Life Science Compliance Update

105 posts categorized "CMS"

April 08, 2015

CMS and OIG Discuss “The Use of Data to Stop Medicare Fraud” Before House Ways and Means Subcommittee

  Big data

The House Ways and Means Subcommittee on Oversight recently held a hearing on the federal government’s use of data analysis to confront Medicare Fraud. The hearing featured testimony from Dr. Shantanu Agrawal, Deputy Administrator and Director of the Center for Program Integrity at the Centers for Medicare and Medicaid Services (CMS) and Gary Cantrell, Deputy Inspector General for Investigations at the Office of Inspector General (OIG).

Medicare fraud “remains a serious, evolving threat,” Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) began the hearing. "I want to emphasize just how big of a problem this is. Last year, the federal government lost $124.7 billion dollars in improper payments across 124 programs. Of that $124 billion, one program accounted for $60 billion—or nearly half of the losses: Medicare.”

Pay and Chase

"Historically, CMS has used a method called 'pay and chase' in processing Medicare payments, first paying for a charge, and then later looking back to check on the validity of the transaction and potentially trying to claw back the money if the payment was made improperly,” Roskam stated. “As you can imagine, that strategy isn't very effective. Time and again we have seen fraudsters bilk the system for a few million dollars, shut down, and pop up under a new name to run their scams all over again. The Medicare program is getting outsmarted by these methods and the proof is in the unacceptably high rate of improper payments each year.”

Kirk Ogrosky, a former prosecutor and now partner at Arnold & Porter LLP, provided a concise overview of the issues at hand in his testimony. “Fraud will not be reduced or eradicated with a ‘pay-and-chase’ enforcement system that relies on criminal prosecution and civil litigation,” Ogrosky stated. “With advances in the ability to analyze claims data, the goal of the system should be to detect fraudulent claims when they are submitted, identify the perpetrators, and to use prosecution sparingly to punish and deter.”

Rep. Roskam stated: "In 2010, I proposed a new approach to help CMS work smarter. Instead of 'pay and chase,' CMS should use the same kind of cutting-edge predictive analytics technology that private companies use successfully to look at transaction data in real time and identify potentially fraudulent charges—stopping the payment before the money goes out the door.” This is similar to what private credit card companies use to identify potentially fraudulent charges and stop payments while they further investigate claims. Indeed, the panel heard testimony from Visa, a private company whose “global rate of fraud is 6 basis points—meaning 99.4 percent of the $10 trillion dollars in payments it processes globally are fraud-free.” Roskam added: “That's quite an impressive track record, and one we hope to learn a thing or two from.” 

Big Data: The “Fraud Prevention System”

The system created by CMS to incorporate data analytics to protect Medicare is called the Fraud Prevention System, or FPS. “In its first year, FPS got off to a rocky start—the Health and Human Services Inspector General could not even certify any of the system's results,” stated Rep. Roskam. In its second year, ending in July 2013, the Inspector General certified that the system had returned one dollar and thirty-four cents for each dollar invested that year, totaling around $54.2 million in savings. "Now $54.2 million dollars is a lot of money, but it is quite literally a drop in the bucket when compared to the $60 billion that Medicare programs lost last year," Roskam noted. 

CMS Testimony

Historically, CMS and our law enforcement partners have been dependent upon ‘pay and chase’ activities, by working to identify and recoup fraudulent payments after claims were paid,” Shantanu Agrawal of CMS acknowledged. “Now, CMS is using a variety of tools, including innovative data analytics, to keep fraudsters out of our programs and to uncover fraudulent schemes and trends quickly.”

He described CMS’s data tools in detail:

Since 2011, CMS has been using [FPS] to apply advanced analytics on all Medicare fee-for-service claims on a streaming, national basis by using predictive algorithms and other sophisticated analytics to analyze every Medicare fee-for-service claim against billing patterns. The system also incorporates other data sources, including information on compromised Medicare cards and complaints made through 1-800-MEDICARE. When FPS models identify egregious, suspect, or aberrant activity, the system automatically generates and prioritizes leads for review and investigation by CMS’ Zone Program Integrity Contractors (ZPICs). The ZPICs then identify administrative actions that can be implemented swiftly, such as revocation, payment suspension, or prepayment review, as appropriate. The FPS is also an important management tool, as it prioritizes leads for ZPICs in their designated region, making our program integrity strategy more data-driven.

