New strat­egy, tech­nol­ogy emerg­ing in on­go­ing fight against healthcare fraud

Healthcare fraud is a seem­ingly over­whelm­ing prob­lem. Large healthcare com­pa­nies per­pe­trate sys­tem­atic schemes, while cor­rupt prac­ti­tion­ers and com­mon crim­i­nals steal funds through hoaxes in­volv­ing phony clin­ics, phan­tom pa­tients and billing for ser­vices

Modern Healthcare - - COMMENT - By Dr. Peter P. Budetti

Most im­por­tant, healthcare fraud can in­jure pa­tients. No clearer ex­am­ple ex­ists than the Michigan on­col­o­gist re­cently sen­tenced to 45 years in prison for giv­ing false can­cer di­ag­noses and pro­vid­ing un­nec­es­sary and dan­ger­ous treat­ments to col­lect mil­lions of Medi­care dol­lars.

Dur­ing my years as the chief Obama ad­min­is­tra­tion of­fi­cial re­spon­si­ble for fight­ing healthcare fraud at the CMS, I saw the chal­lenges first­hand. They are big, but not in­sur­mount­able.

The an­swer lies in chang­ing the par­a­digm, the anti-fraud in­fra­struc­ture and the tech­nol­ogy for fight­ing fraud as well as strength­en­ing the re­ward sys­tem to en­cour­age those with in­for­ma­tion about healthcare fraud to step for­ward.

The par­a­digm, rightly dubbed “pay and chase,” has been to pay claims quickly, then search for dis­crep­an­cies af­ter the fact. But this ap­proach has a fa­tal flaw. As a take­down in June of more than 240 healthcare pro­fes­sion­als in 17 cities showed, ar­rests gen­er­ally do not hap­pen un­til hun­dreds of mil­lions of dol­lars in false billings have oc­curred. By then, the money has usu­ally dis­ap­peared. More­over, “pay and chase” ad­dresses fee-for-ser­vice fraud, while novel schemes are emerg­ing in Medi­care Ad­van­tage and pre­scrip­tion drug plans and in­no­va­tive fund­ing ar­range­ments such as ac­count­able care or­ga­ni­za­tions. A con­gres­sional hear­ing just last week fo­cused on these is­sues.

The new ap­proach must be one of pre­vent­ing fraud from oc­cur­ring in the first place, or de­tect­ing and stop­ping it early. Yet, that shift is not easily ac­com­plished.

“Pay and chase” re­lies on an en­trenched en­force­ment in­fra­struc­ture built to carry out in­ves­ti­ga­tions and de­velop cases for pros­e­cu­tion. Preven­tion and early de­tec­tion, on the other hand, re­quire costly and com­pli- cated ad­vanced tech­nol­ogy and an­a­lyt­ics that screen real-time claims data to spot and cut off fraud­u­lent claims be­fore they are paid.

This par­a­digm shift can oc­cur only if preven­tion and early de­tec­tion re­ceive high-level com­mit­ment and sig­nif­i­cant fi­nan­cial sup­port. Therein lies an in­her­ent co­nun­drum: Ar­rest­ing peo­ple who have stolen hun­dreds of mil­lions of dol­lars grabs head­lines, but it is dif­fi­cult to garner much credit—and there­fore, sup­port—for stop­ping a would-be thief from steal­ing.

An ef­fec­tive fraud-preven­tion strat­egy is emerg­ing. The new CMS Fraud Preven­tion Sys­tem uses so­phis­ti­cated an­a­lyt­ics to screen ev­ery Medi­care fee-for-ser­vice claim against billing pat­terns and other data sources be­fore pay­ment. In its first two years, the sys­tem pre­vented or iden­ti­fied $325 mil­lion in in­ap­pro­pri­ate Medi­care billing. The CMS re­cently an­nounced plans to en­hance and ex­pand the sys­tem and in­cor­po­rate mod­els to mon­i­tor high­risk pre­scribers in Part D.

Com­ple­men­tary ini­tia­tives are show­ing re­sults. The CMS re­viewed the cre­den­tials of over 1 mil­lion providers and sup­pli­ers, de­ac­ti­vat­ing 470,000 en­roll­ments and re­vok­ing some 24,000 Medi­care providers’ billing priv­i­leges. A new reg­u­la­tion en­ables the CMS to re­voke billing priv­i­leges of providers or sup­pli­ers with a pat­tern or prac­tice of sub­mit­ting claims that fail to meet Medi­care re­quire­ments.

Mean­while, the CMS is up­dat­ing its anti-fraud in­fra­struc­ture by com­bin­ing and in­te­grat­ing pro­gram in­tegrity func­tions into a sin­gle con­tract ori­ented to­ward preven­tion and early de­tec­tion. The new ar­range­ment prom­ises a far greater re­turn on the fed­eral in­vest­ment than was pos­si­ble with mul­ti­ple con­trac­tors.

Another key de­vel­op­ment is the Healthcare Fraud Preven­tion Part­ner­ship. Some 18 health plans, nu­mer­ous pri­vate as­so­ci­a­tions, and fed­eral and state gov­ern­ments are work­ing col­lab­o­ra­tively to de­tect and pre­vent healthcare fraud through data- and in­for­ma­tion-shar­ing.

Even with all of these anti-fraud mea­sures, it’s im­por­tant to rec­og­nize that the best tools for fight­ing fraud are healthcare work­ers and pa­tients who are out­raged by scams and schemes that steal public and pri­vate funds. Tens of bil­lions of dol­lars have been re­turned to the U.S. Trea­sury, the Medi­care trust fund and state gov­ern­ments us­ing the False Claims Act, mostly due to whis­tle-blower cases.

Adop­tion of a pro­posed CMS rule to in­crease the po­ten­tial re­ward un­der the Medi­care In­cen­tive Re­ward Pro­gram would help en­cour­age more in­di­vid­u­als to re­port fraud. Since the in­cen­tive pro­gram started in 1998, only 18 re­wards have been paid, to­tal­ing less than $16,000 and lead­ing to the gov­ern­ment col­lect­ing less than $3.5 mil­lion.

The gov­ern­ment is tak­ing big steps in the right di­rec­tion to sig­nif­i­cantly re­duce healthcare fraud, but much more re­mains to be done.

Dr. Peter P. Budetti is a lawyer and for­mer deputy CMS ad­min­is­tra­tor who is cur­rently of coun­sel to Phillips & Co­hen, a law firm that rep­re­sents whis­tle-blow­ers.

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