Providers Should Prepare for Medicaid Data Mining, Audits

The federal government is redoubling its efforts to combat Medicaid fraud through prevention and detection, as it has for the last several years with respect to Medicare fraud. Speaking at a webinar sponsored by the Health Care Compliance Association, Karen Nelson, explained recent federal developments and their impact on state enforcement efforts with respect to Medicaid fraud and abuse. Nelson, who is Of Counsel at DLA Piper in Austin, Texas, was Deputy Inspector General and Chief Counsel for the Inspector General of the Texas Health and Human Services Commission (HHSC).

“Follow the Money” to Predict Enforcement Efforts

State agencies enforce state law when they collect overpayments or pursue allegations of fraud against Medicaid providers. However, in most states, more than half of Medicaid spending comes from federal funds, and states must return overpayments to the federal government, and they must do so within one year of discovery whether or not they have been able to recoup the money from the provider. As a result, their enforcement efforts will be heavily influenced by federal priorities. Nelson said that providers should pay close attention to the HHS Office of Inspector General’s (OIG) annual Work Plan and CMS guidance.

Federal Priorities

Nelson believes that the HHS OIG will focus on state oversight to prevent, detect, and recover overpayments and state management of the Medicaid program generally. The OIG will monitor whether states have implemented their enhanced powers and authorities under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), including: (1) termination of providers whose Medicaid participation has been terminated in other states; (2) suspension of payments due to credible allegations of fraud; (3) recovery of overpayments from credit balances; (4) use of enhanced screening and enrollment disclosures to assure that no payment is made to or for persons excluded from Medicare or Medicaid participation; (5) data matching to confirm beneficiaries’ eligibility; and (6) prevention of the use of inactive or invalid provider numbers or coding edits.

As CMS and the OIG move away from “pay and chase” and toward early detection and prevention of payment of fraudulent claims, they are expanding their use of data mining and analytics, increasing the volume and types of data that contractors will examine to find possible fraud. Nelson compared data mining to prospecting, where one determines the likeliest sources. Investigators use historical data sets to identify patterns and risk factors. The algorithms are continuously refined based on the newest data and recent findings. For example, Medicaid claims for medical transportation could be compared with claims for other services on the same day, drivers’ licenses and automobile ownership to uncover instances where the beneficiary did not have any medical procedures or visits on the date for which transportation was claimed, or would not have needed transportation. Nelson’s other examples included reviewing the officers and boards of professional corporations to for excluded practitioners and their relatives and comparing the number of procedures a practitioner claims to have performed with utility usage at the location.

Reorganization of Integrity Contractors

Nelson noted that CMS is changing its integrity contractor system to combine Medicare and Medicaid functions into Unified Program Integrity Contractors (UPICs). Like Medicare Administrative Contractors, a UPIC will be assigned to each CMS region, combining the functions of zone program integrity contractors, the Medicare-Medicaid Data Match (Medi-Medi), program safeguard contractors (PSC), and Medicaid Integrity contractors (MICs). The recovery audit contractors (RACs) will function separately, however.

Priorities for Providers

Nelson noted that federal enforcement efforts are emphasizing compliance with threshold conditions of payment and recommends that providers do the same, screening regularly to be sure that the individuals furnishing services have proper credentials, have not been excluded from participation and are practicing within the scope of their licenses. This data is relatively easy to find and confirmed with the providers’ internal data. The OIG Work Plan places special emphasis on these matters.

Other Recommendations

Nelson recommended that providers routinely review their internal data to note the claims that are denied most frequently, outliers whose numbers of procedures or dollar amounts are inconsistent with those of others on staff and to track the denials by code and provider. As they develop their programs, they should develop new queries for monthly reports, such as spikes in utilization, readmissions, billing units or dosages, and timed services. As they become aware of risk factors, their training and counseling efforts should be modified accordingly. In the event of an audit, site visit, or requests from a RAC, Nelson recommends that providers closely track each request and record all documents provided in response.

Show Us the Money: Medicare Data Disclosure Highlights Expensive Treatments

In an unprecedented action, on April 9, 2014, CMS publicly released data disclosing Medicare payments made to physicians in 2012. CMS Principal Deputy Administrator Jonathan Blum  told the media on the morning of the release that the reasons behind the disclosure were three-fold: (1) because the public had a right to know; (2) to help understand geographic variation in spending; and (3) to aid in the identification of fraudulent activity. Yet, in the flood of responses to the release, different patterns in the data became evident and other, maybe unanticipated, discussions arose. Many have noted that oncologists and ophthalmologists make up two of the three most highly billed types of providers on the data list. Blum and other CMS representatives acknowledged this pattern and stated that these higher numbers were due to more expensive drugs. In addition, recent reports have emerged that highlight these treatments and question their necessity in the presence of less expensive alternatives.

