Fraud Prevention System saves $454 million in first 3 years

CMS’ Fraud Prevention System, an advanced analytics system, identified or prevented $820 million in inappropriate payments in the program’s first three years of existence, according to the agency. The system uses predictive analytics to identify irregular billing patterns and outlier claims for action, similar to systems used by credit card companies. In 2014, the Fraud Prevention System identified or prevented $454 million in inappropriate payments, a 10 to 1 return on investment.

The Fraud Prevention System is used to identify questionable billing patterns in real time and can review past patterns that may indicate fraud. As an example, CMS highlighted the system’s predictive models identifying a questionable billing pattern at a provider for podiatry services that resulted in Medicare revoking the provider’s payments and referring the findings to law enforcement. Moreover, the Fraud Prevention System also identified an ambulance provider for questionable trips allegedly made to a hospital. In the timeframe three years prior to the system alerting officials, the provider was paid more than $1.5 million for transporting more than 4,500 beneficiaries.

Established in 2010 by the Small Business Jobs Act (P.L. 111-240), CMS has used the Fraud Prevention System, along with other new authorities granted by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), to safeguard Medicare Trust Funds, as well as prevent fraudulent payments. For example, CMS noted that tools such as the Fraud Prevention System were integral in the largest coordinated fraud takedown in history, which resulted in charges against 243 individuals for participation in Medicare fraud schemes that involved almost $712 million in false claims (see Medicare Fraud Strike Force sets record with $712 million takedown, Health Law Daily, June 19, 2015). As a result, over the last five years, the combined efforts of the system and other tools at CMS’ disposal have resulted in more than $25 billion returned to the Medicare Trust Fund.

Going forward, CMS plans to expand on the Fraud Prevention System and its algorithms to identify lower levels of non-compliant providers who would be better served by education or data transparency interventions.