Kusserow on Compliance: CMS needs to improve written instructions on prevention of improper Medicare payments

The Office of Inspector General (OIG) issued an audit report that recommended CMS provide its contractors with improved written instructions on how to attribute the Fraud Prevention System (FPS) savings accurately and better document the contribution of the leads toward achieving administrative actions. The agency found that although HHS has made significant progress to address the challenges of measuring actual and projected savings, the written directives to its contractors were not sufficient to ensure that the contractors could identify and report the most accurate estimate of FPS savings; it should continue to enhance its efforts to prevent fraud, waste, and abuse in the Medicare fee-for-service (FFS) program, which has generated a positive return on investment.

HHS is legally mandated to use predictive modeling and other analytics technologies (predictive analytics technologies) to: (1) identify improper Medicare FFS claims that providers submit for reimbursement; and (2) prevent the payment of such claims. CMS is responsible for using the FPS and providing “leads” to Zone Program Integrity and Program Safeguard Contractors (contractors) for investigation. The OIG, in turn, is required to certify whether HHS should continue, expand, or modify its predictive analytics technologies and to certify the actual and projected savings with respect to: (1) improper payments recovered and, thus, maintained in the Medicare Trust Funds (or recovered and avoided); and (2) the return on investment related to the HHS use of the FPS for each of its first three years (the implementation years). The two types of FPS savings are adjusted savings, which are identified actual and projected savings within the FPS that can reasonably be expected to be recovered or avoided, and unadjusted savings, which  are projected savings that may not be recovered or avoided. The FPS lead is one of several sources that the contractors use to conduct an investigation that can result in:

  • payment suspension to a provider;
  • referral to law enforcement of suspected fraud cases for potential prosecution;
  • recovery of overpayments by Medicare Administrative Contractors (MACs);
  • instructions in the software that suspend all or part of submitted claims;
  • auto-denial or auto-rejection software edits that automatically deny all or part of the submitted claims without making any payments to providers; and
  • revocation of a provider’s Medicare billing privileges;

In the third implementation year of the FPS (2014), the OIG stated that HHS complied with the requirements for reporting actual and projected savings and the return on investment from the use of predictive analytics technologies. The report noted that the use of the FPS resulted in $133,200,896 of adjusted actual and projected savings to the Medicare FFS program, of which $85,755,356 resulted from administrative actions that the FPS initiated, and $47,445,540 resulted from administrative actions for which the FPS lead contributed to the existing investigation. This resulted on a return on investment of $2.84 for every dollar spent on the FPS. The OIG report also highlighted $453,976,078 in unadjusted savings that the FPS identified.

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.