Government Slams Medicaid Fraud But Commercial Carriers Exposed

Posted on October 19, 2011 by Kathleen Rand

Many Facing Charges of Medicaid Fraud

Department of Health and Human Services (HHS) and the Department of Justice (DOJ) teamed up in 2009 to reduce instances of healthcare fraud and abuse in Medicare and Medicaid. In fact, on September 7th, HHS and the DOJ announced that 91 people in eight cities were facing charges for their alleged participation in a variety of Medicare fraud schemes involving nearly $300 million — about $263.6 million in false billings and another $30 million in fraudulent claims.

But, according to some health plan investigators, federal and state investigators could do a better job of sharing information that could help identify fraud on the commercial side. Commercial carriers will more than likely become easy targets as the federal government focuses on fraud in Medicare and Medicaid.

The National Health Care Anti-Fraud Association (NHCAA) sponsors three meetings a year where health plan representatives from around the country discuss the types of fraud and abuse cases that they are encountering. The goal is to help detect possible schemes with in the commercial carrier world. Furthermore, there is software available that is sophisticated enough that it allows health plans to analyze claims data for outliers and can, in effect, indicate potential fraud and abuse.

But the medical loss ratio (MLR) provision of the healthcare reform law could restrict commercial health insurers and their efforts to identify fraudulent claims before they get paid. The Affordable Care Act classifies fraud and abuse prevention as an administrative expense. However, those expenses can be offset by any money recovered. So why prevent fraud? It seems there is more financial incentive to let the money go and then recover it later.

The HHS/DOJ Health Care Fraud Prevention and Enforcement Action Team (HEAT) is clearly chasing down Medicaid fraud and abuse, leaving the commercial carriers exposed in several ways and for many reasons. Systemic fraud, in which a medical provider might try to justify misrepresentation on claims as being what is best for the patient, are far more difficult to prove while Medicaid cases can be viewed as more straightforward. Further, higher unemployment and more people with no coverage seem to have caused an increase of illegal use of health insurance identification numbers, emerging elaborate fraud schemes, and a spike in violence related to fraudulent activities.

Unfortunately the economy might force otherwise honest people to perform questionable abuses of the system. But it can also encourage people to pay greater attention to where every dollar goes and report potential fraud cases immediately. The following video is an informative clip, showing how all of us can be mindful of fraud and begin to protect ourselves: http://www.wisconsinsmp.org/2011/02/video-avoiding-medicare-and-medicaid-fraud-and-abuse/

The Billion Dollar Cost of Fraud

Posted on September 30, 2011 by Kathleen Rand

Fraud Prevention Initiatives

Despite the Fraud Prevention Initiatives like the Affordable Care Act, the federal government admits that a staggering $60 billion is stolen from taxpayers through Medicare scams every year. Some experts believe the number is more than twice that.

Fraudulent pharmacies, clinics and medical supply companies seem to pop up like dandelions. Former car mechanics, bus boys and clerks can be involved in individual scams, taking tens of millions of dollars every year from the government program meant to provide healthcare to the nation’s elderly. The victims of the schemes? American taxpayers.

It’s simple because Medicare is based on trust. When the program was introduced in the 1960s, there was an assumption that no one would try to defraud a system created to take care of the elderly. The government was required to reimburse vendors in less than 30 days. In 99.9 percent of the cases, Medicare “auto-adjudicates” claims within 30 days. In other words, the computer decides if the right codes are in the right boxes. If they are, the checks are automatically sent.

“That means that if you check the right boxes and fill out the right forms, you’re going to get paid,” said Kirk Ogrosky, who until recently was the federal prosecutor in charge of all criminal Medicare fraud at the Department of Justice.

Unlike credit card companies that stop payments as soon as a second suspicious charge is made, Medicare is slow to respond even when people call to tell them about fraud. Judge Marshall Ader, who sat on the Florida state bench for decades, said he even had trouble getting Medicare to pay attention. When he saw that Medicare was being billed for two prosthetic legs using his Medicare number, he was enraged.