He also described a variety of other methods for detecting a preventing fraud, including CMS’s improved coordination with law enforcement. View Agrawal’s testimony here

OIG Testimony

Gary Cantrell, Deputy Inspector General for Investigations for OIG called combatting Medicare fraud a “top priority,” and stated: “We use data analytics to detect and investigate Medicare fraud and to target our resources for maximum results.” He stated that these results have included “almost $15 billion in investigative receivables and more than 2,700 criminal actions in the past 3 years.”

OIG uses data in order to detect and investigate fraud, and to target the use of their limited resources. “OIG is a front-runner in the use of data analytics to detect and investigate health care fraud,” states Cantrell. “We use innovative analytic methods to analyze billions of records and data points to identify trends that may indicate fraud, geographical hot spots, emerging schemes, and individual providers of concern.”

He notes that at the “macro-level,” OIG analyzes “data patterns to assess fraud risks across Medicare services and provider types and geographically to prioritize and deploy our resources.” Then, “[a]t the micro-level, we use data analytics, including near-realtime data, to identify fraud suspects and conduct our investigations as efficiently and effectively as possible.”

Cantrell also walked through a particular example of how OIG integrates various strategies to fight fraud:

We combine our field intelligence with data analytics to assess vulnerabilities across the program and to deploy our special agents to investigate the most egregious cases of suspected fraud. For example, we worked with OIG’s evaluators to develop indicators of questionable billing for Part D drugs that may be associated with fraud and abuse based on our experience with prescription drug investigations. OIG evaluators designed studies using sophisticated data analytics to identify questionable billing by retail pharmacies, prescribers with aberrant patterns, individuals writing prescriptions without authority to prescribe, and Schedule II drugs billed as refills. These studies generated numerous law enforcement leads, resulting in multiple ongoing investigations. They also identified systemic vulnerabilities in the Part D program and made recommendations to CMS to better prevent fraud.

"The need to protect the Medicare program and the beneficiaries it serves from fraud and harm has never been more important," Cantrell concluded. "OIG, working with our internal and external partners, will continue using data analytics to target our resources for maximum results."  View Cantrell’s testimony here


March 31, 2015

Open Payments Submissions Due Today, March 31; Vermont Reports Due Tomorrow, April 1


Manufacturers must submit their Open Payments reports to the Centers for Medicare and Medicaid Services (CMS) today, March 31. These records cover payments or other transfers of value from pharmaceutical and medical device companies to healthcare professionals given in 2014. This second year submission process is unique in that it covers an entire year of payments, rather than only five months’ worth, as was the case in the first round of Open Payments reporting. 

Yesterday evening, CMS sent out an email confirming the deadline:

Tomorrow, Tuesday, March 31, 2015, is the final day for applicable manufacturers and group purchasing organizations (GPOs) to submit and attest to 2014 program year data and update 2013 program year data for publication by June 30, 2015. Complete your reporting entity’s data submission and attestation activities by logging into the Open Payments system through the EIDM Portal.

If you submitted data for the 2013 program year but have not yet begun the process for the 2014 program year, you will need to recertify in the Open Payments system before you can begin any 2014 submission activities. Use the Applicable Manufacturer and GPO Registration and Re-Certification – Quick Reference Guide [PDF] to help you complete this necessary step.

Lessons Learned, But Issues Remain

The initial Open Payments roll-out last year was problematic for manufacturers and physicians/teaching hospitals alike, and ultimately resulted in thousands of payment records being "de-identified" or outright removed from the database. CMS has attempted to fine tune the submission process by improving upon the matching formula used to verify a physician’s or teaching hospital’s identity as manufacturers attempt to enter their information into the system.

In addition to modifying the data matching algorithm for covered recipients, CMS also developed a Validated Physician List--a master list of their data. “To proactively assist with data matching, and in an effort to be fully transparent about the method and data sources used to validate submitted data, CMS is publishing a downloadable list of physician data in CSV format, which contains variations of physician first/last name, NPI and state license number, for physicians who were reported in the Open Payments system," CMS states. “This Validated Physician List is accessible in the Open Payments system via the CMS Enterprise Portal. CMS encourages applicable manufacturers and GPOs to utilize the provided physician list to avoid further inconsistencies in data reporting.”

