House Energy and Commerce Subcommittee on Oversight and Investigations Hearing
Federal Information & News Dispatch, Inc. |
Testimony by
Chairman Stearns, Ranking Member DeGette, and Members of the Subcommittee, thank you for the invitation to discuss the
CMS Fee-for-Service Antifraud Contractors
CMS' mission is to ensure health care security for all
CMS uses a variety of different contractors to administer and oversee the
Medicare Administrative Contractors (MACs)
MACs are the central point of contact for providers within the national fee-for-service program.
The MACs process, approve, and deny enrollment applications according to the enrollment standards established by CMS. MACs process 4.5 million claims each day, totaling approximately 1.2 billion claims in fiscal year (FY) 2011, and handle the first level of a provider's claim appeal. They implement all
Zone Program Integrity Contractors (ZPICs)
CMS has nearly completed the process of transitioning from Program Safeguard Contractors (PSCs) to Zone Program Integrity Contractors (ZPICs). CMS created seven program integrity zones to align with the MAC jurisdictions. The ZPICs focus exclusively on a wide range of program integrity issues and projects. Six of the seven ZPICs have been awarded. The ZPICs and remaining PSC perform program integrity functions in these zones.
* Develop investigative leads generated by the new Fraud Prevention System (FPS) and a variety of other sources;
* Perform data analysis to identify cases of suspected fraud, waste, and abuse;
* Make recommendations to CMS for appropriate administrative actions to protect
* Make referrals to law enforcement for potential prosecution;
* Provide support for ongoing investigations;
* Provide feedback and support to CMS to improve the FPS; and</p>
* Identify improper payments to be recovered.
Unlike the MACs, the ZPICs' activities are dedicated exclusively to the prevention, detection, and recovery of potential fraud, waste, or abuse. The ZPICs coordinate with the MACs to implement administrative actions, including claim edits, payment suspensions, and revocations. ZPICs also refer overpayments to the MACs for collection. During 2011, CMS saved
Recovery Audit Contractors (RACs)
RACs' primary responsibilities are to identify a wide range of improper payments - including, but not limited to fraud - and to make recommendations to CMS about how to reduce improper payments in the
Figure 1 below shows how CMS and its contractors communicate with each other during three key points within the
Moving Beyond Pay and Chase: The Twin Pillar Strategy
CMS has recently implemented a twin pillar approach for advancing our fraud prevention strategy in
The First Pillar: The Fraud Prevention System
CMS is committed to the goal of detecting potential fraud before suspect claims are paid. The FPS is the predictive analytic technology required under the Small Business Jobs Act. Since
For the first time in the history of the program, CMS is using a system to apply advanced analytics against
Importantly, the FPS is a resource management tool; the system automatically sets priorities for our program integrity contractors' workload to target investigative resources to suspect claims and providers, and swiftly impose administrative action when warranted. The system generates alerts in order of priority, allowing program integrity analysts to further investigate the most egregious, suspect, or aberrant activity. CMS and our antifraud contractors use the FPS to stop, prevent, and identify improper payments using a variety of administrative tools and actions, including claim denials, payment suspensions, revocation of
In the first ten months of implementation of the FPS, the new preventive system resulted in:
* Leads for 591 new investigations
* Supporting information for 419 pre-existing investigations
* Leads for 550 direct interviews with providers and suppliers suspected of participating in fraudulent activity
* Leads for over 1,541 interviews with beneficiaries to confirm whether they received services for which the
The FPS may be compared to similar, more well-known predictive modeling technologies, such as the algorithms employed in the credit card industry to generate interviews of cardholders when suspect items are charged. Indeed the FPS metrics related to provider, supplier, and beneficiary interviews are particularly encouraging and exciting because they show that CMS has turned
The Second Pillar: Enhanced Provider Enrollment and Automated Provider Screening
CMS must go beyond pay and chase to stop criminals whose intent is to enroll in
In
To complement the new screening requirements, CMS launched the Automated Provider Screening (APS) system on
Since
Provider enrollment safeguards, recently improved by the new APS, are CMS's first line of defense against paying fraudulent or improper claims. These improvements are vitally important because they enable legitimate providers and suppliers to enroll easily and quickly in the
Post-Payment Review and Recovery of Improper Payments
CMS has an additional opportunity to administratively recover improper payments after payment is made, through analysis and investigation conducted by
After payment is made, CMS and its contractors continue to analyze FPS results and historical claims data to identify suspected overpayments and potential fraud. ZPICs may make fraud referrals to law enforcement for further investigation, or identify and send potential fraudulent or improper payments to MACs to collect, or in some situations, do both.
