Life Science Compliance Update

June 20, 2016

GAO Report Harshly Critical of Medicare Advantage Plans

A May 2016 report from the United States Government Accountability Office (GAO) is harshly critical of Private Medicare Advantage plans, stating that the plans have overbilled the government by billions of dollars, but have rarely been forced to repay the money or face other consequences for their actions. The report, "Fundamental Improvements Needed in CMS's Effort to Recover Substantial Amounts of Improper Payments," called for "fundamental improvements" to curb overbilling by the health plans, which are paid more than $160 billion annually. The privately run health plans, an alternative to traditional fee-for-service Medicare, have proven popular with seniors and have enrolled more than 17 million people. The plans, which were the subject of a Center for Public Integrity investigation, also enjoy strong support in Congress.  

This report follows an October 2014 audit by the GAO that was prompted by the Center for Public Integrity's "Medicare Advantage Money Grab" series. The series documented nearly $70 billion in improper payments to health plans, most of which were inflated fees from overstating patients' health risks, from 2008 through 2013 alone.

The investigation performed by the Center for Public Integrity traced the overpayments to abuse of a billing formula known as a risk score, which pays higher rates for sicker patients and less for people in good health. Since 2004, that risk score has been used on the "honor system," despite criticism that many health plans have overstated how sick some patients are to boost their revenues. Such a practice is referred to as "upcoding."

CMS also released records to the Center for Public Integrity through a court order in a Freedom of Information (FOIA) lawsuit that showed overbilling has wasted tax dollars almost since risk scores were introduced in 2004. As an example, one review of 2005 payments determined that almost one-third of patients that were enrolled in 22 health plans were not actually as sick as was claimed; as a result, the audit projected overpayments of $4.2 billion.

In the report, the GAO noted that CMS had failed to target health plans with "known improper payment risk," thereby allowing the worst performers to continue escaping the net. The GAO also criticized the agency for allowing audits and appeals to drag on for years: i.e., some audits of 2007 payments to health plans are still under appeal.

America's Health Insurance Plans, an industry trade organization, responded to the GAO report by stating that an "unconfirmed diagnosis" in an audit does not mean that the patient doesn't have the disease. The trade group also also been known to criticize the audit review as not yet complete or "fully tested," to ensure stability and reliability.

David Lipschuz, an attorney with the Center for Medicare Advocacy, noted that his group is "troubled" by the extent of the improper payments to Medicare Advantage plans and the government's "lack of progress on recouping and deterring such payments." He further noted that he is hopeful that policymakers who focus on protecting Medicare Advantage profit take heed of this GAO report to ensure that the recommendations are implemented.

CMS officials have begun to audit Medicare Advantage payments from 2011 and 2012, and have set a goal to have all Medicare Advantage contracts audited on an annual basis. According to the agency, "HHS is strongly committed to program integrity in the Medicare Advantage program and takes seriously our responsibility to protect taxpayer dollars by identifying and correcting improper payments."

GAO officials noted that while CMS is stepping up their RADV audits, much more needs to be done: the upcoming audits are expected to recover around $370 million; however, that is only around 3% of the total estimated annual overpayment. HHS concurred with all five recommendations made in the report, which also included: modifying CMS's calculation of coding intensity; modifying CMS's selection of contracts for contract-level RADV audits to focus on those contracts most likely to have high rates of improper payments; enhancing the timeliness of CMS's contract-level RADV process; improving the timeliness of CMS's contract-level RADV appeal process by requiring that reconsideration decisions be rendered within a specified number of days comparable to other medical record review and first-level appeal time frames in the Medicare program; and ensuring that CMS develops specific plans and a timetable for incorporating a RAC into the program as mandated by the Affordable Care Act.

May 31, 2016

E&C Subcommittee Hearing, HHS OIG and GAO Reports on Medicare and Medicaid Fraud Enforcement – More Work to Be Done

On May 24, 2016, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled, "Medicare and Medicaid Program Integrity: Combatting Improper Payments and Ineligible Providers." The hearing also coincided with a series of reports released by the Health and Human Services (HHS) Office of Inspector General (OIG) related to Centers for Medicare and Medicaid Services (CMS) oversight in the federal programs, as well as with a report issued by the Government Accountability Office (GAO) relating to CMS.

Opening Statements

Full Committee Chairman Fred Upton and Subcommittee Chairman Tim Murphy opened the hearing, and they, along with some of their politically-aligned colleagues noted the work of both the OIG and the GAO and highlighted the need for CMS to continue to implement recommendations made by the agencies. Both Chairmen expressed concern about improper payments, including Rep. Murphy mentioning the approximately $89 million in improper payments and Rep. Upton mentioned improper payments to locations that do not exist.

