State health care analysts react to investigation saying Medicare provider data ‘inaccurate, incomplete and inconsistent’

OKLAHOMA CITY — On the eve of an historic expansion of the federal government’s role in American healthcare, an Inspector General’s report for the Department of Health and Human Services has found Medicare databases riddled with errors and wide open to fraud.

Health care professionals and analysts in Oklahoma had conflicting reactions to the IG’s conclusions.

Responding to reports on massive potential for fraud, Nico Gomez, chief executive officer at the Oklahoma Health Care Authority told CapitolBeatOK, “Frankly I’m not surprised by the story. It is a point of frustration for many of us in the states. We’d like to share more information with our Medicare partner on the federal side, but this is an area of concern we have.”
Asked if the report indicated the feds cannot manage current information, let alone handle a vastly expanded system, Gomez said, “whether or not the federal government can take on the envisioned expansion of responsibility when the record for existing data is so murky – I don’t necessarily have an opinion on that right now. But I don’t think it’s irrational to be asking the questions.”
The inspector general’s report in question was released four weeks ago. It found the data systems used to catalog the records of Medicare providers were riddled with inaccurate or incomplete information. The report found 97 percent of files studied revealed internal inconsistencies.

The IG’s report focused on two Medicare databases that manage important provider information, the National Plan and Provider Enumeration System (NPPES) and the Provider Enrollment, Chain and Ownership System (PECOS).

The inspector general’s report found Medicare’s databases for processing medical providers “inaccurate”, opening the door for potential waste, fraud and abuse. The systems contain information and identifiers of healthcare providers enrolled in Medicare and assist the government system in processing payments to those providers. The report found data in both systems was “often inaccurate and occasionally incomplete, and were generally inconsistent between the two databases.”
Nearly half — 48 percent — of the files containing identifiers assigned to providers by the Centers for Medicare & Medicaid Services were inaccurate. PECOS, which is used to process provider information, had inaccuracies in 58 percent of its files. When provider information from both databases was compared, 97 percent of the files had conflicting information, including the addresses of providers that were billing Medicare.

Dr. Katherine Scheirman of Oklahoma City, an advocate of ACA and of Medicaid expansion, told CapitolBeatOK, “I don’t think this report is in any way relevant to the implementation of the Affordable Care Act.
“In the first place, Medicare is a separate program, unrelated to care provision in the ACA. Insurance/care through the ACA is through either (1) private insurance companies, via the exchanges, or (2) in states that agree to it, expanded Medicaid coverage for those below 138% of the Federal Poverty Level.  As you know, the states run their own Medicaid programs.
“Of note, this audit was done by the HHS IG, a routine way of improving performance in agencies. These databases are used for paying providers, and do not contain actual medical records of patients, just billing information.”
The national report found that CMS did not verify most of the information in either database, raising the possibility that fraudulent information had been used to scam the system. The report found that while CMS had processes in place to verify provider data, “the manner in which CMS implemented these processes impeded efforts to ensure that the databases contained accurate information.”

Faced with surging provider applications to fill the increased role of Medicare, CMS allowed for the suspension of other verification processes that may have caught inaccurate data.

“The suspension of provider enrollment verification activities at a time of increased application volume could have compromised the accuracy and completeness of PECOS data, increasing the vulnerability of the Medicare program to fraud and abuse,” the IG’s report said.

Two Oklahoma conservatives disagreed with Dr. Scheirman’s upbeat response to the IG report.

State Rep. Mike Ritze, R-Broken Arrow, observed, “Few of the assorted promises about ObamaCare are being kept, as should have been obvious from the beginning even to mass media commentators or other vaguely sentient beings. Premiums are rising; total health spending continues to jump; coverage is being cut back and cancelled; and employment itself is suffering from what has already occurred and what is around the corner.”

Jonathan Small, fiscal policy analyst for the Oklahoma Council of Public Affairs, the state’s largest free market “think tank,” told CapitolBeatOK, “The inspector general’s report detailing of rampant and systemic database errors and high susceptibility to fraud is exactly why it is highly likely that Obamacare Medicaid and insurance entitlements programs will fail. The evidence abounds that the federal government is horrible in estimating the cost and operational protocols necessary for large programs.”

The IG report, released May 29, came as the White House touted how the Affordable Care Act’s expansion of the government healthcare giant has ensured its solvency until at least 2026.

A press release from the Obama administration on May 31 cited the Medicare Trustees’ annual report, which said the Hospital Insurance Trust Fund’s long run actuarial deficit had been cut by more than 70 percent since the ACA became law, helping to project Medicare solvency for two years longer than the 2012 report.

The White House also highlighted new care models that incentivize providers to manage costs for Medicare patients, asserting, “(O)ur data and health information technology initiatives are driving a wave of innovation as entrepreneurs and innovators develop and deploy new digital tools to help clinicians deliver better care across the country.”

The IG report also noted that CMS oversight allowed for ineffective safeguards in the verification process and suspended others to expedite the processing of provider information.

The inspector general’s office recommended stronger oversight and safeguards after noting that three out of four providers identified inaccurate data in either system.

This report is adapted from a story first posted on Virginia Watchdog. Contact Patrick B. McGuigan at and follow us on Twitter: @capitolbeatok. Email Carten Cordell at