Kusserow’s Corner: House Hearing on Medicare Fraud and Abuse

The U.S. House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on “Medicare Program Integrity: Screening Out Errors, Fraud, and Abuse.” During the hearing, subcommittee members heard testimony from CMS Deputy Administrator and Director of the Center for Program Integrity Dr. Shantanu Agrawal, HHS Office of Inspector General (OIG) Deputy Inspector General for Investigations Gary Cantrell, and Government Accountability Office (GAO) Director of Health Care Kathleen M. King.

CMS Testimony

The CMS testimony revolved around how it is applying three operational principles to guide all of its initiatives: (1) aiming to achieve operational excellence in addressing the full spectrum of integrity causes, in taking swift administrative actions, and in the performance of audits, investigations and payment oversight; (2) providing leadership and coordination in program integrity efforts across the health care system; and (3) focusing on impacting the cost and appropriateness of care across health care programs. Some of CMS’s efforts to reduce fraud, waste and abuse were noted, including: (1) strengthening provider enrollment; (2) ensuring proper and accurate claims payment; (3) facilitating leadership and coordination across the health care system; and (4) improving payment data transparency.

CMS acknowledged the failure to meet its target goal of a reduced improper payment rate for Medicare fee-for-service, and that the improper payment rate had actually worsened over the last fiscal year. CMS noted that it recovered about $19.2 billion in fraudulent payments over the past five years, including $210 million through a new system that uses analytics to probe billing patterns; however, the recovered sum is dwarfed by the size of the problem, projected to be up to $50 billion a year.

The subcommittee cited one news outlet that reported that several doctors who had lost a medical license were still able to bill the Medicare program for millions of dollars. In addition, it noted that at least 14 individuals convicted of FDA-related crimes and debarred by the FDA do not appear to be excluded from the Medicare program; six doctors debarred by the FDA were paid over $1 million in Medicare payments in 2012. Another issue raised in the hearing was that a Medicare card has the patient’s social security number (SSN), creating serious risk of identity theft. Both the GAO and OIG identified fixing this SSN issue as an important step in preventing Medicare fraud.

GAO Testimony

The GAO testimony spoke to their strategies to combat fraud through examining: (1) the ability of CMS’ information system to prevent and detect enrollment of ineligible or fraudulent Medicare providers and suppliers; (2) the possible use of electronic-card technologies; (3) the oversight of program integrity efforts for prescription drugs; and (4) the oversight of certain contractors who conduct post-payment claims reviews. The GAO has focused on the following strategies: (1) provider and supplier enrollment; (2) prepayment and post payment claims review; and (3) addressing identified vulnerabilities. Based upon its work, the GAO recommended:

  • Requiring additional provider and supplier disclosures of information;
  • Establishing core elements for provider and supplier compliance programs as authorized in the Patient Protection and Affordable Care Act (ACA);
  • Increasing use of prepayment edits to help prevent improper payments;
  • Improving oversight of the information systems analysts use to identify claims for post payment, as well as the contractors responsible for the reviews;
  • Implementing mechanisms to resolve vulnerabilities that could cause improper payments; and
  • Removing SSNs from beneficiaries’ Medicare cards to help prevent identify theft.

OIG Testimony

The OIG testimony provided an overview of current health care fraud trends and challenges that impede effective oversight, as well as recommendations on how to address such trends and challenges that could result in billions of dollars being saved, along with a more efficient and effective programs. These included:

  • Providing the OIG with authority to execute federal warrants for the seizure of assets for forfeiture to curb the profitability of healthcare fraud, which will exert a deterrent effect.
  • Removing SSNs from Medicare cards to help protect the personally identifiable information of Medicare beneficiaries.
  • Strengthening the Medicare contractor’s monitoring of pharmacies and its ability to identify for further review of pharmacies with questionable billing patterns.
  • Requiring Part D plans to verify that prescribers have the authority to prescribe.
  • Increasing monitoring of Medicare claims for home health services.
  • Creating a standardized form to ensure better compliance with the face-to-face encounter documentation requirements for home health agencies (HHAs).
  • Implementing the surety bond requirement for HHAs.
  • Monitor hospices that depend heavily on nursing facility residents.
  • Modifying the hospice payment system for care in nursing facilities, seeking statutory authority if necessary.
  • Taking action to provide States with data for identifying overpayments for physician certification statement (PCS) claims when beneficiaries are receiving institutional care paid for by Medicare or Medicaid.
  • Mandating the use of the audit log feature in all electronic health records (EHRs).
  • Working with contractors to identify best practices and develop guidance and tools for detecting fraud associated with EHRs, with specific guidance to address documentation and electronic signatures in EHRs.
  • Amending regulations to require Medicare Advantage and Part D plans to report to CMS, or its designee, their identification of and response to incidents of potential fraud and abuse.
  • Establishing a deadline for when complete, accurate, and timely Transformed Medical Statistical Information System (T-MSIS) data will be available.