Subcommittee Ranking Member Diana DeGette (D-CO) said in her opening remarks that fraud and abuse in Medicare and Medicaid was a "longstanding, pervasive challenge." She mentioned she was encouraged by recent successes of CMS implementing program integrity efforts that were brought about by the Affordable Care Act (ACA) and that these new tools should greatly enhance CMS' ability to achieve antifraud goals.

Testimony

Testimony was elicited first from Ann Maxwell, the Assistant Inspector General at the Office of Evaluation and Inspections within HHS OIG. She testified that oversight of provider enrollment in both Medicare and Medicaid is critical. She believes that enrollment in the program is truly "where is starts" and that once they are enrolled, providers essentially have a "green light" to start billing CMS. She also noted that she had some concerns about the different information about the same providers between Medicare and Medicaid; she believes that it was hard to know who you are doing business with "if you can't even get the name right."

Dr. Seto Bagdoyan, the Director of Audit Services with the GAO discussed that his office had recommended that CMS improve address verification processes. He believes that such a move will help to prevent future instances of CMS making incorrect payments to non-existent addresses.

The Deputy Administrator at the Center for Program Integrity at CMS, Dr. Shantanu Agrawal, noted that there are efforts underway to improve payment accuracy including site visits, automated risk based screening efforts, and targeted enforcement efforts. He said that CMS' work so far as resulted in a $2.4 billion program savings.

Discussion

Ensuring Access to Quality Medicaid Providers Act

This legislation, which would require the states to report Medicaid provider terminations to CMS, received bipartisan support from the Subcommittee. Ranking Member Diana DeGette encouraged her colleagues in the Senate to take the bill up, following its passage in the House of Representatives.

Improper Payment Rate

The vast majority of the hearing's discussion focused on improper payments in both Medicare and Medicaid. Improper payments occur when federal fund go to the wrong recipient, when the recipient receives the incorrect amount of funds (overpayments and underpayments), documentation is not available to support a payment, or the recipient uses federal funds in an improper manger. A recent OIG report found that HHS had a payment error rate of 12% in FY 2015.

Prior Authorization

Dr. Agrawal mentioned that CMS was increasing the use of prior authorization, which requires the service to be approved by CMS prior to the service being rendered. Dr. Agrawal feels as though it is a useful tool and that while he may be open to more focused prior authorization usage, he thinks that the agency needs more experience before begin able to do so successfully.

The OIG and GAO Reports

HHS OIG

The HHS OIG released three reports: "Medicaid: Vulnerabilities Related to Provider Enrollment and Ownership Disclosure," "Medicare: Vulnerabilities Related to Provider Enrollment and Ownership Disclosure," and "Medicaid Enhanced Provider Enrollment Screenings Have Not Been Fully Implemented."

The first report resulted in seven recommendations being made by OIG to resolve issues revolving around disclosure and ownership information. Those seven recommendations included CMS: working with State Medicaid programs to identify and correct gaps in their collection of required provider ownership data; require State Medicaid programs to verify the completeness and accuracy of provider ownership information; and work with State Medicaid programs to review providers that submitted nonmatching owner names and take appropriate action.

The second report ended with four recommendations for CMS, including: reviewing providers that submitted nonmatching owner names and take appropriate actions; educate providers on the requirement to report changes of ownership; and increase coordination with State Medicaid programs on the collection and verification of provider ownership information in Medicare and Medicaid.

The third report included six recommendations, all of which CMS concurred with. The recommendations included: CMS assist the states in implementing fingerprint based criminal background checks for all high risk providers; enable the States to substitute Medicare screening data by ensuring the accessibility and quality of Medicare data; and strengthen minimum standards for fingerprint-based criminal background checks and site visits.

GAO

The GAO report, titled "Continued Action Required to Address Weaknesses in Provider and Supplier Enrollment Controls," highlighted progress that CMS has made in implementing previous recommendations related to oversight of providers that are enrolling in the agency's Provider Enrollment, Chain and Ownership System (PECOS).

 

June 17, 2015

E&C Committee Requests Government Accountability Office Look Into CMS's Fraud Prevention System

GAO

Bipartisan leaders of the House Energy and Commerce and House Ways and Means Committees on Monday sent a letter to the Government Accountability Office (GAO) requesting a review of the Fraud Prevention System (FPS) at the Centers for Medicare and Medicaid Services. The FPS was implemented in July 2011 in an effort to more proactively prevent fraud in the Medicare program, as opposed to a “pay and chase” approach that still provides the bulk of the enforcement activities.

