Health Reform WK-EDGE CMS under fire for improper payments in House committee hearing
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Thursday, June 2, 2016

CMS under fire for improper payments in House committee hearing

CMS under fire for improper payments in House committee hearing

By Patricia K. Ruiz, J.D.

The prevalence of improper Medicare and Medicaid payments and lack of success weeding out ineligible providers came under scrutiny in a hearing before the House Energy and Commerce Committee’s Oversight and Investigations subcommittee. Investigators from the Government Accountability Office (GAO) and the Office of Inspector General (OIG) detailed the extent to which tax dollars are lost in improper payments, and CMS highlighted the efforts it has taken through new technology and authority granted under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to curb improper payments.

Medicare and Medicaid are large and fast-growing federal programs, with Medicare spending growing 5.5 percent to $618.7 billion and Medicaid spending growing 11 percent to $495.8 billion in 2014. Several reports released by the GAO and the OIG in recent months present evidence of substantial fraud and abuse in Medicare and Medicaid programs, raising questions about CMS’s effectiveness in discovering waste, fraud, and abuse. "Improper payments muddy the waters and make it harder for auditors and investigators to root out fraud and abuse, said Committee Chairman Rep. Tim Murphy (R-Penn). "If the system is murky and confusing, that only benefits the fraudsters taking advantage of our system."

Improper payments. Assistant Inspector General Ann Maxwell focused her testimony on how CMS did not meet its targets on improper payment rates and gave insight into the implementation of new provider enrollment safeguards authorized by the ACA. Medicare and Medicaid accounted for $88.8 billion (99 percent) of the $89.8 billion in improper payments HHS reported in FY 2015. Traditional fee-for-service Medicare alone accounted for $43.3 billion, almost one-half of HHS’s total. Medicaid improper payments totaled an additional $29.1 billion. These improper payments include federal funds going to the wrong recipient, the correct recipient receiving the incorrect amount of funds (whether an underpayment or overpayment), lack of documentation to support a payment, or a recipient’s use of federal funds in an improper manner. In a report issued May 11, 2016, the OIG found that HHS did not fully comply with the Improper Payments Act of 2002 (IPIA) for FY 2015, with HHS failing to achieve targets or goals for certain programs, including Medicare, Medicare Advantage, Medicaid, and the Children’s Health Insurance Program (CHIP). HHS also failed to meet requirements implement a plan to reduce improper payments.

Screening under the ACA. One key component of a strategy to minimize improper payments is to take steps to ensure that only eligible providers are allowed to enroll in Medicare and Medicaid, Maxwell testified. The ACA strengthened the provider enrollment process for Medicare and Medicaid by expanding who gets screened and how the screening occurs. The ACA also authorized enhanced screening tools, including verification of provider information, placement of providers in risk categories, increased site visits, and fingerprinting requirements. The extensiveness of provider screenings depends on provider risk categories, with high-risk categories subject to more extensive review than low-risk categories.

No more pay and chase. Deputy Administrator and Director for the CMS Center for Program Integrity, Shantanu Agrawal, M.D., wrote in a prepared statements that CMS and its law enforcement partners have historically been dependent upon "pay and chase" activities, identifying and recouping fraudulent payments after claims were paid. Now CMS uses data analytics to keep fraudsters out of the programs in the first place. "I think the recommendations are generally very important," said Agarwal to the committee. "The issue with recommendations are some are relatively easier to implement than others."

CMS has taken efforts to implement recommendations from the GAO and OIG, including: eliminating Social Security Numbers from Medicare cards; requiring Part D plan sponsors to have drug utilization review systems, policies, and procedures to ensure that a review of prescribed drug therapy is performed before each prescription is dispensed; establishing new revocation authority for abusive prescribing patterns; and strengthening fiscal transparency and integrity in Medicaid and CHIP managed care. These efforts strike a balance by protecting beneficiary access to necessary health care and reducing the administrative burden on legitimate providers and suppliers and ensuring tax dollars are not lost to fraud, waste, and abuse. Furthermore, CMS’s predictive analysis technology, the Fraud Prevention System (FPS), identifies investigative leads to further protect Medicare from inappropriate billing practices and provides oversight on provider-enrollment actions. The FPS has identified or prevented $820 million in inappropriate payments since June 2011.

Provider eligibility. Flaws in the eligibility verification process for Medicare providers and suppliers contribute to improper payments. Providers and suppliers enroll through the Provider Enrollment, Chain and Ownership System (PECOS), a centralized database designed to contain their enrollment information, and CMS relies largely on contractors to verify the eligibility of providers and identify fraud and abuse. In his testimony, Seto J. Bagdoyan, Director of the Forensic Audits and Investigative Service highlighted the findings of a June 2015 GAO report, which detailed the implementation of four enrollment screening procedures used by CMS to prevent and detect ineligible or potentially fraudulent providers and suppliers from enrolling. To assess the extent to which CMS had controls to verify eligibility, the GAO reviewed CMS procedural manuals and directives and interviewed officials about the procedures. The GAO found weaknesses in CMS’s verification of provider practice location, physician licensure status, providers listed as deceased or excluded from participation, and criminal background histories. These weaknesses may have resulted in the improper payment of thousands of potentially ineligible providers and suppliers.

Enrollment oversight. In his prepared testimony, Agrawal stated that categorical risk-based screening of newly enrolling Medicare and Medicaid providers under the ACA allows CMS to target its resources efficiently, applying the most scrutiny to higher risk categories while limiting the burden on providers and suppliers posing a lower risk. Furthermore, before providers and suppliers can bill Medicare, they must submit enrollment applications via mail or using the PECOS. CMS is in the process of enhancing its address verification software on PECOS to better detect vacant or invalid addresses or commercial mail reporting agencies. CMS also began deactivating providers and suppliers that have not billed Medicare in the last 13 months, which is expected to help remove providers and suppliers with potentially invalid addresses from PECOS without requiring site visits.

MainStory: TopStory CongressionalHearings NewsFeed AgencyNews FraudNews MedicaidNews MedicarePartANews MedicarePartBNews MedicarePartCNews MedicarePartDNews ProgramIntegrityNews

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