“I saw that there was a report for some prosthesis that I, of course, didn’t use and had never used,” said Ader, who has no need for prosthesis. “The bill was something like $30,000. I called Medicare, the investigative fraud unit …Nobody seemed to care,” he said. It took over a year to sort out the situation.

Plenty of criminals, however, are arrested by the FBI and the Office of Inspector General. U.S. Attorney Jeffrey Sloman spearheads prosecutions in South Florida which has become a focal point of Medicare scams. He believes there are cases pending that are worth “over a billion dollars… probably…two billion.”

Despite the fact that the South Florida strike force prosecuted approximately 170 cases last year, all their hard work hardly makes a dent.

There is overwhelming evidence of healthcare fraud and abuse, yet again and again, Medicare pays. Meanwhile, the vicious cycle continues: law enforcement continues to try to chase down fraudulent activity and the system continues to pump out the checks to the perpetrators. Evidently, a lot of time and effort is still necessary to bridge the disconnect between the knowledge that the fraud and abuse is prevalent, that initiatives and legislation are in existence to stop the abuse and the actual cessation and permanent prevention of fraud. In the meantime, providers themselves need to become more attentive and vigilant as they strive to maintain healthcare compliance possibly by implementing their own healthcare financial management and anti-fraud initiatives.

An excellent illustration of the billion dollar cost of fraud is the following link to a CBS new story: http://www.cbsnews.com/stories/2009/10/23/60minutes/main5414390.shtml

Fraud Prevention Initiative

Posted on September 26, 2011 by Kathleen Rand

Healthcare fraud and abuse affects everyone in the healthcare system and interferes Medicare’s ability to serve future generations. To address this growing problem, the federal government continues to attempt to recover improper payments and prevent fraud. The federal government’s recovery of a record $4 billion last year from people who attempted to defraud seniors and taxpayers shows the significant progress in the fight against healthcare fraud. The Affordable Care Act provides additional resources and tools to enable the Centers for Medicare & Medicaid Services (CMS) to expand efforts to prevent and fight fraud, waste and abuse.

Fraud prevention efforts focus on moving CMS to a more proactive “prevent and detect” model that will help prevent fraud and abuse before payment is made. The previous “pay and chase” scenario in recovery operations was reactionary and ineffective. A valid illustration of this pro-activity is the recent CMS announcement that, via the use of innovative predictive modeling technology, the agency will have the ability to use ‘risk scoring techniques’ to alert them to high risk claims and providers. Consequently action can be taken to stop payments and remove providers from the program, if necessary.

Through the Fraud Prevention Initiative, the Center for Medicare & Medicaid Services (CMS) is working to certify that correct payments are made to legitimate providers for covered, appropriate and reasonable healthcare services. The Affordable Care Act contains numerous provisions that support the Department of Health and Human Services (HHS), CMS and States. These provisions will expand efforts to prevent and fight fraud, waste and abuse in all Federal health care programs including Medicare, Medicaid and the Children’s Health Insurance Program (CHIP). The new authorities offer more protections and new tools to keep those who are intent on committing fraud out of the programs and address fraudulent payment issues promptly to ensure the integrity of Medicare, Medicaid, and CHIP.

As CMS and states implement these provisions, the savings generated could help bring down healthcare costs for families, businesses and governments. On January 24, 2011, HHS announced new rules authorized under the Affordable Care Act that will help Medicare, Medicaid and CHIP reduce fraud while protecting both patients and legitimate physicians and providers.

CMS is planning to utilize analytical techniques to improve payment accuracy by identifying unusual trends that could be indicative of waste or fraud. The rules also give CMS new enforcement tools to fight fraud, such as the ability to suspend payments in cases of valid allegations of fraud. The new rules:

•Create a rigorous screening process for providers and suppliers enrolling in Medicare, Medicaid or CHIP.

•Require a cross-termination among Federal and State health programs. This means that providers and suppliers who have had their Medicare billing privileges rescinded or whose participation has been terminated by a State Medicaid program or CHIP will be banned from all other Medicaid programs and CHIPs.

