GAO Reports on CMS Fraud Prevention Activities.

The Government Accountability Office (GAO) recently released a report analyzing the Centers for Medicare and Medicaid’s (CMS) use of its data analytic system and the activities of its associated payer collaborative in identifying and investigating suspected fraudulent providers.  The GAO report also reviewed the types of Medicare fee-for-service claims denied by the data analytic system.  Since 1990, the GAO has designated Medicare as a high-risk program due to the complexity, size, and susceptibility to improper management of payments associated with expenditures of approximately $699 billion.   CMS is responsible for carrying out program integrity activities to reduce fraud, waste and abuse.  To carry out its program integrity responsibilities, CMS implemented the Fraud Prevention System (FPS) in 2011 to develop leads for fraud investigations and to deny improper payments.  Additionally, CMS, the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) established the voluntary public-private partnership, the Healthcare Fraud Prevention Partnership (HFPP), to facilitate a collaborative payor effort to address healthcare fraud.  To conduct its review, the GAO analyzed CMS reports to Congress detailing implementation of the CMS Fraud Prevention System (FPS), CMS documents, and CMS guides for information technology (IT) systems.  The GAO also conducted interviews with all seven Zone Program Integrity Contractors (ZPIC) and CMS officials regarding their use of the FPS to investigate and identify potential Medicare fraud.

The FPS analyzes Medicare claims on a pre-payment basis to identify health care providers with suspect billing patterns that may require further investigation to prevent improper payments.  Prior to implementing the FPS, CMS used a “pay and chase” method that involved paying bills from health care service providers first, and then investigating potential fraudulent claims to recover improper payments. The FPS pre-payment analysis uses provider billing patterns compared to a set of models consistent with fraudulent behavior, to identify suspect provider billing patterns and prioritize potential leads for investigators.  Automated payment edits may deny claims for Medicare rule or policy violations (i.e., coverage utilization limits), but claims are not denied solely on the basis of risk.  CMS’s review of aberrant billing patterns, such as a single provider rendering a disproportionate number of services in a single day, has resulted in expedited pre-payment edits and timely corrective actions.

The GAO reported that CMS’ fraud mitigation programs accomplished the following results in FY 2016:

• 65% of the FPS identified providers were subject to prepayment review;
• 654 new investigations involving 90 providers led to a savings of $6.7 million;
• 22% of fraud investigations were based on leads generated by Medicare claims data analysis;
• FPS edits denied nearly 324,000 claims and saved more than $20.4 million;
• CMS referred 47% of overpayment determinations for collection; and
• 20% of fraud investigations managed by the ZPICs began with a FPS initiated or supported lead.

The GAO found that the FPS has been instrumental in identifying and preventing approximately $1.5 billion in improper and potentially fraudulent payments by the end of calendar year 2015.  The continued FPS roll out has led to a substantial increase in ZPIC activity and a subsequent increase in investigative findings.  CMS plans to upgrade the current IT infrastructure including a new contractor workload management system to monitor program performance, timeliness of investigation processes, and corrective actions.  CMS is also currently transitioning Medicare program integrity contracts from ZPICs to new entities, Unified Program Integrity Contractors (UPIC), to continue the success demonstrated by the pre-payment approach.

The GAO Report is Available at: www.gao.gov/assets/690/686849.pdf.