Medical Billing Blog

CMS Shifts Strategy to Combat Fraud

Posted by Scott Shatzman on Fri, Jan, 09, 2015 @ 08:01 AM

Dr. Shantanu Agrawal, MD, the Director of CMS’ Center for Program Integrity (CPI) stated that CPI is going to shift its focus to preventing fraud rather than chasing overpayments down after they have already been paid.  In a speech to the American Bar Association’s Health Law Summit, Agrawal said that “preventative actions have a greater return on investment than the pay and chase model, in which the government seeks the return of overpayments it has already made”.   


Agrawal also said that the CPI will start to look at medically unnecessary billing as an indicator of fraud in addition to the more overt sources of fraud it had been focused on.  The CPI will use its data to identify outliers in spending and notify them that they are demanding more reimbursement than the average provider of their specialty in their area.  These letters are not accusations of fraud but are effective at getting providers to rein in costs.  Agrawal also touted more coordination within CMS as a source of more efficiency in fighting waste and abuse.


In a related development, in early December, CMS released a final rule making changes in their fraud prevention initiatives.  


In the final rule, CMS stated it would use frequency of denials based on medical necessity as one factor in determining abuse.  This was done over HBMA’s strong objections.  In comments HBMA submitted in response to the propose rule, HBMA expressed disagreement with the statistical method used by CMS to determine patterns of medical necessity based abuse.  HBMA noted that providers, with no fraudulent intent, routinely submit unnecessary claims that are denied, sometimes because beneficiaries need a Medicare denial to use secondary insurance.  HBMA suggested that this rule would open up investigations into many honest providers and CMS should consider the intent of the providers in addition to the proportion of denied claims.  


In the final rule, CMS expressed its full confidence that it has the ability to distinguish between innocuous claims denials and abuse and this will prevent unfair scrutiny.  


CMS stated that it understood the concerns about medical necessity but stated that “sporadic claims denial” due to medical necessity should not result in revocation.  Therefore, CMS has decided to keep medical necessity as a factor in determining denials because “this raises quality of care issues” as well as abuse concerns.  It stated that the proportion of claims that are denied will remain a factor in determining if a pattern exists.  It also declined to use a provider’s intent or knowledge as a factor in determining abuse because determining each provider’s intent would place an excessive burden on CMS.  


HBMA will continue to express its concern to CMS regarding the use of billing data as an indicator for fraud and abuse activities. HBMA worries that the threshold for unnecessary billing can be arbitrary especially when there are legitimate needs for intentionally submitting a claim that will be denied in order to receive payment from a secondary payer. CMS has acknowledged our concerns but plans to continue to use this data anyway. This will continue to be an issue HBMA engages with CMS on in 2015 to make sure that such data is used appropriately and does not target legitimate business actions.  


Thank you Bill Finerfrock, Matt Reiter, Taylor Miller, Emma Goodson and Carolyn Bounds for contributing this article.