•Authorize CMS to temporarily stop enrollment of new providers and suppliers. Medicare and State agencies will be watchful of trends indicating a significant potential for health care fraud, and can temporarily stop enrollment of a category of providers or suppliers, or enrollment of new providers or suppliers in a geographic area that has been identified as high risk. In deciding whether to impose a temporary freeze, CMS will consider the effect such a cessation would have on beneficiary access to care.

•Authorize CMS to temporarily stop payments to providers and suppliers in cases of suspected fraud. Under the new rules, if there has been a credible fraud allegation, payments can be held while investigation is being conducted.

Numerous other provisions of the Affordable Care Act support the Administration’s ongoing work to prevent and fight healthcare fraud and abuse by:

a) Incorporating sophisticated new technologies and innovative data sources. These new technologies will help to identify patterns associated with fraud and avoid paying fraudulent claims.

b) Sharing data. 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 assimilated, facilitating agency and law enforcement officials’ ability to identify criminals and prevent fraud on a system-wide basis.

c) Expanding overpayment recovery efforts. The law expands the Recovery Audit Contractors (RACs) program, requiring RAC audits to find and recoup improper payments across Medicare Parts C and D and in Medicaid. Providers must also report and return Medicare and Medicaid over payments within 60 days of identification.

d) Increasing penalties to discourage fraud and abuse. The law gives the HHS Secretary new authority to prevent problem providers from participating in Medicare or Medicaid.

e) Establishing tough new rules and sentences for criminals. The Affordable Care Act increases the Federal sentencing guidelines related to healthcare fraud offenses involving $1 million or more in losses to federal healthcare programs.

Yet, as important as these aggressive new initiatives are, the first and best line of defense against fraud remains the healthcare consumer and providers. Healthcare compliance saves all of us money in the long run.

RAC Audit Overview

Posted on September 22, 2011 by Danyell Jones

BHM assists organizations mitigate RAC audit risk

In conjunction with the False Claims Act, a RAC audit protects the government from potential fraud, specifically within the Medicare and Medicaid system. Some healthcare providers overbill or commit other fraudulent actions against the government institutions, and these audits are designed to flesh out such activities.

RAC is an acronym for recovery audit contractor. RAC represents an effort to audit health care providers on behalf of Medicare and Medicaid in order to identify improper payments made on claims of health care services provided to Medicare beneficiaries. The Centers for Medicare & Medicaid Services (CMS) oversee the programs to seek and correct healthcare fraud and abuse .

Improper payments may be overpayments or underpayments. Overpayments can occur when health care providers submit claims that do not meet Medicare’s coding or medical necessity policies. Underpayments can occur when health care providers submit claims for a simple procedure but the medical record reveals that a more complicated procedure was actually performed. Health care providers that might be reviewed include hospitals, nursing homes, home health agencies, physician practices, durable medical equipment suppliers and any other provider that bills Medicare Parts A and B.

The RAC program began as a demonstration program in 2005 and ran until 2008. Consequently, in the Tax Relief and Health Care Act of 2006, Congress mandated a permanent and national RAC program to be in place by January 1, 2010. The national RAC program is the outgrowth of this successful demonstration program that performed RAC audits in select states: California, Florida, New York, Massachusetts, South Carolina and Arizona. The demonstration resulted in over $900 million in overpayments being returned to the Medicare Trust Fund between 2005 and 2008 and nearly $38 million in underpayments returned to health care providers.

The CMS selects recovery audit contractors to execute audits at provider facilities. The CMS pays RAC contractors only when they find overpayments or potential fraud. For this reason, health care providers must have their records and accounting system in order, bringing healthcare compliance and financial management to the forefront and protects them from an audit in which RAC contractors may be extremely determined to find problems.

Third-party organizations provide audit preparation software to help health providers organize their records and prepare for an RAC audit. Given the aggressive nature of an RAC audit, health care providers may wish to consider consultation.

