Kusserow on Compliance: Congress asks GAO to review Medicare Fraud Prevention System

Bipartisan leaders of the House Energy and Commerce and the House Ways and Means Committees sent a letter to the Government Accountability Office (GAO) asking the agency to review CMS’ Medicare Fraud Prevention System (FPS), which was implemented in July of 2011. The Energy and Commerce Committee’s Subcommittee on Oversight and Investigations recently held a hearing to discuss a new GAO report that identified key practices for using predictive analysis systems, including leveraging the results of predictive analysis to address service- or system-specific weaknesses that can lead to payment errors, such as gaps in pre-payment edits.

The FPS was designed to analyze all Medicare fee-for-service claims prior to payment to identify aberrant and suspicious billing patterns for further investigation and was said to have the ability to avoid payment of some suspected fraudulent claims by quicker investigation. This was seen as more of a proactive approach compared to the so-called “pay and chase” approach, which meant that the government often reacted to problems regarding payments after those payments occurred.

Upon its review, it was unclear to the Committee whether CMS was using FPS to identify broader program vulnerabilities in Medicare and taking action based on these vulnerabilities throughout the program. Therefore, the Committee requested that the GAO conduct a follow-up review to answer the following questions:

  • What types of fraudulent payments have been denied due to the FPS pre-payment edits, and how do these edits differ from those implemented by Medicare Administrative Contractors?
  • How many administrative actions has CMS taken against providers since 2010? What types of actions were they, and how many of these were the result of FPS-initiated actions?
  • Has the use of FPS led CMS to identify program vulnerabilities that could lead to payment errors, and what steps have they taken to address identified vulnerabilities?
  • What percentage of savings attributable to FPS is also attributable to pre-payment denials and to post-payment denials and how do they compare to other traditional program integrity efforts?
  • What are CMS’ plans for using FPS with Medicaid and the Children’s Health Insurance Program (CHIP) claims, and what is a recommended alternative approach?
  • How do the program outlays for FPS compare with actual and projected savings attributable to FPS-initiated actions?

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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Copyright © 2015 Strategic Management Services, LLC. Published with permission.