SUPPORTING INFORMATION program, procedures, responsibilities, and time lines to continually achieve more efficiencies while ensuring the requirements reflect the current standard of practice in laboratory medicine. By being flexible and results-oriented, the program has been successfully implemented as each of the agencies responds to the dynamic healthcare environment. SUPPORTING INFORMATION Audited Financial Statement CMS's corrective action plan (CAP) addresses each of the three sections of the financial statement audit: the opinion on the principal statements; the report on internal controls; and the report on compliance with laws and regulations. CMS completed the update of the current CAP for activities through September 30, 2001. The following narrative response focuses on our accomplishments and plans for the part of the CAP that addresses the opinion on the principal statements. In fiscal year (FY) 2000, CMS received an unqualified audit opinion. However, our auditors continue to report material weaknesses in financial systems, central office (CO) and regional office (RO) oversight, and Medicare electronic data processing controls. CMS is making the following efforts to correct these weaknesses: During FY 2001, CMS: (1) tested financial management internal controls during Statement on Auditing Standards (SAS)–70 reviews at 13 Medicare contractors using certified public accounting (CPA) firms, (2) conducted contractor performance evaluation reviews of financial management issues at 6 Medicare contractors, and (3) reviewed accounts receivable balances at 12 Medicare contractors using CPA firms. Contractor financial reporting instructions have been revised and issued to all contractors. The CMS 750/751 Contractor Financial Reports and CMS RO accounts receivable reports have been reformatted to enable contractors, CO, and ROS to provide more detailed financial data. The revised instructions, which took effect October 1, 2001, were presented to Medicare contractors during two financial reporting training conferences held in June 2001. CMS issued final instructions for the CO/ROS to implement regarding the processing and follow up of corrective action plans (CAPS) resulting from Chief Financial Officer (CFO) audits, SAS -70 reviews, as well as other financial management audits and reviews performed by consulting/certified public accounting firms, the Office of Inspector General (OIG), and the General Accounting Office. During FYs 2000 and 2001, CMS hired consultants to assist us in developing analytical tools necessary to perform more expansive trend analysis of critical financial and related data, specifically accounts receivable. These tools provide the steps necessary to identify unusual variances and potential areas of risk of errors or misstatements of reported financial data. Additionally, the tools allow CMS to follow up with Medicare contractors, and determine the need for additional actions to ensure that problems are adequately resolved. These SUPPORTING INFORMATION enhancements along with additional staff members hired during FY 2000, June 30, 2000. CMS is now performing a more structured and robust financial Our long-term plan is to develop and implement the CMS Healthcare Integrated General Ledger Accounting System (HIGLAS). This project is a key element of our strategic vision to develop a state-of-the-art accounting system that will encompass all Medicare contractor and CMS financial activities. CMS will continue to enhance Medicare electronic data processing (EDP) access controls through improvements in training, risk assessments, system administration, and internal audits. CMS will develop procedures that will allow contractors to resolve processing problems without requiring use of the source code and will implement systems changes to establish internal controls over this process. The efforts discussed above helped CMS to maintain its unqualified audit opinion and improve its internal controls and compliance with laws and regulations. Mandatory Costs: Claims Review: In FY 2003, CMS will continue to be responsible for claims review, a part of the substantive testing process for the CFO audit. This activity will be funded through the Medicare Integrity Program (MIP) budget at an estimated cost of $4.7 million. The methodology for this is outlined in the OIG report, Improper FY 2000 Medicare Fee-for-Service Payments. Generally, it consists of a medical records review or "look behind" of all claims submitted for 600 beneficiaries drawn from a sample of 12 contractor quarters; an estimate of the Medicare fee-for-service payment error rate is calculated from this review and projected to the program. The OIG oversees this review which is done by Medicare contractor staff. SAS-70 Reviews: CMS's MIP budget will also fund SAS-70 reviews of financial management internal controls at the Medicare contractors. FY 2002 reviews will be split funded $1.5 million from FY 2001 and $3.75 million from FY 2002-for a total of $5.25 million. SUPPORTING INFORMATION Discretionary Costs: The Medicare Operations line item within the Program Management account funds the CFO audit at an annual estimated cost of $4.8 million. This account also funded the following items in FY 2001: $1.9 million for CPA firms to review accounts receivable balances at 12 Medicare contractors; and $114,000 for development of a database that will contain all financial management guidance and instructions that CMS components have provided to contractors. SUPPORTING INFORMATION Health Care Fraud and Abuse Control Health Care Fraud and Abuse Control (HCFAC) Account Section 1128C of the Social Security Act established the Health Care Fraud and Abuse Control (HCFAC) program. Section 1817 of the Social Security Act established HCFAC in the Federal Hospital Insurance (HI) Trust Fund, as well as the levels of funding for the activities in this account. Funds are permanently appropriated and are made available through the appropriation process. Section 1893 of the Social Security Act established the Medicare Integrity Program (MIP). The HCFAC account funds the MIP and other health care fraud and abuse control activities. In addition to MIP, funds are provided for the FBI, the HHS OIG, and other HHS and of Justice agencies. Funding for these non-OIG agencies is known as Department "wedge" money, a term from the original negotiations about the bill. The activities and agency are, by statute, negotiated between the Attorney General and amounts for each the Secretary of HHS. Priorities and Strategies strive in every Reducing fraud, waste and abuse continues to be a top priority of CMS in FY 2003. We case to pay the right amount, to a legitimate provider, for covered, reasonable and necessary services provided in the appropriate setting to an eligible beneficiary. |