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www.medscape.org

This article is a CME certified activity. To earn credit for this activity visit:

http://www.medscape.org/viewarticle/764791 CME Information

CME Released: 06/11/2012; Valid for credit through 06/11/2013 Target Audience

This activity is intended for physicians and other medical professionals who deliver care to Medicare and Medicaid beneficiaries.

Goal

The goal of this activity is to describe ways the Centers for Medicare & Medicaid Services (CMS) is overhauling its fraud prevention and detection capabilities.

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Upon completion of this activity, participants will be able to:

1. Describe the strategies that CMS has undertaken to detect and to prevent fraud and abuse in the Medicare and Medicaid programs.

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Author

Peter Budetti, MD, JD

Deputy Administrator, Centers for Medicare & Medicaid Services, Washington, DC Disclosure: Peter Budetti, MD, JD, has disclosed no relevant financial relationships.

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Peter Budetti, MD, JD, does not intend to discuss investigational drugs, mechanical devices, biologics, or diagnostics not approved by the FDA for use in the United States.

Peter Budetti, MD, JD, does not intend to discuss off-label uses of drugs, mechanical devices, biologics, or diagnostics approved by the FDA for use in the United States.

Editors Jane Lowers

Group Scientific Director, Medscape, LLC

Disclosure: Jane Lowers has disclosed no relevant financial relationships.

Neil Chesanow

Senior Clinical Editor, Medscape, LLC

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Dominique Brooks, MD

Disclosure: Dominique Brooks, MD, has disclosed no relevant financial relationships.

Peter Budetti, MD, JD

How CMS Is Fighting Fraud: Major Program Integrity Initiatives CME

CME Released: 06/11/2012; Valid for credit through 06/11/2013

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Slide 1.

Peter Budetti, MD, JD: Hello, I am Dr Peter Budetti. I am the Deputy Administrator for Program Integrity of the

Centers for Medicare & Medicaid Services. I am talking to you today about how the Centers for Medicare & Medicaid

Services is fighting fraud and giving you some detail on our major program integrity initiatives.

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Slide 2.

The goal of this continuing education activity is for you to be able to describe the strategies that the Centers for Medicare & Medicaid Services have undertaken to detect and to prevent fraud and abuse in the Medicare and Medicaid programs.

Slide 3.

The Center for Program Integrity is a component within the Centers for Medicare & Medicaid Services. The Center for

Program Integrity is designed to ensure that the money that goes out to pay for care for beneficiaries is actually going

to legitimate providers for covered, appropriate, and reasonable services for eligible beneficiaries. The money needs to

go to the right people for the right thing and not to be somehow diverted to illegal or other fraudulent purposes. The

Center for Program Integrity is dedicated to becoming a state-of-the-art activity to prevent and detect fraud, and to

reduce waste, abuse, and other improper payments under the Medicare and Medicaid programs.

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Slide 4.

When I talk about program integrity activities, I am talking about a wide range of activities ranging from honest mistakes, to intentional deception, to downright fraud. Within the Center for Program Integrity, and within the Centers for Medicare & Medicaid Services, we are very much aware that the vast majority of the providers and suppliers whom we deal with -- the physicians and nurses -- are honest providers whom we depend on to provide the services to our beneficiaries and your patients. In recognizing that, we know that people make mistakes and that there are honest mistakes. Unfortunately, at the other end of the spectrum, there are also people who set out to steal money from the programs and not to deliver good services to beneficiaries. We treat each one of those situations very differently, and that is one of the most important aspects of the way we approach these problems in the Centers for Medicare &

Medicaid Services.

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Slide 5.

The strategic direction takes into account what I just mentioned: that the approaches should be targeted to the problems that we are actually facing. One of the problems that we are facing is that the amount of fraud that we are seeing in the Medicare and Medicaid programs has grown very large. The traditional ways of dealing with fraud in our programs has been to allow people to get into the system relatively easily and pay claims relatively quickly. Now, that is appropriate for all the legitimate physicians and nurses and other professionals whom we deal with, but unfortunately it has created a soft spot that people have been able to take advantage of. So we need to move away from simply looking at where the problems may be after we have paid the bills, and we need to move into an era where we are preventing those problems from occurring in the first place. The approach that we are taking is very much to look at the real risks and to apply our resources in ways that are appropriate for those risks.

