Republican Lawmakers Voice Concern About Medicare Fraud Prevention

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On September 12, 2016, Republican leaders of the House Ways and Means Committee, Energy and Commerce Committee, and Committee on Finance wrote a letter to the acting CMS administrator requesting information regarding CMS’s Fraud Prevention System (FPS) results and stressing the importance of preventing payment of improper Medicare claims.  The Letter expresses concern that the FPS is used to recover payments already improperly made in a “pay and chase” model rather than prevent payment of improper claims, noting a 12.1 percent  payment error rate in 2015 for the Medicare Fee-for-Service Program and a return on investment for the FPS of $2.84 to $1 in 2014.  

The Letter is the latest in a series of inquiries from lawmakers regarding the FPS.  Last summer, bipartisan leaders of the Energy and Commerce and Ways and Means Committees asked the Government Accountability Office to review the types of fraudulent behavior identified by the FPS, so as to report on how many administrative actions against providers were the result of the FPS.  The request was followed by an inquiry from Republican leaders to CMS in October 2015 regarding the spending needed to update the system.

The Letter follows the annual report from CMS to Congress in July regarding the Medicare and Medicaid Integrity Programs, which covered FY 2013 and 2014.  According to the Report, Medicare program integrity activities saved Medicare $21.1 billion in FY 2013 and $18.1 billion in FY 2014, for a two-year return on investment of $12.4 to $1.  The Report attributed 68.4 percent of the savings to prevention of improper payments.  The Report also indicates that the FPS systematic edits, which use predictive analytics to identify claims and providers that present a high risk of fraud, resulted in $454 million in fraudulent payments being stopped, prevented or identified in 2014.  Other preventive methods mentioned in the Report include other systematic edits (e.g., Zone Program Integrity Contractors (ZPIC), National Correct Coding Initiative, and Field Office), provider revocations, prepayment reviews, and payment suspensions.

While the authors of the Letter “remain supportive” of the FPS, they requested more information to better understand CMS’s “work implementing” the system, including:

  • The percentage of FPS referred and assisted ZPIC investigations, including a breakdown of the types of schemes identified and the Medicare programs they impact and the actions taken by CMS, including dollar amounts, for the past 3 years;
  • The types of edits and filters put into place as a result of the FPS and how many improper claims have been stopped as a result, including dollar amounts, over the past 3 years;
  • The projected savings and recovery by Medicare from the FPS for 2015;
  • The total amount obligated for the FPS and ZPICs for the past 3 years; and
  • The processes in place to monitor the effectiveness of the FPS models.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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