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Auditors Question $90 Million In Medicare Costs

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By KEVIN FREKING, The Associated Press

Published: December 21, 2007

WASHINGTON - Government auditors said they found nearly $90 million in potentially questionable payments from the Medicare program to contractors helping enact the prescription drug benefit for the elderly and disabled.

The government's Centers for Medicare & Medicaid Services paid $735.4 million to more than 250 different contractors and vendors. Most of the money went to 16 major contractors. The drug benefit kicked in Jan. 1, 2006.

The contractors helped with marketing and with oversight of the 1-800-Medicare help line. They also provided technical expertise. The questionable payments represent about $1 out every $7 spent.

Auditors said they found payments that did not comply with the terms of contracts. In other cases, the agency could not obtain adequate documentation to support costs billed. In one case, the agency was billed twice for $95,000 worth of equipment.

The auditors said that Medicare's contracting has more than doubled during the past decade. Yet, the number of full-time employees providing contract oversight went up 11 percent during that time.

"This trend presents a major challenge," the Government Accountability Office said.

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