The Centers for Medicare & Medicaid Services and the related agencies have been around since the beginning of the Medicare program. We need to advance the state of the art of what we are doing in program integrity to take

advantage of the high technology and innovations that are possible now in the 21st century.

The approach that we are taking is to let people have the opportunity to speak more to us, to exchange ideas with us, and to learn from the medical provider community what they are doing and what we can do together to work on these problems. We are no longer simply within the government. We are talking to all of our public and private sector partners as well.

Finally, one of the things that is different now is that we are putting in one place the fraud-fighting policies and

programs for Medicare and Medicaid. The purpose of doing that is to do a better job but also to ensure that our

policies are as related to each other, as consistent with each other, as they can be.

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Slide 6.

Today I am going to focus on the National Fraud Prevention Program. I want to emphasize that we are talking about identifying real fraud, about identifying people who are not the legitimate providers who are providing services and billing appropriately. We are talking about people who are committing fraud against the Medicare and Medicaid program. We are approaching this in 2 ways. We are putting into place a new system that looks very carefully at the claims that are coming in and uses a lot of techniques to look for problems. We are also looking at changes in the way that physicians and other providers and suppliers enroll to provide services within the Medicare program and how we are screening the people who are applying to get in. I am going to talk about those 2 very closely related

approaches that we have put into place over the last couple of years.

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Slide 7.

First I am going to talk about the enrollment and screening side of our initiatives.

Slide 8.

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The gateway to getting into Medicare is what is called the Provider Enrollment, Chain, and Ownership System (PECOS). PECOS is the face that you see when you enroll in Medicare. That information is of great importance. It is central to what we are doing, but it is also central to your ability to be an enrolled provider in the Medicare program and to be able to take care of Medicare patients and submit claims for the services that you have provided. PECOS is the face of provider enrollment that you deal with all the time.

Slide 9.

We know that many of our partners -- many of the physicians and other health professionals and suppliers who have enrolled in Medicare -- have encountered some problems in enrolling in the system, and we have had a lot of dialog to the extent that we understand that the process has been slower than it should be, it has often been quite

cumbersome, and frankly in some ways it has been unreliable, because the information has not always been

accurate and in the single national database. We recognize that these are changes that need to occur on the

enrollment side, and we are focused on making those changes and doing so in partnership with the medical

community.

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Slide 10.

We have had a lot of interaction with the medical community over the last couple of years working on these issues.

We anticipate that the changes we are making on the enrollment side will vastly reduce, by about two-thirds, the

amount of time that it takes for your enrollment in Medicare to be processed and approved. We are also making

changes so that the system is much more user-friendly and easier to use. And finally, we are making the system

much more reliable so that all of the information will be in the same system and be up to date.

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Slide 11.

We have set out several important guidelines for how we are going about this. We are doing it in a way that focuses

on you, our customers, and what is useful from your perspective. In doing that, we are moving to an all-digital process

to remove paper from the system, and we are opening up lines of communication with you in order to make the

system work better from our perspective, but also work better from your perspective.

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Slide 12.

These are a number of the changes that we have made in the enrollment system. Some are already in place. A

number are still forthcoming in order to make sure that we are responding to the needs that we have been told exist in

the enrollment system. We need to improve what we are doing. We want to make it work better for you. We want to

make it work better in terms of our ability to get you enrolled in the program and also for us to have the information

available when we need it.

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Slide 13.

Having said that we are improving the enrollment side of things, we also need to improve the screening side of things.

We are committed to doing 2 things simultaneously. We want to make it easier for the legitimate providers and suppliers to enroll in the program. At the same time, we want to make it harder for the fraudulent providers and suppliers to get in or to stay in. We know that fraudulent providers have been able to exploit our enrollment system.

They have been able to register with stolen medical identities. They have been able to register phony addresses.

They have been able to get back in even after we kicked them out and revoked their billing privileges, and they have

been able to stay in the local decentralized systems without being in the national system and therefore be less likely

for us to detect that they are still able to bill Medicare when they should not.

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Slide 14.

