Reducing Improper Payments, Fighting Fraud, and Curbing Waste and Abuse under the Affordable Care Act
New Initiative Will Save $2.1 Billion
The Department of Health and Human Services (HHS) today released its final rule for the Medicaid Recovery Audit Program, a key part of the Administration’s initiatives to curb waste, fraud and abuse. Created by the Affordable Care Act, the Medicaid Recovery Audit Program will help states identify and recover improper Medicaid payments. It will be largely self-funded, paying independent auditors a contingency fee out of any improper payments they recover that took place in the previous three years.
The Recovery Audit Contractors (RACs) detect and correct past improper payments. RACs review claims after payments have been made, using both simple, automated review processes and detailed reviews that include medical records. RACs can only go three years back from the date the claim was paid, and are required to employ a staff consisting of nurses, therapists, certified coders, and a physician. Under these expansions, RACs will help identify and recover over and underpayments to providers across Medicare and Medicaid for the first time.
Over the next five years, HHS projects that this effort will save $2.1 billion, of which $900 million will be returned to states. This comes as the Medicare Recovery Audit program completes its second year of being used nationally. The Medicare Recovery Audit Program is on pace to increase the amount of Medicare overpayments recovered by nearly 800%, from roughly $75 million in 2010 to nearly $670 million in 2011.
These efforts build on the many aspects of the Affordable Care Act that are currently working to bring down waste, fraud and abuse in the health care system. Below are some of the accomplishments the new tools have produced in preventing and fighting waste, fraud and abuse in these programs.
New Resources to Fight Fraud
The Affordable Care Act provides an additional $350 million over 10 years and an annual inflation adjustment to ramp up anti-fraud efforts, including increasing scrutiny of claims before they’ve been paid, investments in sophisticated data analytics, and more “feet on the street” law enforcement agents and others to fight fraud in the health care system.
These efforts build on our recently awarded predictive modeling contract under which the Centers for Medicare and Medicaid Services (CMS) is using the kind of technology used by credit card companies to stop fraud. Since June 30th of this year CMS has been using this technology to help identify potentially fraudulent Medicare claims and uncover fraudulent providers and suppliers, flagging both for investigation and referrals to law enforcement. This new tool allows CMS for the first time to use real-time data to spot suspect claims and providers and take action to stop fraudulent payments before they are paid.
Tough New Rules and Sentences for Criminals
The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50% for crimes that involve more than $1 million in losses, establishes penalties for obstructing a fraud investigation and makes it easier for the government to recapture any funds acquired through fraudulent practices. The law also makes it easier for the Department of Justice to investigate potential fraud or wrongdoing at facilities like nursing homes.
Enhanced Penalties to Deter Fraud and Abuse
The Affordable Care Act provides the Department of Health and Human Services’ Office of the Inspector General (OIG) with the authority to impose stronger civil and monetary penalties on those found to have committed fraud. The Secretary also is provided new authority to prevent problematic providers from participating in Medicare or Medicaid. Under the new law:
- Providers and suppliers who lie on their application to enroll in Medicare or Medicaid may be excluded from the programs;
- Providers who identify an overpayment from Medicare or Medicaid but do not return it within 60 days may be subject to new fines and penalties; and
- Providers who are terminated from Medicare, a State’s Medicaid program, or both will be terminated from Medicaid programs in other states.
Enhanced Screening and Other Enrollment Requirements
On January 24, 2011, CMS announced some of the Affordable Care Act’s most powerful new fraud prevention tools, including new screening requirements for all Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) providers and suppliers. These new rules require all providers to go through licensure checks and subject those who pose higher levels of risk to undergo site visits and in some cases, criminal background checks before being allowed to bill the Medicare program. One of the most powerful new tools is the new authority to suspend Medicare payments to providers or suppliers when there is a credible allegation of fraud. The new rules also give the Secretary new authority to impose a temporary moratorium on newly enrolling providers or suppliers in certain geographic areas to prevent or combat waste, fraud and abuse. These new tools are also available to states to enhance their program integrity efforts in the Medicaid and CHIP programs. Already, revocations, payment suspensions and enrollment denials have taken place as a result of this increased scrutiny.
Increased Coordination of Fraud Prevention Efforts
Many of the Affordable Care Act provisions increase coordination between states, CMS, and its law enforcement partners at the Office of the Inspector General and the Department of Justice. The law deters fraudulent providers and suppliers from moving from State to State or between Medicare and Medicaid by requiring all states to terminate anyone who has been terminated by Medicare or by another State. Under the Affordable Care Act, CMS must work hand-in-hand with the Office of the Inspector General on suspending payments to suspect providers. CMS is also helping to provide the Office of the Inspector General and the Department of Justice improved real-time data access to enable investigators and law enforcement agents to more quickly detect and prosecute fraud schemes. In addition, the Senior Medicare Patrol (SMP) program, led by the Administration on Aging (AoA), empowers seniors to identify and fight fraud through increased awareness and understanding of Federal health care programs. Since the program’s inception, the program has educated over 3.84 million beneficiaries in group or one-on-one counseling sessions and has reached almost 24 million people through community education outreach events.
Sharing Data to Fight Fraud
Building on the Obama Administration initiatives to improve coordination across the agencies charged with stopping fraud, the law requires certain claims data from Medicare, Medicaid and CHIP, the Veterans Administration, the Department of Defense, the Social Security Disability Insurance program, and the Indian Health Service to be centralized, making it easier for agency and law enforcement officials to identify criminals and prevent fraud on a system-wide basis. The Affordable Care Act and new initiatives like the interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force between DOJ and HHS has already improved access to data for law enforcement, and DOJ and OIG continue to benefit from improved access to Medicare data to help identify criminals and fight fraud while protecting patient privacy.
Targeting High Risk Entities
The Affordable Care Act also imposes more stringent payment and enrollment requirements to target high risk items and entities. On November 17, 2010, CMS published final rules requiring a face-to-face meeting for Medicare and Medicaid home health and Medicare hospice and durable medical equipment (DME) items and services. CMS also issued a final rule on May 5, 2010 to require providers and suppliers who order and refer certain items or services for Medicare beneficiaries to enroll in Medicare and maintain documentation on those orders and referrals.
New Focus on Compliance and Prevention
Under the new law, providers and suppliers must establish compliance programs ensuring they are aware of anti-fraud requirements and good governance practices and have incorporated these into their operations. Nursing homes are also subject to new compliance and ethics plan requirements. Other preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies suppliers, and Community Mental Health Centers.
Raising the Bar on DME Suppliers through Expanded Competitive Bidding
As part of competitive bidding, CMS is implementing new stricter requirements for DME suppliers, which have historically presented a high risk of fraud. Thanks to the Affordable Care Act, CMS last month announced that it is expanding the DME Competitive Bidding program to 91 new areas of the country. Over 4 million Medicare beneficiaries living in these areas can save money through this new program, while continuing to have access to quality medical equipment from accredited suppliers they can trust. In the first five years, it is estimated to save $2.9 billion – over the first ten years, the savings are estimated at $17 billion.
Greater Oversight of Private Insurance Abuses
The new law gives new powers to the Secretary and Inspector General to investigate and audit the health insurance exchanges when they are operational. This, plus the new rules to ensure accountability in the insurance industry, will protect consumers and increase the affordability of health care.
Posted on: September 14, 2011