WASHINGTON | Tue Mar 1, 2011 12:13am EST - Democratic senators on Tuesday expressed concern that companies hired to help pay and oversee medical claims under the Medicare health insurance program may have costly conflicts of interest.

Subsidiaries of WellPoint Inc, Hewlett Packard Co's EDS Corp., now called HP Enterprise Services, and other companies have "numerous relationships" that raise concern, the lawmakers' staff wrote in memo released on Tuesday.

Congressional staffers said they looked at those and several other Medicare contractors that the government has hired to monitor the bills that doctors and other health care providers send the government after treating Medicare patients.

The staffers found that some companies had "clear financial relationships" such as being a subsidiary of another company charged with actually paying out a claim and processing it, according to the memo.

The Centers for Medicare and Medicaid Services (CMS), an agency of the Department of Health and Human Services (HHS), oversees Medicare, the federal program that provides health insurance to about 47 million elderly and disabled Americans.

CMS uses private companies for a range of activities from billing services and payment oversight to providing alternative, privately run drug benefits or health coverage.

"We need a thorough examination of relationships between the contractors paying Medicare claims and their related corporate entities in charge of overseeing those same payments to make sure taxpayer dollars aren't being wasted," Senate Finance Committee Chairman Max Baucus said in a statement.

Congress holds hearings

The findings by congressional staffers come as both houses of Congress this week prepare to look at healthcare waste and fraud.

On Wednesday, the Senate Finance Committee and the House of Representatives Energy and Commerce Committee plan to question Obama administration officials and others about Medicare and Medicaid fraud. Medicaid is the state-federal health insurance program for the poor.

Overall, incorrectly paying health care providers too much money is estimated to cost the federal government nearly $50 billion a year while abuse costs about $60 billion, according to the staff findings.

Such lost revenue is a major concern for lawmakers struggling to pass the federal government's budget while grappling with a soaring deficit.

Medicare is the nation's largest buyer of health care services in the United States -- it paid out, for example, $502 billion in 2009 benefits. It also is the government's biggest entitlement program.

Experts had expected the program to go bankrupt as early as 2017 but now see it surviving until 2029 in the wake of payment cuts and other changes made under President Barack Obama's health care reform law passed last year.

Lawmakers of both parties and the Obama administration have pointed to curbing financial waste as one way to save the government billions of dollars.

Along with Senators Tom Carper and Claire McCaskill, who chair subcommittees on the Homeland Security and Governmental Affairs Committee, Baucus is asking the U.S. Department of Health and Human Services' inspector general to investigate.

If there are conflicts of interest, that does not necessarily mean the companies are engaged in fraud or waste, the lawmakers' staff said in their memo. But even if they are not, it could still lead to the appearance of a problem, they added.

(Reporting by Susan Heavey; Editing by Will Dunham)

© 2010 Thomson Reuters. Click for Restrictions.

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