We have put into place a number of important provisions related to screening providers. These are provisions that

build on things that we were already doing, but there are new regulations that were put into place under the very

strong antifraud provisions in the Affordable Care Act. These regulations took place just a little over a year ago, in

March 2011, and they call upon us to do things in a way that meets the requirements of the statute and provide

information in a new way. The first point is what I mentioned earlier: that the way that we are going about screening

new providers is based on the actual risks we face with any given category of providers. There is another ability under

this regulation, and that is for the secretary of Health and Human Services to declare a moratorium on the enrollment

of new providers and suppliers when that is necessary to fight fraud. That could be done in a given geographic area or

it could be done by a particular type of provider or supplier. We have the authority now for us to suspend payments

pending investigation of a credible allegation of fraud, and we have established a process for being very careful about

allegations and identifying only the ones that are sufficiently credible to warrant suspension of payments. Finally, one

of the provisions in the Affordable Care Act that we have put into place is a requirement that if a provider or supplier is

terminated for cause in a Medicaid program in one state, he or she will then be terminated for cause in other states,

and this cuts across Medicare as well. The people who are sufficiently problematic that they are terminated for cause

by one state will not simply be able to move around the country easily and continue to bill Medicaid and Medicare

programs.

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Slide 15.

I mentioned that we are committed to risk-based screening, and this is very important. Under the Affordable Care Act, we identified the different providers and suppliers by category and put them into one of 3 risk levels: limited,

moderate, and high risk. Physicians, medical groups, and a number of other providers and suppliers, whom you can

see on screen, were put in the limited category. The moderate category includes a number of providers such as

physical therapists. The high-risk category is restricted to new durable medical equipment suppliers and new home

health agencies. So by category, people are put into different levels of screening, and I will identify what that means

in just 1 minute. I also want to point out, though, that an individual who has come to our attention in certain ways can

be bumped up from a limited or moderate level to the high level. For example, if the individual has been excluded from

the Medicare and Medicaid programs by the Inspector General; if the individual has been subject to a payment

suspension; if he or she has been terminated for cause by Medicaid; or if he or she has been subject to other final

adverse actions, such as committing certain felonies.

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Slide 16.

Everyone is subject to checks that will look at whether or not they have the credentials that they are supposed to

have. For physicians, of course, that means they have to be licensed where they are practicing medicine, and that

kind of background check makes sure that they are still active, that they meet all the requirements. Those checks

apply to all levels: limited, moderate, and high. The moderate level is also subject to unannounced site visits to make

sure that physicians are actually where they say they are; that they are actually operational and doing the things that

they say they are doing; and, of course, that they are submitting bills for those things. And finally, the highest level is

subject to fingerprinting and criminal background checks through the Federal Bureau of Investigation.

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Slide 17.

We have done a number of things to improve the screening, as I have just described. A number of the kinds of

activities that we engaged in to screen providers previously were being done manually, so that we were checking

individually with state licensure agencies, for example, to make sure that people had their appropriate licenses in

place. We were separately checking other databases for certain requirements to see whether or not the credentials

were in place or whether the physician was still alive, for that matter. Now we have put in place a new Automated

Provider Screening system that does all of those things through an advanced technological approach that looks into

many different databases and screens them simultaneously. So if someone has been excluded by the Office of the

Inspector General, if that person has been convicted of certain felonies, or if he or she has submitted an address to

us that turns out to be an empty field and not a legitimate operation, those are the kinds of things that our new

system will check on very quickly through this automated approach.

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Slide 18.

The Automated Provider Screening system has been in place since the end of 2011. The Automated Provider

Screening system is being used to validate the data we receive on the enrollment applications when you apply to be

enrolled in the Medicare program. The Automated Provider Screening system will identify the level of risk that we are

seeing, based upon certain specific analytic techniques, as to whether or not someone who is applying to get into the

program represents a risk of being someone who does not belong in the program, and this will assign a risk score to

each provider and supplier who enrolls in the program. That will help us apply our resources on the basis of the real

risk that we are facing.

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Slide 19.

The Automated Provider Screening system, as I mentioned, checks many different sources of information to verify the

person's identity; to check on the person's licensure; to check on his or her criminal history; to look at whether the

person has been subject to certain sanctions; to see whether or not the individual's National Provider Identifier is still

active; to see whether or not he or she is found in the files from the Social Security Administration of people who have

passed away; and also to check on an individual's locations. All of these are the kinds of things that we are looking at

with this Automated Provider Screening system to make sure that the people in the program and the people who get

into the program meet all of the requirements.

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Slide 20.

