KPMG’s Conflict of Interest in Medicare Fraud Examined

The General Accounting Office has released a report examining the "odd dual role" of the accounting firm KPMG, which was "publicly implicated" for Medicare fraud even while under "a federal contract to police" Medicare, the New York Times reports. The accusations stem from a December 1997 Times article demonstrating that KPMG "'clearly abetted' an effort by the company then known as the Columbia/HCA Healthcare Corporation in a scheme to defraud federal health programs." The Times article was published three months after HCFA awarded KPMG a contract "to perform audits for Medicare and similar federal health programs." The GAO report blames the government's continued use of KPMG on "a series of miscommunications and mistakes" by HCFA, and asserts that "no information about the [fraud] accusations was provided within [HCFA] to the appropriate personnel involved in extending the KPMG contract." House Commerce Committee spokesperson Peter Sheffield said, "It is beyond comprehension that HCFA, in an effort to fight Medicare fraud, would hire the fox to guard the henhouse" (Eichenwald, New York Times, 12/01). The full report may be accessed at http://www.gao.gov/cgi-bin/fetchrpt?rptno=gao-01-136r.