According to a new report issued by the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG), the predictive modeling technology used to fight Medicare fraud is flawed. The risk-scoring technology, which helps to identify and stop fraudulent claims before they are paid, is required of HHS under the Small Business Jobs Act of 2010. It was implemented July 1, 2011, by the Centers for Medicare & Medicaid Services (CMS), as the administrator of Medicare claims.
This-July 1, 2011 through June 1, 2012-was the first year CMS used predictive modeling and other analytics in its Fraud Prevention System (FPS), and it is the first federal agency to do so on a large-scale to identify fraud, waste, and abuse.
The OIG report found that CMS did not fully comply with the requirements for reporting actual and projected improper payments recovered and avoided.To improve results, the OIG made five recommendations geared toward, among other things, CMS improving its methodology.
- Require contractors to track money recovered from following FPS leads.
- Coordinate with law enforcement to enhance reporting of investigative and prosecutorial outcomes in cases referred from the FPS.
- Revise the methodology for calculating projected savings from improper payments avoided to recognize that some prior-year claims submitted by a revoked provider may be legitimate and some previously denied claims may ultimately be paid.
- Revise the methodology for calculating costs avoided to include verifying that the information in the HHS records is consistent with that maintained by the Zone Program Integrity Contractors and the Program Safeguard Contractors.
- Include all costs associated with the FPS in its return on investment calculation.
CMS concurred with the recommendations and noted it is committed to working with the OIG to ensure the recommendations are incorporated into future FPS reports. CMS said it has already begun to take actions on some of the measures. CMS also noted that in its first year, the FPS generated leads for 536 new fraud investigations, provided new information for 511 pre-existing investigations, and triggered thousands of provider and beneficiary interviews to verify legitimate items and services were provided to beneficiaries.
The OIG’s report follows an October 2012 report issued by the U.S. Government Accountability Office (GAO) that concluded CMS was behind schedule on its FPS. Specifically, CMS had not yet defined or measured quantifiable benefits or established appropriate performance goals for its FPS, nor had it implemented functionality in the system to allow for the prevention of payments until suspect claims could be validated. HHS stated that it concurred with all of GAO’s recommendations, adding that CMS officials were taking steps to implement them.