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 © 2014 Strategic Management Services, LLC. Published with permission.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow’s Corner Newsletter

Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Doctor Payment Data Will Enhance Fraud Investigations

The release of Medicare payment data has already identified numeorus doctors who continue to recieve payments from Medicare even though they have been previoulsy discplined and are therefore ineligible to participate in the Medicare program.  Many are questioning why such discoveries have been made so easily by media sources with access to little data while the federal government spends billions these entities to find individuals who are defrauding the Medicare program.  The answer maybe as simple as that there is so much fraud and abuse going on, why does it matter how fradulent individuals are caught just as long as they are.  The main point is that the release of payment data will make it even easier for federal and state fraud investigators to identify and further investigate individuals with unusual billing practices or who should not even be receiving any federal reimbursement at all.

High paid physicians. Eight physicians were recently identified by Businessweek who billed more than $7 million during 2012 to Medicare while their medical licenses were suspended,  expired, or revoked. In some instances, the magazine reported that doctors who had their license suspeneded or revoked in one state while they had a license in another state used the other state’s license to qualify for Medicare payments.  The Businessweek article noted that many had their licenses revoked or suspended for gross malpractice, battery or violating prescription drug laws.

The New York times reported that in 2012 about two percent of doctors received approximately $15 billion from Medicare or roughly one-fourth of the $77 billion paid to doctors that year. The same article went on to identify 100 doctors who recieved a total of $610 million in 2012.  This article did not claim that any Medicare payments were improper, and stated that some of these amounts included very expensive drugs.  The New York Times article did point out that fraud invesitgators across the country now have a treasure trove of data available to examine and help identify physicians and others who are billing in execess of other professionals or who may not be licensed at all.  The New York Times provided a look-up tool so you can see how much any particular doctor has received from Medicare.

Program integrity. The level of fraud and abuse against the Medicare program is unknown, but is thought to be quite substantial. One estimate by former CMS Administrator Donald Berwick is that the total amount of fraud against Medicare and Medicaid is between $30 billion and $98 billion a year.   Because this number is difficult to determine, the Government Accountability Office (GAO) continues to list Medicare as a program that is at high risk for fraud and abuse;  a description that the GAO has attributed to Medicare since 1990.

In 2013, the federal government spent $1.5 billion fighting health care fraud and abuse while recovering  $4.3 billion  from health care fraud settlments and court judgements, according to the Health Care Fraud and Abuse Control Program’s Annual Report for Fiscal Year 2013.  Increased efforts to reduce fraud and abuse was a part of the Affordable Care Act (ACA) (P.L. 111-148). Since 2011, 17,000 providers have been prohibited from billing Medicare as a result of an ACA requirement that all 1.5 million providers and suppliers be rescreened, according to the testimony of Dr. Shantanu Agrawal, Deputy Administrator and Director of CMS’ Center for Program Integrity delivered to  before the Senate’s Select Committee on Agining in March 2014.  The rescreening found providers who were ineligible to participate in Medicare because they had felony convicitions, did not have the appropriate medical license, or had the wrong address on file.  In addition 260,000 suppliers and providers had their participation in Medicare revoked for not responding at all to the request for the rescreening.

The release of the amount paid to physicians by Medicare should increase the success of  fraud investigators who no doubt will follow the lead of journalist in identifying irregular billing patterns and people who do not meet the requirements to bill Medicare at all.

Healthcare.gov Web Site: House Hearings a Blame Game

Since the debut of the healthcare.gov site on October 1, when most potential enrollees could not get onto the site, there has been much criticism and placing of blame.  In the U.S. House of Representatives, both the Committee on Oversight and Government Reform and the Energy and Commerce Committee recently held hearings to assign responsibility for its failure to launch.  At a hearing of the Energy and Commerce Committee on October 24th, representatives of two of the contractors involved, CGI Federal and Quality Software Services, Inc., testified that they warned CMS the system had not been adequately tested and was not ready to go live. Rep. Diana Degette (D. Col.) noted that the witnesses had not mentioned that more testing was needed when they testified in September.

