The Small Business Jobs Act of 2010 (pertinent sections of which are codified at 42 U.S.C. Section 1320a-7m) directed the Centers for Medicare & Medicaid Services (CMS) to use predictive modeling and other analytics technologies to identify and prevent fraud, waste, and abuse in the Medicare fee-for-service program. The statute required CMS to implement a system that could analyze provider billing and beneficiary utilization patterns to identify potentially fraudulent claims before they were paid. CMS calls this predictive analytics program the Fraud Prevention System (FPS).
CMS recently issued a report to Congress entitled “Fraud Prevention System Second Implementation Year” (June 2014) (Report), covering the progress of the FPS for the period from October 1, 2012 to September 30, 2013 (the Report was due in 2013). Among its reported items are the following:
Also as required by statute, OIG issued a corollary “Certification of the Report to Congress: Fraud Prevention System–Second Implementation Year,” which is included as an appendix to the Report. OIG found the return on investment (ROI) to be just $1.34/$1, in contrast to CMS’ ROI calculation of $5/$1. OIG made two recommendations to improve the effectiveness of the FPS program: (1) that CMS provide written instructions to its contractors as to how to identify those administrative actions that resulted from FPS; and (2) that the contractors be required to prepare and retain documentation as to how FPS contributed to their efforts.
On June 25 the U.S. Government Accountability Office (GAO) released a written statement of Kathleen King, Director, Health Care, GAO, entitled “Medicare Fraud: Further Actions Needed to Address Fraud, Waste, and Abuse,” which, among other things, addressed the FPS. GAO noted that while CMS had now established the link between the FPS and CMS claim processing systems so that it could deny claims, it still had no way to suspend (delay adjudication) claims while the claims were under investigation.
In addition, GAO recommended that CMS focus on several areas for improvement in non-FPS fraud-fighting efforts, including implementation of authorities provided by the 2010 Affordable Care Act:
Access CMS’ press release on the Report.
This article originally appeared on the American Health Lawyers Association’s website. AHLA would like to thank Fraud and Abuse Enforcement Committee member Timothy J. Cahill (Nationwide Children’s Hospital, Columbus, OH) for reviewing this post. Author Judith A. Waltz is also a member of the Fraud and Abuse Enforcement Committee.