| Private insurers participating in Medicare have been allowed to keep tens of millions of dollars that should have been passed on to beneficiaries or returned to the government, and the Center for Medicare and Medicaid Services (CMS) has not properly audited the companies or attempted to recover the excess payments, according to the Government Accounting Office
www.gao.gov . Under federal law, Medicare officials are required to audit the financial records of at least one-third of insurance companies participating in Medicare annually. However, the report found that the mandate has never been met by the Bush administration. In 2001, federal officials audited 24% of participating private insurers, and that rate declined to 14% of participating companies in 2006 despite a steady increase in Medicare payments to private insurers. Federal audits are intended to determine whether insurers' bids correctly calculate their costs and premiums. If costs exceed expectations, insurers can receive extra payments, but they are expected to share some of the savings with beneficiaries and the government if costs fall below expectations. According to GAO, federal officials found significant errors at 41 of the 49 organizations that were audited in 2003, but no action was taken on the findings, which uncovered $59 million in excess payments. There were 220 plans participating in the program that year. GAO investigators said the money should have been used to help beneficiaries by reducing premiums or providing additional benefits.
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