The following week, HHS Secretary Kathleen Sebelius testified before the same committee. She conceded that the rollout of the web site was “a debacle” and apologized. Still, she said she was not aware of the specific issues regarding any failed testing or security gaps. She promised the site would be performing optimally by the end of November. But developments since then suggest that the promise may be impossible to keep.

On November 6th, Tony Trenkle, CMS’ Chief Information Officer, who was responsible for the security of the web site, announced his resignation after it was revealed that he and two other CMS officials had signed off on a “risk acknowledgement” stating that the agency’s plan for ongoing monitoring and testing would “not reduce the (security) risk to the … system itself going into operation on October 1, 2013.”   The possibility that adequate security controls would not be ready was raised in an OIG report in August. The auditors found that CMS was behind schedule in its assessments of the security of the data hub used to exchange data among agencies. In July 2013, the agency extended the deadline for a final review of the security of the site to September 30, 2013, the day before the web site would launch. CMS Director Marilyn Tavenner signed off on the launch on September 27th, after Trenkle and other officials had signed the risk acknowledgement.

House Oversight Committee Hearings

On November 13, 2013, Rep. Darrell Issa (R.- Calif.) presided over a hearing of the House Committee on Oversight and Government Reform, at which several high-level HHS information technology ( IT) officials, a representative of the Government Accountability Office (GAO), and Todd Park,  Chief Technology Officer at the White House Office of Science and Technology, testified about the efforts to fix the system, and management issues that contributed to the inadequacy of the site. The committee members asked many questions about the decision, made in mid-September, to eliminate the “anonymous shopping” feature of healthcare.gov and require visitors to create an account and register first. Issa asked nearly every witness whether anyone in the administration had made that decision to prevent “sticker shock” when potential enrollees saw the premiums they would have to pay. Henry Chao, Deputy Chief Information Officer and Deputy Director of the Office of Information Services at CMS, stated that the feature was pulled because it  had failed during testing; Issa contended that it actually had passed security testing in September, and repeated his allegation. Chao admitted that the “end-to-end” security testing had not been completed before the launch, but insisted that his responsibilities were largely limited to specific operational issues, primarily the data hub, which he stated was not part of the security problem.

Todd Park agreed with other witnesses that best practices would require testing to begin several months before the launch date. He was not involved in the development of healthcare.gov but was brought in to work on the fix after October 1. He stated that the site now can process 17,000 applications per hour and that the response time for a user request, such as loading a page, had been reduced from eight seconds to less than one second.

David Powner, GAO’s Director of Information Technology Management Issues, testified that GAO had studied government IT acquisitions and development for years, and cost overruns and delays were common. Most recently, GAO studied successful projects at several different agencies to learn why they succeeded. He determined that there were specific best practices, particularly in program management, that were necessary for success. Among them were involvement of all stakeholders, including end users, in setting the scope of the project, the prioritization of requirements by program management, and maintaining regular communication between the agency officials and the prime contractor. GAO has developed and published best practices for government IT acquisition, and the Office of Management and Budget (OMB) also has resources available. OMB established a Dashboard to track agencies’ IT acquisitions, but Powner testified that agencies often do not enter the information accurately and timely. The healthcare.gov project consistently showed a “green light” status, notwithstanding the delays and difficulties.

Richard Spires, former Chief Information Officer at the Department of Homeland Security, testified similarly with respect to best practices in government IT acquisition. He also noted that CIOs need to have more control over their projects and that it is important that the person with ultimate responsibility for managing the project be a staff member at the agency rather than an outside contractor. In response to a question from the committee, he stated, “Outsourcing doesn’t work.”

The Committee’s Focus

Many of the committee members made lengthy statements about their opposition to the health reform law in general. Several times, they asked witnesses questions they could not reasonably be expected to answer. For example, an IT witness was asked what law Secretary Sebelius referred to when she told Congress that the law required that the site be up and running on October 1. Todd Park was asked how many people had enrolled in a plan.

Rep. Stephen Lynch (D-Mass.) expressed concern that outreach workers found the requirement to have an email address was the biggest obstacle to the enrollment of low-income people and the elderly through the web site.