Blog Fraud, Waste, and Abuse: It's Complex and We Can Help

Posted March 21, 2017 by Judith Nelson and Pete Titas

With the recent changes at the Federal level, one thing this is fairly certain is bipartisan commitment to combating Fraud, Waste, and Abuse.

Category Requirement
Disclosure & Reporting

Report all improper payments identified or recovered, specifying the improper payments due to potential fraud, to the State or law enforcement.
Notify State re: enrollee’s eligibility:

  • Change in residence or mail returned as undeliverable
  • Change in income
  • Death

Notify State re: change in provider’s circumstances including termination of provider’s agreement

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Fraud, Waste, and Abuse (FWA) costs the US healthcare system billions of dollars every year. In fact, the Department of Justice (DOJ) announced they recovered over $4.7 Billion from False Claims Act cases in fiscal year 2016. “Of the $4.7 billion recovered, $2.5 billion came from the health care industry, including drug companies, medical device companies, hospitals, nursing homes, laboratories, and physicians. The $2.5 billion recovered in fiscal year 2016 reflects only federal losses. In many of these cases, the Department was instrumental in recovering additional millions of dollars for state Medicaid programs. This is the seventh consecutive year the Department’s civil health care fraud recoveries have exceeded $2 billion.”

Despite the uncertainly with regard to government sponsored health care, it is likely that combating FWA will continue to remain a top priority. There were several measures in the Affordable Care Act (ACA) designed to strengthen the government’s ability to fight FWA including increased penalties and additional funds for additional oversight activities. The ACA increased the federal sentencing guidelines for healthcare fraud offenses by 20-50% for crimes that involve more than $1 Million and provided an additional $350 Million over 10 years to increase anti-fraud efforts. The additional funding is to support additional human resources as well as data analytic solutions. Increased data sharing and improved coordination across governments including states, Centers for Medicare and Medicaid Services (CMS), Office of Inspector General (OIG), and DOJ was also mandated by the ACA. The interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force between DOJ and Health and Human Services (HHS) demonstrates the initiatives to improve coordination within the government.

Compliance Program Element Medicare Advantage FWA Requirements
1. Policies, Procedures & Standards
  • Compliance with Laws & Regulations
  • Reporting Mechanisms
  • Whistleblower protections
2. Compliance Officer & Committee
  • Respond to reports of potential FWA
  • Coordinate internal investigations with the Special Investigations Unit (SIU)
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There are various types of program integrity requirements for each of the various government health care programs: Original Medicare, Medicare Advantage, Qualified Health Plans, Medicaid and Medicare–Medicaid demonstration projects. In general, CMS addresses the requirements for program integrity or fraud, waste, and abuse activities as part of the managed care organization’s comprehensive compliance program. The industry standard for compliance programs includes seven elements and the requirements designed to combat fraud, waste, and abuse are addressed as a component for each of these elements.

Most of the analytical, investigative, and prosecutorial efforts at the Federal and state level have focused on the Medicare and Medicaid fee-for-service system, where the federal government is the direct payer of healthcare providers, and thus is at immediate risk for FWA. For Medicare Advantage Plans, Medicaid Managed Care Organizations (MCO), and Children’s Health Insurance Plans (CHIP), where the government delegates the risk to plans, common requirements have focused on plans establishing a comprehensive program integrity initiative, including planned self-surveillance activities, reporting known or suspected fraud to government agencies, and prohibitions on plan payment of debarred providers identified by public authorities.

The requirements for Medicare Advantage plan sponsors are very detailed while those for the Qualified Health Plans on the Health Insurance Market Places are limited to simply maintaining procedures to self-report potential FWA concerns. The Medicaid program regulations released last year use the standard compliance program as a foundation however; the specific requirements related to FWA are expanded. Additionally, CMS’s Center for Program Integrity recently expanded its audit activity to include state Medicaid agencies, and for the first time, is conducting fraud and program integrity reviews during 2016 of Medicaid MCOs in 12 states, including Alabama, Maryland, Puerto Rice, Rhode Island, and Virginia. Some states have also taken their own initiatives to enhance fraud requirements on MCOs, by requiring plans to not only report identified FWA, but also to submit annual reports to Medicaid agencies summarizing all of their fraud surveillance and analytic efforts.

Summaries of the specific regulations are included in the tables on this page.

DST Health Solutions and Change Healthcare are working together to integrate selected DST’s core administrative systems with Change Healthcare’s payment integrity solutions to help improve payer’s payment accuracy at every stage of the claims lifecycle. Change Healthcare’s payment integrity solutions complement Reporting, SIU, and other program integrity efforts at the MCO to address program requirements.

“We are excited at the potential of this partnership to bring Change Healthcare’s Payment Integrity services to the DST Payer community, enabling them to realize meaningful savings and improve accountability for responsible administration of premium dollars” said Creighton Long, Vice President of Payment Accuracy Insight at Change Healthcare.

DST is pleased to offer this integration to our customers in order to preserve the integrity of the various health care programs they administer. Change Healthcare has a proven track record in post pay audit, prepayment avoidance, and provider education which is successful in not disrupting the health plan’s valuable provider relationships. This alliance will enable our customers to quickly implement comprehensive solutions to improve payment accuracy and combat fraud, waste, and abuse.

Pete Titus
Pete Titas
Vice President of Sales, Payment Integrity
Change Healthcare
Judith Nelson
Judith Nelson
Director, Medicare Advantage Strategy
DST Health Solutions

The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.

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