Data Disclosure

According to an analysis by the Washington Post, the Medicare data revealed that, in 2012, the highest Medicare-paid specialists were ophthalmologists, oncologists, and pathologists. While the report noted that many factors could explain that trend, including “costly overhead” that necessitate costs to be forwarded to pharmaceutical companies or medical device manufacturers, the piece focused on the role fraud might play in explaining the extremely large reimbursement amounts received by some physicians. In general, most other reports on the subject also evaluated the disclosure as a means of fraud detection. A Reuters story noted the ecstatic reaction of lawyers representing whistleblowers in Medicare fraud cases that now may have potential incriminating evidence at their fingertips. Yet, viewing these numbers in light of other recent findings with regard to and in response to allegations of overspending on certain types of treatments in the field of oncology and ophthalmology, perhaps the investigative lens should be widened to analyze these trends in treatment as well.

Treatments Questioned

Although not directly related to the Medicare data disclosure, a recent perspective published in the New England Journal of Medicine is relevant to this discussion. According to this piece, high cost cancer drugs are dominating patient and provider options. The study’s authors reference estimates that reveal that one year of treatment for cancer per patient using new drugs costs over $100,000. Further, the article indicates that this cost is both borne by the patients and other payers and that these high prices form barriers to comparative effectiveness trials that could establish the efficacy of alternative, cheaper drugs. In this light, these authors might argue that the extravagantly high Medicare payments made to oncologists evident in the 2012 data is a function of this new cancer drug market that protects itself against cheaper interlopers.

Similarly, Boston University reported on the dominance of the macular degeneration treating drug Lucentis® in the field of ophthalmology. This treatment is ranked as one of the most heavily reimbursed procedures by Medicare and many ophthalmologists have blamed their high fees on the cost of this single drug which is six times more expensive than an alternative product, Avastin® that is typically used to treat cancer but is used off-label for macular degeneration as well. The BU report described the findings of  Professor Manju Subramanian, who says that while treatment with Lucentis costs $50,000 per year, Avastin, which Subramanian claims works equally well, rings in at $650 per year. Both Lucentis and Avastin are owned by the same company, which would stand to lose millions if providers begin to prescribe the less expensive option.

Oncologists Respond

The flood of response and reactions to the Medicare data release included formal statements released by several professional associations in the oncology field, including the American Society of Clinical Oncology (ASCO), the American Society of Hematology, the American Society for Radiation Oncology, and the Association of Community Cancer Centers. While each of these groups affirmed their support for greater transparency in Medicare payments to physicians, each entity also expressed concern over the release of the data without context or explanation of the details of the payment system. For instance, the statement released by ASCO asserted that “[m]ost of the amounts shown in the Medicare database for oncologists are not, in fact, revenue to oncology practices. Instead, these Medicare payments merely cover the upfront costs of purchasing drugs for patients.” While these statements certainly may quell debate about over-the-top reimbursements as to doctors’ salaries and, perhaps, even foreclose allegations of fraud, they do not address the root of the problem, which is that expensive treatments appear to dominate certain fields, causing staggering, and perhaps, unnecessary reimbursement amounts.

Kusserow’s Corner: CMS Improperly Paid Millions of Dollars for Prescription Drugs Provided to Prisoners

The HHS Office of Inspector General (OIG) issued an audit (A-07-12-06035) to CMS, reporting that CMS inappropriately accepted prescription drug event (PDE) records submitted by Part D sponsors for prescription drugs provided to incarcerated beneficiaries and used those records to make final payment determinations. The report found that CMS accepted PDE records submitted by sponsors for prescription drugs provided to approximately half of incarcerated beneficiaries. The OIG was unable to verify the remaining half as being incarcerated on the dates in the CMS database. On the basis of its sample results, the OIG estimated the total gross drug costs were about $11.7 million for period (2006-2010) covered in the audit. The OIG explained that an individual is eligible for Medicare Part D benefits if he or she is entitled to Medicare benefits under Part A or enrolled in Part B and lives in the service area of a Part D plan. Federal regulations specify that facilities in which individuals are incarcerated are not to be regarded as being within service areas for purposes of Part D coverage. The OIG noted that during the period of the audit, the final PDE records to CMS with gross drug costs totaled $256 billion.