In cases of fraud, CMS vigorously pursues post-payment remedies, including overpayment recoveries, in close collaboration with our law enforcement colleagues. In conjunction with CMS' antifraud efforts, our law enforcement partners have recovered
For potential overpayment referrals to a MAC, the MAC makes a final determination as to the dollar amount to demand for recovery and sends the demand letter to the provider.
MACs validate ZPIC-recommended potential overpayments against a variety of sources, including contractual and regulatory requirements, as well as their review of the claims information. The MAC reviews the claims history to determine if there have been other adjustments or recovery actions, which could affect the demanded amount, and if the amounts identified were for claims paid within the past four years, the period that is open for collection of overpayment unless there is "fraud or similar fault." If there have been other adjustments or recovery actions on a claim, then the overpayment amount could be affected because portions of the ZPIC-identified overpayment may have already been recovered by the other
While post-payment reviews may suffice to recover overpayments from legitimate, established providers and suppliers, there are significant challenges to recovering overpayments from those that are attempting to defraud the
RACs conduct post-payment reviews and make recommendations to CMS by identifying opportunities for reducing improper payments. Overpayments identified by the Medicare FFS RACs are also sent to the MACs for collection. In the past, RAC reviews in
The Medicare FFS RAC program has had increasing success since its national implementation in
CMS MA and Part D Contractors
The
CMS contracts with two private organizations, called Medicare Drug Integrity Contractors (MEDICs) for all MA and Part D program integrity work. The national benefit integrity MEDIC has the following responsibilities:
* Managing all incoming complaints about Part C and Part D fraud, waste, and abuse;
* Using new and innovative techniques to monitor and analyze information to help identify potential fraud;
* Working with law enforcement, MA and prescription drug plans, consumer groups, and other key partners to protect consumers and enforce
The outreach and education MEDIC has the following responsibilities:
* Facilitating a quarterly workgroup with key partners; and
* Providing basic tips for consumers on how to protect themselves from potential scams.
The national benefit integrity MEDIC also conducts proactive analyses that result in case referrals to law enforcement. For example, the national benefit integrity MEDIC conducts a proactive analysis called Miles Too Great. Miles Too Great identifies instances when it is unlikely that a beneficiary could fill a prescription in two or more locations that are too far apart. This relatively simple calculation may identify drug-seeking beneficiaries, over-prescribers, or services not rendered. Another method is to look at pharmacy change of ownership and determine if there is a sudden change in billing behavior after the change of ownership. From
In FY 2011, the national benefit integrity MEDIC received approximately 342 actionable complaints (within the MEDIC's scope) per month, processed 34 requests for information from law enforcement per month, and referred an average of 36 cases per month. The national benefit integrity MEDIC was responsible for assisting the
The outreach and education MEDIC hosts quarterly Part C and Part D fraud workgroup meetings where attendees share information and data on identified or suspected fraudulent schemes. CMS, pharmacy benefit managers, sponsoring organizations, MA plans, as well as local, State, and Federal law enforcement officials attended the workgroups. The Part D workgroup recently provided a useful forum for discussion of inventory shortages involving Part D claims (for example, drugs billed, but not dispensed).
Looking Forward
n1 We note that the first and second phase revalidation results are preliminary results as deactivated providers could reactivate over time with updated practice information or after showing evidence of proper licensing.
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