Kusserow’s Corner: CMS Efforts Have Led to $19 Billion in Fraud Recoveries

The House Ways and Means Health Subcommittee held a hearing on May 20 on oversight of the Medicare program, specifically targeting waste, fraud, and abuse. The subject was “CMS Efforts to Reduce Improper Payments in the Medicare Program.” The subcommittee called three witnesses to discuss action against Medicare fraud. Gloria Jarmon, the CMS Office of Inspector General (OIG) Deputy Inspector General for Audit Service, spoke about the need for CMS to reduce improper payments and improve oversight of contractors. Kathleen King, the Director of Health for the Government Accountability Office (GAO), spoke about the need for further action at CMS on implementing strategies developed by the GAO. Finally, Dr. Shantanu Agrawal, the new Deputy Administrator and Director of the Center for Program Integrity at CMS, responded to criticism that the agency has not made sufficient progress in fighting Medicare fraud, waste, and abuse. This hearing followed a similar one before the Special Committee on Aging.

Dr. Agrawal stated that fraud-fighting efforts over the last five years have led to $19 billion in recoveries, up from $9.4 billion in the prior five years. The return on investment for this program has been $8.10 for every dollar spent. To achieve these results, CMS used a multi-faceted approach to target all causes of waste, abuse, and fraud by working closely with law enforcement agencies, especially through the Health Care Fraud and Abuse Control (CHFAC) program, which resulted in recoveries of $4.3 billion dollars. The areas of fraud and abuse that were highlighted in the testimony included the following:

  • Home health, where under new authorities provided by the Affordable Care Act, CMS moved to have moratoria on home health agencies in seven metropolitan areas. As reported extensively in this blog, there have been proportionately more enforcement actions in this sector than any other. It is also a major enforcement issue at the state level, where nearly 40 percent of all prosecutions by the state Medicaid fraud units involved home health.
  • CMS has labeled the Medicare fee-for-service as “high risk,” due to the sheer volume and complexity of the program, which includes 1.5 million providers that service 54 million beneficiaries. The vast majority of improper payments in the program are either the result of inadequate documentation for services billed or documentation that did not support the services as being medically necessary. A free webinar on June 5, presented by Dr. Cornelia Dorfschmid, focuses on this subject.
  • Durable medical equipment (DME) was also cited as high risk for fraud and abuse. One example given involved powered mobility devices, where CMS found over 80 percent of claims did not meet coverage requirements.
  • The testimony also cited the actions of the Recovery Audits, which has returned over $7.4 billion to Medicare.

Dr. Agrawal faced tough questions, with members of both parties showing irritation with CMS by their questions and comments. Committee members called for greater commitment to tackling fraud. Subcommittee Chairman Kevin Brady ended the hearing with a pledge to introduce legislation to address the problem, saying that a recent report revealed that fraud costs Medicare more than $50 billion annually.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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