To prepare for the start of the program, an internal assessment to ensure that submitted claims meet the Medicare rules should be conducted. Additionally, providers should consider:

• Reviewing the RACs’ websites and identifying any patterns of denied claims within their own practice or facility;

•Introducing measures to promptly respond to RAC requests for medical records;

•Keeping track of denied claims and correcting these previous errors; and

•Finding out what curative actions need to be taken to safeguard compliance with Medicare’s requirements and to avoid submitting incorrect future claims.

When discovered, providers are given a chance to discuss improper payments with RAC. If there is no dispute, providers can pay by check, consent for monies to be recovered from future payments, or set up a payment plan. If there is a contradiction with the finding, providers can file an appeal within 120 days.

There are four RACs. Each one is responsible for a quarter of the country, defined by The Centers for Medicare & Medicaid Services. RACs must employ a staff that includes nurses, therapists, certified coders and a certified medical director physician. RACs receive a percentage of the improper over- or underpayment that they collect from providers.

CMS will continue to monitor the efforts of the RACs. The idea is to make certain the RACs are providing appropriate information to reach all the health care providers in their regions and make certain that no provider feels arbitrarily burdened.

Fraud and Abuse-False Claims Act in Healthcare

Posted on September 16, 2011 by Danyell Jones

The False Claims Act, as we discussed in our prior post, encompasses any government spending program. Our focus will be on the FCA as it specifically relates to healthcare fraud and abuse.

The FCA was amended again in 1993. Within that amendment the Attorney General announced that pursuing health care fraud and abuse would be a top priority for the Department of Justice. Through the use of this law, the government has obtained huge health care fraud settlements in recent years, and has paid sizable payments to private individuals who have sued on behalf of the government.

The government has used the False Claims Act to investigate a wide range of health care providers, from managed care organizations, pharmaceutical companies, and chains of hospitals, to physician practices, home health agencies and durable medical equipment suppliers. The government has also pursued the entities that assist plans and providers with health care transactions, such as billing companies, Medicare carriers, and fiscal intermediaries.

The False Claims Act has been applied in a wide variety of situations involving knowing, false claims, including by not limited to the following:

1. Claims for “medically unnecessary” health care.

2. Double-billing by one provider.

3. Duplication of billing by two providers: for instance, a physician who bills for an analysis of X-rays when a radiologist has already performed and billed the federal program for the analysis.

4. Billing for patients not eligible to receive a benefit such as home health or hospice.

5. “Un-bundling” of services required by Medicare rules to be “bundled.”

7. Improper administration of federal programs by fiscal intermediaries and carriers, including failure to process claims and correspondence in accordance with program agency guidelines.

8. Billing for ghost patients and other care not provided at all.

9. Allocating costs that should be covered by private insurers to a federal health program.

10. Refusal to provide medically necessary care covered under capitated fee arrangements. In other words, a provider indirectly represents that it is providing the services covered by a relevant contract or regulatory provisions when it knows that it is not. This conduct is also known as knowing “under utilization.” It often involves denial of authorization for care, failure to authorize care in a timely fashion, and causing network providers to deny care through the use of financial or other pressure.

The key to survival for many organizations in this current economic climate is to attempt to prevent fraud. Knowing the likely areas in which most fraud is committed and a financial analysis are two effective means to safeguard organizations and to enable them stay competitive and profitable

Basics on the False Claims Act

Posted on September 14, 2011 by Danyell Jones

As healthcare fraud and abuse , unfortunately, becomes more prevalent, it is key to understand some of the basic information pertaining to fraud and abuse which may impact healthcare organizati ons. As part of “learning the basics” BHM will focus this blog post on an overview of the False Claims Act (FCA).

Click here to access the compete False Claims Act

The False Claims Act, an American federal law, has been around since the Civil War. It was known as the Lincoln Law. During the Civil War, horses and mules in poor health, faulty rifles and ammunition, and rancid supplies were sold to soldiers on a regular basis; Congress passed the Lincoln Law to respond to this entrenched fraud. It included a “qui tam” provision, permitting citizens to sue on behalf of the government and be paid a percentage of the recovery.