While CMS’s efforts to improve the data submission process are appreciated, various consultants in the Open Payments space have indicated that CMS continues to use outdated physician and teaching hospital information for matching purposes and that the Validated Physician List has some gaps in the data. Several users have raised the issue that CMS has physicians still listed as a “student,” despite the fact that the physician is actively licensed by a state, for example. The result is that many HCPs are not being validated even by CMS’s updated matching logic, forcing at least one large aggregate spend firm to remove anywhere from 5-15 percent of the physicians, depending on the manufacturer.

Other issues include the fact that CMS has taken Open Payments offline on a number of occasions, including as recently as March 27. Companies have also reported challenges with submitting their corrections from last year, or continuing to delay publication of research payments. Manufacturers may request delayed disclosures related to research payments for investigational products in order to maintain confidentiality. These payments must be reported once the product receives FDA approval or four years have passed since the payments were made, whichever comes first.

Updated 3/31, 9:20 am: In addition to especially slow system performance in the last day of reporting, we have heard reports of zip codes being erroneously cleared out of covered recipient addresses in the submission stage. Another issue concerns how to report research spend to a teaching hospital with a physician principal investigator when the physician was (incorrectly) not included on CMS's master list.  CMS has addressed this fact pattern for general payments, through the separate deleted file process described in the next section, but has not given guidance on whether it is better to report the research spend to the teaching hospital on-time with no principal investigator or to load the files separately and remove them, as CMS instructed for general payments. 

CMS Call

During a call with manufacturers a few weeks ago, Doug Brown, Director of the Data Sharing and Partnership Group at CMS, stated that even given Open Payments’ revamped matching process, a situation may still arise where (1) a physician is not on CMS’s validated physician list, and (2) when companies submit the seemingly correct information, it is still being rejected by the system. “If we have a record that has an NPI, state license, and first and last name, and CMS cannot validate it using NPPES and PECOS,” than the system will not accept the record, Brown stated. ”So, there will be records attributable to covered recipients that the system will not be able to accept.”

Brown notes that he “does not want this to be something that "comes up down the road in an audit.” To avoid problems during an audit and resulting Civil Monetary Penalties, Brown advised companies to separate out the physician records that are problematic and that have been rejected. He stated that companies should separately submit all of the physician records that the system accepts, and attest to these. For the rejected pile of records, companies should nonetheless upload these records, which will be rejected, and then delete the entire file. Brown stated that Open Payments has a traceability capability that saves a lasting record that the company has submitted this file. Thus CMS will know that the company submitted transfers of value about individuals, even if there were problems with the ultimate submission process.

“Even when you delete the entire file, we do retain a record of this transaction actually occurring. And we can then look back later on, before contemplating any audit or any CMP action to make sure we have a firm understanding of those records that you attempted to report about," Brown states.

Vermont Reports Due April 1

Open Payments is just one aspect of reporting that manufacturers must juggle this spring. Vermont reports are due April 1 as well. 

Unlike the Federal Sunshine Act, which requires disclosure of certain payments, Vermont law bans most gifts from manufacturers to healthcare professionals. This means manufacturers must be weary of payments made to any prescriber practicing in Vermont to make sure such transfers of value due not break the state law.

View Vermont's guide to its law here

For any "allowable expenditures and permitted gifts," manufacturers must disclose these amounts to the state's Attorney General. Importantly, Vermont's list of reportable "covered recipients" is more expansive than the Federal law, so as not to be pre-empted. Indeed, the “Prescribed Products Gift Ban and Disclosure Law” applies to a broad list of “health care providers” (HCP), that includes a “health care professional, a hospital, nursing home, pharmacist, health benefit plan administrator, or any other person authorized to dispense or purchase for distribution prescribed products in Vermont.” Vermont law also requires manufacturers to disclose the distribution of samples of prescribed products to Vermont HCPs. 

Vermont has been very active on enforcement of its gift ban and disclosure law this year, and does not seem to be letting up even after the Federal Sunshine Act has come into effect. View Vermont's list of enforcement actions

Next Up For Open Payments: Physician Review and Dispute

CMS is hosting a webinar on April 15, entitled “Prepare to Review Reported Data” targeted at physicians, teaching hospitals, and physician office staff heading into the review and dispute phase of the Open Payments cycle. 

During the call, CMS will provide a brief overview of the Open Payments program and highlight the parts of the program timeline when it is most critical for physicians and teaching hospitals to be aware and get involved. The call aligns with the beginning of the program phase when physicians and teaching hospitals are able to enter the Open Payments system and review the accuracy of data submitted about them, prior to the publication of this data on the CMS website.


Provide your insight into the Open Payments submission process, or offer any issues in a comment below. 


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