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Expanding the Clinton Administration's campaign against Medicare waste, fraud and abuse, the Health Care Financing Administration today named 12 businesses as the program's first-ever Medicare Integrity Program contractors devoted to protecting the Medicare Trust Fund.

These special contractors, which include technology and accounting businesses, bring additional expertise to conduct audits, medical reviews and other tasks to stop and prevent waste, fraud and abuse. Until now, Medicare relied only on the same private insurance companies that pay and process Medicare claims to perform such critical program-integrity tasks.

HCFA also released its first six assignments for these special contractors, which will submit bids to perform specific tasks to prevent and reduce improper Medicare payments, including auditing cost reports for large national health-care chains and identifying areas to target for additional national provider education.

These tasks will supplement the program integrity work already being performed by Medicare's existing contractors. HCFA will issue additional task orders in the future, and each company may receive some work over the next five years.

Hiring these special contractors is part of the Clinton Administration's overall strategy to ensure that Medicare pays claims appropriately and to root out fraud and abuse. Its efforts, which involve HCFA, the HHS Inspector General, the Department of Justice, and other federal, state and private partners, have contributed to a dramatic decline in improper Medicare payments and returned $1.2 billion to the Medicare Trust Fund in the past two years.

According to annual audits by the HHS Inspector General, Medicare's improper payment rate fell 45 percent over the past two years, from 14 percent in fiscal year 1996 to 7.1 percent in fiscal year 1998. The latest audit credits the improvement to the administration's anti-fraud and abuse efforts; HCFA's corrective action plan; and improved compliance by hospitals, doctors and other health-care providers."We are making solid progress, and these new contractors will help us build on that progress," HCFA Administrator Nancy-Ann DeParle said. "Medicare dollars must be spent on legitimate services for our 39 million beneficiaries. This new initiative will help us find and stop both honest errors and unscrupulous practices that harm Medicare."

Medicare obtained the authority to hire these additional contractors, who have expertise in conducting audits, medical reviews and other program integrity activities, through the Health Insurance Portability and Accountability Act. HCFA will pay for their work this year with a small portion of the dedicated funds for program integrity provided by HIPAA.

HCFA solicited applications from private businesses in September. HCFA selected 12 from the 24 applicants, based on their ability to perform essential tasks to promote program integrity.

These companies now will compete for specific work assignments, starting with the six task orders released today. Contractors will be chosen this summer for each of these tasks:

• Conducting cost-report audits for large health-care chains. This task requires careful review of the way large chains allocate the costs of their home offices to ensure that Medicare pays those providers appropriately.
  
  
• Preventing possible Year 2000 threats to program integrity. This task involves national data analysis to detect and prevent potential risks of fraud and abuse during the critical months surrounding the millennium change.
  
  
• Conducting on-site reviews of Community Mental Health Centers. Building on HCFA's ongoing CMHC initiative, these reviews require qualified mental health professionals to conduct unannounced visits to CMHCs to ensure that they provide the services required by law and meet all other applicable federal and state requirements.
  
  
• Identifying effective areas to target for national provider education. This task requires analysis of data and trends, surveys of health-care providers, and other research to develop an educational plan. If HCFA accepts the proposal, the contractor could be asked to carry out the education campaign.
  
  
• Performing data analysis and other activities to support the fraud units in New England. This work will support the efforts of the relatively small fraud units at New England's Part A Medicare contractors, which will continue their current workload and staffing levels. The contractor will analyze regional data and develop fraud cases.
  
  
• Ensuring providers comply with settlement agreements with the Office of Inspector General. This work involves may involve on-site reviews of providers with corporate integrity agreements to ensure they meet the terms and follow proper procedures.
  

The 12 contractors named today are: Aspen Systems, Rockville, Md.; Blue Cross/Blue Shield of Alabama, Birmingham; Computer Sciences Corp., Falls Church, Va.; California Medical Review, San Francisco; DYN Corp., Reston, Va.; Electronic Data Systems, Plano, Texas; Lifecare Management Partners, Inc., Alexandria, Va.; Reliance Safeguard Solutions, Inc., Syracuse, N.Y.; Regence Blue Cross/Blue Shield of Utah, Salt Lake City; Science Applications International. Corp., Vienna, Va.; Tri-Centurion, L.L.C., Columbia, S.C.; and United Government Services, Milwaukee, Wis.

Hiring these special contractors is one aspect of HCFA's Comprehensive Plan for Program Integrity, which was issued in February. "Most health-care providers want what we want -- fair reimbursement for providing quality care to the elderly, disabled and other Americans that rely on Medicare," DeParle said. "By continuing to work together, we can help keep Medicare strong today and in the future."