Today, it has greatly expanded to encompass any fraud against government spending programs. This law imposes liability on any person or company who defrauds the government. Specifically, those guilty of a violation of the False Claims Act (FCA) are liable for three times the government’s damages plus civil penalties of $5,500 to $11,000 per false claim.

In 1986, the FCA was amended, strengthening the qui tam provisions and offering incentives for citizens to assist the government in combating fraud. In fact, the law relies upon these ‘whistleblowers’ or ‘qui tam relators’ who have evidence of fraud against government contracts and programs to come forward and act on behalf of the government. Relators are allowed to file a lawsuit against the person or business that committed the fraud. If the action is successful, the qui tam plaintiff is rewarded with a percentage of the recovery.

The qui tam relator’s portion of the damages recovered depends on whether the Justice Department intervenes and takes over the case. If the Justice Department takes over, the qui tam relator is entitled to between 15% and 25% of the recovery. If the Justice Department does not intervene, and the suit is pursued individually, the qui tam plaintiff can be granted between 25% and 30% of the recovery.

Recognizing that the government could not fight against rampant fraud alone, Congress put into play a powerful public-private partnership for uncovering fraud against the federal government and obtaining the maximum recovery for American taxpayers. As Sen. Charles Grassley (R-IA) and Rep. Howard Berman (D-CA) have noted:

“Studies estimate the fraud deterred thus far by the qui tam provisions runs into the hundreds of billions of dollars. Instead of encouraging or rewarding a culture of deceit, corporations now spend substantial sums on sophisticated and meaningful compliance programs. That change in the corporate culture — and in the values-based decisions that ordinary Americans make daily in the workplace — may be the law’s most durable legacy.”

In the next blog post, we will explore, in more detail, the qui tam provisions and how they specifically relate to healthcare compliance and healthcare financial management.

The Cost of Healthcare Fraud and Abuse

Posted on September 6, 2011 by Danyell Jones

With a tight economy, budgetary cutbacks, and lawmakers looking for ever increasing ways to recoup money, healthcare fraud and abuse has become an issue of singular focus lately.

Back in 2010 CNN ran an excellent article on the cost of fraud and abuse (for article click here). Little has changed since then and healthcare fraud and abuse is still having a staggering impact on the country’s bottom line. In the upcoming week we will take a look at some of the key healthcare fraud related issues including;

The Qui Tam provisions of the False Claims Act
Reverse false claims and Medicare RAC audits
The Billion dollar cost of Fraud
What fraud initiatives are on the horizon

Here is a video from NBC Nightly News…..this story focuses on Florida, a state identified as one of the most egregious offenders when it comes to Medicaid/Medicare fraud.

Visit msnbc.com for breaking news, world news, and news about the economy

USA Today Predicts Fraud Prosecutions to Rise by 85%

Posted on September 1, 2011 by Danyell Jones

Kelly Kennedy a reporter for USA Today recently wrote a story about healthcare fraud and abuse, and shared a staggering statistic, according to government statistics “federal health care fraud prosecution in the first eight months of 2011 are on pace to rise 85% over last year”

To read the full article please click here

What is causing this dramatic increase? The Obama administrations ramped up fraud enforcement and economic recoupment efforts which are being banked on as a way to pay for Obamas proposed Health Care Reform plans.

According to the article, statistics which were harvested and released by the Transactional Records Access Clearinghouse (TRAC) show that prosecutions went from 731 people in 2010 to 903 people so far in 2011. Furthermore “prosecutions have gone up 71% from five years ago, according to TRAC.”

With such an emphasis on recoupment from both a fraud and abuse perspective, and a RAC audit perspective it will become more important than ever that organizations are aware of all of the new laws and regulations which are being released, and that they have a healthcare compliance program in place to mitigate any risk to their organization.

The key is preparation…..so make sure that your organization is ready. If you are not sure if you have a solid healthcare compliance program, BHM can help. Just give us a call at 1-888-831-1171 to set up your free initial consultation.