Medicare Compliance & Reimbursement

CMS goes high-tech with fraud-fighting efforts of the 21^st century.

“Big data” is paying off in a big way for the Centers for Medicare & Medicaid Services (CMS), specifically when it comes to fraud, waste, and abuse. Now, CMS has better techniques than ever before to spot — and halt payments for — any of your claims that CMS’ special data analytics flag as being improper in any way.

In a May 27 announcement, CMS touted the huge successes of its Fraud Prevention System (FPS), which uses “big data” and predictive analytics to zero-in on improper Medicare billing at lightning speed. In just 2014 and 2015, the FPS’s predictive analytics technology contributed to more than $1 billion in savings. And since the beginning of the program, CMS has netted a whopping $1.5 billion in inappropriate payments.

What Amazing Things the FPS Can Do

Background: The Small Business Jobs Act of 2010 led to the FPS’s creation, because the law required HHS to use predictive analytics technologies every three years to identify improper Medicare fee-for-service claims that providers submit for reimbursement, and prevent the payment of these claims.

Through the FPS, CMS uses data and predictive analytics to identify and prevent fraud, waste, and abuse in the Medicare fee-for-service program, explained Mitchell Clark of the Medicare Rights Center. The FPS involves public and private predictive analytics experts, data scientists, and law enforcement.

The key to the initiative’s success is the fact that CMS is utilizing “big data” to identify billing issues prior to paying on the claims, Clark noted. The FPS has used predictive analytics for the past five years.

The FPS’s big data effort has enabled CMS to take a more proactive approach to prevent improper payments, instead of identifying them afterward and trying to recoup overpayments (so-called “pay and chase”), according to a recent analysis by attorney Kristen Rosen Moller of Covington & Burling LLP.

Results: Since the FPS began in June 2011, the initiative has been streaming 4.5 million prepaid claims on average per day and applying advanced analytics to this data. CMS asserts that the FPS has yielded a return on investment (ROI) of $11.60 for each federal dollar spent on the effort in 2015. This was a groundbreaking figure, because it was the first-ever national ROI of $11.60.

Annual savings from the FPS have increased from $115.4 million in the first year of the program up to $654.8 million in 2015. The program savings come from the identified savings from CMS’ administrative actions, Auto-Denial Edits, FPS Edits, Prepayment Edits, Payment Suspensions, and revocations.

Through the FPS, CMS also created new ways to calculate costs avoided due to removing certain providers from the Medicare program and tracking ROI. The HHS Office of Inspector General (OIG) even issued certification for such methods to measure cost avoidance, which is the first certification of its kind in the history of federal healthcare programs.

Beware the Consequences of Predictive Analytics

Credit card companies commonly use predictive analytics, which employ various predictive models and statistical analysts to detect improper billing and payment patterns, notes Robert Liles, JD, MS, MBA, a managing partner at Liles Parker Attorneys and Counselors at Law. In the most basic sense, predictive analytics tools use past fraudulent activities to predict future fraud and/or improper billing.

Impact: CMS’ Zone Program Integrity Contractors (ZPICs), for instance, rely heavily on the FPS to identify potential audit targets, Liles says. And ZPICs are using leads generated from the FPS to conduct unannounced provider site visits, patient visits, prepayment reviews post-payment audits, suspensions, revocations, and referrals for criminal investigation and prosecution.

When the FPS’s statistical analysis of your billing utilization rates identifies outliers, your ZPIC may make an unannounced on-site visit, conduct a probe audit, or take another audit-related action, Liles warns. ZPICs may also visit with your patients and their families to compare what they say about the type and duration of care you provided versus what they say you provided to reveal any contradictions.

Also, prepayment reviews have been on the rise, and being placed on prepayment review can cut off your Medicare cash-flow for months, Liles adds. Prepayment reviews can lead to post-payment audits. Suspension and revocation actions are also increasing, both of which can start off with a site visit.

Pitfalls: Liles expects to see the steady increase in suspension actions over the past few years to continue to grow. Thanks to the Affordable Care Act (ACA), which greatly expanded CMS’ suspension authority, CMS can now suspend a provider based on allegations from any source, including fraud hotline complaints, provider audits, law enforcement investigations, and (of course) claims data mining.

CMS Will Upgrade to FPS 2.0 Soon

Look ahead: In future efforts, CMS is working to develop next-generation predictive analytics and a new system design for the FPS, Moller said. This should build on the FPS’s usability and efficiency.

On May 3, Northrop Grumman Corporation announced that CMS awarded it a $91.6-million contract to provide technical and business expertise for the FPS 2.0, which will be an update to the system for even better fraud-fighting capabilities. Northrop will lead a team of seven contractors to create the updated version of the system.

“The award demonstrates our continued collaborative partnership in fraud solutions and strong program performance of more than 20 years with our CMS customer,” Amy Caro, vice president of health solution for Northrop said in the announcement. “As the incumbent contractor on FPS 1.0 and a domain expert in this arena, Northrop Grumman is confident that, through implementation of the FPS 2.0 solution, CMS will continue to achieve high returns on its investment in combatting fraud.”

The soon-to-be-updated system will include data ingestion, data preparation, and edits and models to deny or reject claims that don’t conform to Medicare policy. Like FPS 1.0, the upgraded system will assign providers a risk score to prioritize investigations and provide an investigative user interface that allows program integrity contractors and law enforcement to view evidence, determine rulings, and track investigations.