Government auditors and independence

Here's an another good example of why auditor independence is so critical. The NY Times evidently broke the story after a report by the Inspector General at the U.S. Department of Health and Human Services was leaked. You can also read about it in the Miami Herald. In a report to be released next week, the Inspector General found that AdvanceMed, a company hired to audit claims payments by the Medicare program and calculate the rate of improper payments, was pressured to not follow written procedures. They were told to only verify payments with the vendors and not check medical or patient records to ensure that the item was prescribed and received. As a result, the Inspector General found that the rate of improper payments was much higher than reported by AdvanceMed.

According to one report this firm is a subsidiary of a larger company that is a major government contractor and that this made them susceptible to the pressure applied by the Medicare program. According to another report, the Government Accountability Office is in the early stages of auditing the same company for another project.