.

Lawmakers of both parties and the Obama administration have pointed to curbing financial waste as one way to save the government billions of dollars.

Along with Senators Tom Carper and Claire McCaskill, who chair subcommittees on the Homeland Security and Governmental Affairs Committee, Baucus is asking the U.S. Department of Health and Human Services’ inspector general to investigate.

If there are conflicts, that does not necessarily mean the companies are engaged in fraud or waste, the lawmakers’ staff said in their memo. But even if they are not, it could still lead to the appearance of a problem, they added.

Reporting by Susan Heavey; Editing by Will Dunham and Bill Trott

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