Kusserow on Compliance: Fighting Medicare fraud, waste, and abuse a top HHS challenge

The Reports Consolidation Act of 2000 (P.L. 106-531) requires the Office of Inspector General (OIG) to report on the most significant management and performance challenges facing HHS. This year’s report once again lists “fighting fraud, waste, and abuse in Medicare Parts A and B” as a major challenge. The OIG estimated that 30 percent of U.S. health spending, roughly $750 billion, was wasted on unnecessary services, excessive administrative costs, fraud, and other problems. In addition, CMS reported an improper payment rate of 12.7 percent for Medicare fee-for-service (Parts A and B), corresponding to an estimated $45.8 billion in improper payments last year. Specifically, the OIG report noted:

  • CMS is challenged with every stage of the payment process, from making the initial payment accurately (including implementing appropriate payment edits) to recovery of overpayments.
  • High Medicare improper payment rates exist for various services, including hospitals, home health, skilled nursing, and evaluation and management services.
  • CMS is not realizing the full potential of contractors they rely upon to proactively identify fraud and address other program integrity concerns; the OIG enumerated some identified deficiencies in its performance and CMS’ oversight.
  • Medicare’s recent transition to ICD-10 may bring implementation challenges and potential increases in improper billing as providers and suppliers transition to the new codes.
  • A backlog of provider appeals of Medicare overpayments and Part B claims at the administrative law judge (ALJ) level remains a significant problem.
  • Certain areas have consistent targets of fraud and abuse, including services provided by durable medical equipment (DME) suppliers, home health and hospice agencies, community mental health centers, clinical laboratories, ambulance transportation suppliers, outpatient therapy providers, and chiropractors.
  • As a result of certain payment policies, Medicare pays significantly different amounts for the same services for similar patients in different settings. Medicare is also paying significantly more for services performed in an outpatient hospital department than for the same services performed in an ambulatory surgical center (ASC).
  • Certain payment policies that create incentives for providers to bill for more expensive care instead of the appropriate levels of care result in billions of dollars in wasteful spending and compromised care for beneficiaries.

Efforts to date

  • The Health Care Fraud and Abuse Control Program (a joint program of HHS, CMS, OIG, and the Department of Justice (DOJ) to fight waste, fraud, and abuse in Medicare and Medicaid) returned $7.70 for every $1 invested. Last year, OIG audits and investigations resulted in expected recoveries of $4.9 billion in improperly spent federal health care dollars and estimated savings of more than $15 billion from legislative, regulatory, and administrative actions supported by OIG recommendations.
  • CMS has moved to improve the integrity and accuracy of billing for numerous types of services, such as requiring practitioners who certify Medicare patients as eligible for home health services to document their face-to-face encounters with those patients.
  • CMS started a demonstration project that requires prior authorization for scooters and power wheelchairs.
  • CMS continues to work to address hospital billing for short inpatient stays and outpatient observation stays, which significantly affects Medicare spending, beneficiary cost-sharing, and hospital revenue.
  • CMS reports that it is working to identify potential alternatives to the existing methodology used to pay for therapy services under the nursing facilities prospective payment system (PPS).
  • CMS reports that it has established an ICD-10 Coordination Center for monitoring the implementation of ICD-10, identifying and triaging issues for resolution, and responding to inquiries.
  • CMS instituted temporary moratoria on the enrollment of new home health agencies and ambulance transportation suppliers in select cities and known fraud hot spots.
  • CMS reported improvements in its oversight and measurement of its contractors’ performance and its follow-up on improper payment vulnerabilities that contractors identify.
  • There continues to be a focus on resolving the backlog of Medicare appeals by providers. CMS reports that it has taken steps toward this goal.

Despite the progress noted, the OIG says more to be done to protect Medicare from fraud and waste, including:

  • Ensuring that Medicare payments are accurate and appropriate;
  • Identifying and recovering those payments in a timely manner;
  • Implementing safeguards, as needed, to prevent recurrence;
  • Relying on contractors for most of these crucial functions to ensure effective contractor performance; and
  • Making fundamental changes to the Medicare appeals system to resolve appeals efficiently, effectively, and fairly.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

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