The OIG found that CMS had inadequate internal controls during the period of the review; and did not provide sufficient and timely information to sponsors to permit them to readily and accurately verify a beneficiary’s incarceration status and dates of incarceration. It recommended that CMS:

  1. Resolve improper Part D payments made for prescription drugs provided to incarcerated beneficiaries;
  2. Strengthen internal controls to ensure that Medicare does not pay for prescription drugs for incarcerated beneficiaries; and
  3. Identify and resolve improper payments found by the OIG auditors for prescription drugs provided to incarcerated beneficiaries, by reopening and revising final payment determination for all periods before implementation of the enhanced policies and procedures that would contribute to the strengthened internal controls.

CMS concurred with the first two recommendations but did not concur with the third recommendation. The OIG acknowledged that CMS is developing and implementing policies that would address enrollment of incarcerated beneficiaries. It agreed with the CMS approach would address the problems 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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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

Report Details Administration’s Delays and Extensions of ACA Implementation

The Congressional Research Service (CRS) has issued a report summarizing significant actions the Obama Administration has taken to delay, extend, or otherwise modify implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Although not all-inclusive, the report lists decisions that have affected the ACA’s core insurance expansion provisions, highlighting the most controversial. Specifically, it mentions the delay of the employer mandate, the decision to allow the renewal of noncompliant insurance policies, and the implementation of special enrollment periods. The document provides background for each provision and a detailed history of administrative actions.

Employer Mandate Delay

The ACA requires employers with 50 or more employees to make a shared responsibility payment in the following two scenarios: (1) the employer does not offer coverage to at least 95 percent of full-time employees and dependents and at least one full-time employee receives a premium tax credit for an insurance policy purchased on a Health Insurance Exchange or (2) the employer offers coverage to 95 percent of full-time employees, but at least one full-time employee receives a premium tax credit for a policy purchased on an Exchange because the employer did not offer coverage to that employee, coverage was unaffordable, or coverage did not provide minimum value.

Although the provision became effective January 1, 2014, the IRS decided to delay enforcement of the requirement until 2015, along with a requirement that employers and insurers report certain information to the Internal Revenue Service (IRS). The agency then further delayed enforcement with respect to employers with 50 to 99 employees until 2016 and announced that employers of 100 or more workers would only be required to offer coverage to 70 percent of full-time employees in 2015 to avoid enforcement actions. The IRS explained that it could not enforce the requirements until a related requirement that employers report offered coverage had been implemented. It contended that the relief it offered is part of a practice of providing relief to taxpayers struggling to comply with a new law. Critics argue that it is an unconstitutional failure to enforce the law.

Renewal of Noncompliant Plans

When many insurers began to cancel individual and small business health plans that did not meet the ACA’s standards for health insurance coverage, CMS urged, but did not require, state regulators to allow insurers who issued or planned to issue policies in the individual and small group markets to renew the policies at any time through October 1, 2016. Critics argue that, in doing so, the Administration ignored ACA requirements that had become “politically inconvenient.” However, CMS is still considering an additional one-year extension of this policy. Consumers whose policies were cancelled are eligible for a hardship exemption where available options are unaffordable and may purchase a catastrophic plan to meet individual mandate requirements if available.

Open Enrollment

The CRS report also detailed a number of delays related to open enrollment. Individuals without employer-sponsored coverage have the option of enrolling in a qualified health plan (QHP) through a Health Insurance Exchange to avoid paying a tax for failure to carry insurance. Because consumers who enroll after the fifteenth day of a given month will not be covered by a policy until the first day of the second month following enrollment, those who enrolled after February 15, 2014 would not have been covered until April 1, 2014. They would thus have been uncovered for a full three month period and would have been required to pay a fine. However, CMS exempted individuals who enrolled after the February 15th from paying the penalty. It also issued guidance allowing state Exchanges to retroactively make advance payments of premium tax credits and apply cost-sharing reductions to individuals who were unable to enroll in a QHP on an Exchange because information technology issues prevented timely eligibility determinations.

In perhaps the most controversial of these open enrollment extensions, the Administration announced on March 26, 2014 that certain persons unable to enroll in a QHP by March 31, 2014 would be permitted to enroll in a special enrollment period. Qualifying circumstances included, but were not limited to, natural disasters, untimely transfers of data regarding applicants ineligible for Medicaid and CHIP from state agencies to Marketplaces, and technical problems with In addition to the changes affecting open enrollment for 2014, CMS delayed the beginning of open enrollment for 2015 to November 14, 2014, extending the period to run through February 15, 2015.

The report described a number of other changes in detail, including those affecting Small Business Health Option Program (SHOP) Exchanges, annual limits on cost-sharing and deductibles, and basic health plan (BHP) options.