CMS needs to close out contracts, watchdog says

The Centers for Medicare & Medicaid is leaving the door open to possible overspending by not routinely closing out its billions of dollars' worth of contracts properly, according to a report from the Office of the Inspector General of the Department of Health and Human Services.

CMS, said the internal watchdog, had about of $15 billion obligated across 1,229 active contracts as of February 2014. According to the OIG report, work had been completed on more than 6,100 contracts at that time, but CMS didn't close them out properly under federal rules. There is a backlog of unclosed contracts dating back a decade, according to the report.

The closeout process under the Federal Acquisition Regulations is the agency's final chance to winnow out and recover improper payments. Delays in the process create financial risk to the agency.

"CMS continues to have thousands of contracts overdue for closeout, with 15 percent of contracts that completed before fiscal year 2011 at least 10 years overdue," the report said.

CMS told its OIG that it faces a number of obstacles in closing out contracts. The leading culprits, it said, are "constrained resources." The IG said while the agency hasn’t been consistently closing out contracts, it has been making progress on improving their timeliness in the last few years.