The leaders explain, “GAO has previously identified key practices for using predictive analysis systems, including leveraging the results of predictive analysis to address service- or system-specific weaknesses that can lead to payment errors, such as gaps in prepayment edits. It is unclear whether CMS is using FPS to identify these broader program vulnerabilities in Medicare and taking action based on these vulnerabilities throughout the program.”

The letter requests GAO study the following questions:

  • What types of potentially fraudulent payments have been denied by FPS prepayment edits, and how do the FPS prepayment edits differ from those implemented by the Medicare Administrative Contractors?
  • How many administrative actions has CMS taken against providers since 2010, what types of actions were taken, and how many of these actions were a direct result of FPS? How do these actions compare with non-FPS-initiated actions?
  • How has the FPS led CMS to identify program vulnerabilities that could lead to payment errors, and what steps has CMS taken to address any identified vulnerabilities.
  • What percentage of savings attributable to FPS are also attributable to prepayment  denials compared to post-payment recoveries? How do these savings compare with other traditional program integrity efforts?
  • What are CMS’s plans for using FPS with Medicaid and the Children’s Health Insurance Program (CHIP) as directed under federal statute? If this is unworkable due to the nature of Medicaid and CHIP claims, what is a recommended alternate approach?
  • How do the program outlays for FPS compare with the actual and projected savings attributable to FPS-initiated actions?

The letter was signed by:

  • Energy and Commerce Committee Chairman Fred Upton (R-MI)
  • Ways and Means Committee Chairman Paul Ryan (R-WI)
  • Energy and Commerce Subcommittee on Oversight and Investigations Chairman Tim Murphy (R-PA)
  • Ways and Means Subcommittee on Oversight Chairman Peter Roskam (R-IL)
  • Energy and Commerce Subcommittee on Health Chairman Joe Pitts (R-PA)
  • Ways and Means Subcommittee on Health Chairman Kevin Brady (R-TX)
  • Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ)
  • Ways and Means Committee Ranking Member Sander Levin (D-MI)
  • Energy and Commerce Subcommittee on Oversight and Investigations Ranking Member Diana DeGette (D-CO)
  • Ways and Means Subcommittee on Oversight Ranking Member John Lewis (D-GA)
  • Energy and Commerce Subcommittee on Health Ranking Member Gene Green (D-TX)
  • Ways and Means Subcommittee on Health Ranking Member Jim McDermott (D-WA)

The Energy and Commerce Subcommittee on Oversight and Investigations held a hearing in early June to discuss a report from GAO on fraud in the Medicaid program, entitled, “Additional Actions Needed to Help Improve Provider and Beneficiary Fraud Controls.” 

GAO’s report “found thousands of Medicaid beneficiaries and hundreds of providers involved in potential improper or fraudulent payments during fiscal year 2011 – the most-recent year for which reliable data were available in four selected states: Arizona, Florida, Michigan, and New Jersey. These states had about 9.2 million beneficiaries and accounted for 13 percent of all fiscal year 2011 Medicaid payments.”

Specifically:

  • About 8,600 beneficiaries had payments made on their behalf concurrently by two or more of GAO's selected states totaling at least $18.3 million, even though federal regulations do not permit beneficiaries to have payments made on their behalf by two or more states concurrently
  • The identities of about 200 deceased beneficiaries received about $9.6 million in Medicaid benefits subsequent to the beneficiary's death.
  • About 50 providers were excluded from federal health-care programs, including Medicaid, for a variety of reasons that include patient abuse or neglect, fraud, theft, bribery, or tax evasion.

House Energy and Commerce Subcommittee on Oversight and Investigations chair Rep. Tim Murphy (R-PA) noted, “Last year the Medicaid program provided medical services for approximately 60 million people at a cost of $310 billion. But during that same year, the Centers for Medicare and Medicaid Services estimated that the improper-payment rate was 6.7 percent or $17.5 billion. This is an increase of almost 1 percent or over $3 billion from the previous year.

This is a troubling trend, especially as the program continues to expand.” Full committee Chairman Fred Upton (R-MI) said, “Medicaid is supposed to provide our most vulnerable with vital medical services, but continued waste and fraud undermines this important goal.” Dr. Shantanu Agrawal, Deputy Administrator and Director of the Center for Program Integrity at CMS, testified about steps currently being taken by CMS to reduce waste, fraud and abuse, but agreed that continued oversight is essential. Dr. Agrawal told Rep. Joseph Kennedy (D-MA), “Holding our feet to the fire is appropriate.”

 

 

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