Poor contract management at the Centers for Medicare and Medicaid Services is increasing the government's risk of making improper contract payments, the Government Accountability Office found.

Nearly 85 percent of Medicare and Medicaid Services (CMS) contracts contained actions where the agency failed to follow government acquisition regulations, GAO found. For example, the agency awarded cost-reimbursement contracts without ensuring the contractor had accounting systems that were accurate. In other cases, managers did not certify that vendors' charges matched contract agreements. In many cases, managers paid bills without certifying that the services vendors charged for were completed or permitted under the contract, GAO found.

GAO said CMS doesn't have the policies, staff, planning and funding resources in place to help it manage its contracts, nearly $2.5 billion in 2008. Of the 2,441 contract actions CMS took in 2008, GAO sampled 102, accounting for $141 million in contract spending.

CMS acting administrator Charlene Frizzera concurred with the recommendations in an Oct. 2 letter. However, she claimed the shortcomings GAO found were "perceived documentation deficiencies,'' rather than actual incidents that resulted in fraud, waste and abuse.

The report, released Nov. 24, comes one week after the Office of Management and Budget reported a large increase in the amount of improper payments made by federal agencies, including CMS. Beneficiary claims against Medicare and Medicaid Services programs accounted for $55 billion of the $98 billion in erroneous payments reported governmentwide, according to OMB.

CMS employs contractors to process beneficiary claims. Contractors also staff CMS help lines, provide management and consulting services, assist with financial management and support information technology systems.

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