The Automated Provider Screening system will allow us to take a look at many sources of information, some of which we did manually previously and some of which represent expanded but very important information for us to have. An important aspect of this system is that it will allow us to monitor everyone's status on an ongoing basis. If someone dies, if someone loses his or her medical license, if someone is convicted of certain felonies, the system will create an alert so that we can take action appropriately based on the alert and see whether that is somebody whose enrollment should remain active in the Medicare program.

The Automated Provider Screening system will be implemented in a way that it will be uniform across the country

rather than be applied in a completely decentralized manner as the enrollment process has been in the past.

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Slide 21.

I want to talk about the other major pillar of our approach to fraud prevention: the way we are now screening claims

coming into the Medicare system through an advanced predictive analytic system.

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Slide 22.

This is our Fraud Prevention System, and the purpose of this system is straightforward. We need to prevent the payment of claims that have been identified as potentially fraudulent. We do not want to make payments that we should not make. We do not want to be in the position of making those payments, finding out after the fact, and then trying to get them back. We want to do this in the first place. We want to integrate this into a comprehensive system that will provide effective and timely administrative actions by the Centers for Medicare & Medicaid Services. And we want to ensure that what we are doing, we are doing right. We want to make sure that what we are doing is effective.

We want to minimize false positives. We want to make sure that it is based on the real risks that we are facing. And, of course, we want it to be an efficient system that will pay off over time in terms of the amount of effort that we are taking and the amount of burden that the system is imposing.

Slide 23.

The system was implemented as of June 30, 2011. Since that time, it has been monitoring between 4 and 5 million

Medicare fee-for-service claims every day before they are paid. It generates alerts that allow us to look at potential

problem areas. This is the core of our risk-based approach. What do we do with those alerts? We provide the highest

risk alerts that we are getting from the system to real human beings to take a look at whether or not we are facing a

problem. Those human beings are the investigators who work with our antifraud investigative contractors, the Zone

Program Integrity Contractors. We ask them to take a look at the highest risk alerts and to see whether or not an

alert from the fraud prevention system warrants us taking actions, either within the Centers for Medicare & Medicaid

Services or referrals to law enforcement. It is an interactive system. It involves both high tech and human oversight.

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Slide 24.

The advantages of the automated Fraud Prevention System are great. It is providing, for the first time, access to high-

quality data on a nationwide basis before the claims are paid. It allows us to understand the patterns of care we are

seeing that are problematic, and it allows us to identify vulnerabilities for potential fraud. It also allows us to be

interactive with the system, so that when we follow up on a lead, if it proves to be a problem, we can use that

information to validate a high-risk score for that certain problem that we have identified. On the other hand, if it does

not pan out, and it does not look like it is a problem that deserves attention, we can also use that to modify the

system so that we are not looking at the same potential problem over and over again if it in fact does not prove to be

a real problem. And finally, the core of the system is to allow us to intervene early on, so that we can make changes

and address issues before they have grown to very large proportions.

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Slide 25.

The Fraud Prevention System uses advanced technology that looks at the information that we are getting related to claims in a number of ways. It looks at specific kinds of rules that allow us to determine what should and what should not be paid based on relatively straightforward things, like the fact that people should not be subject to multiple surgeries on the same day for more body parts than their bodies actually have: for example, surgery on 3 eyes on the same day -- simple, straightforward kinds of assessments. It allows us to look for anomalies, for things that are very different than they otherwise should be, and that is an important analytical step that we take. It allows us to do true predictive modeling, to take the results from investigations, from law enforcement actions, and from other kinds of activities that have confirmed that certain things are problems, and to predict, based on that, where the problems might be, and then when we spot a risk, to take actions that will allow us to verify or not verify a prediction was accurate.

Finally, the highest level of analytics that the Fraud Prevention System is capable of is to look at relationships among

systems. If a fraud occurs, such as with a durable medical equipment supplier, the people associated with that

supplier may or may not be associated with a number of other healthcare entities, and the relationships may be very

instructive in terms of where we need to target our resources. So the Fraud Prevention System -- this technology that

we put into place -- is very sophisticated, quite comprehensive, and allows us to do a variety of different kinds of

analytics to track down and prevent fraud from occurring.

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Slide 26.

The diagram in front of you shows the way that the Fraud Prevention System goes about this. The yellow box is very

important, because the yellow box tells you that the system is capable of looking at far more than just the information

that comes in with a single claim. The system is capable of using information from the complaints that we get from

Medicare beneficiaries to the 1-800-MEDICARE call line. The system is capable of integrating information from law

enforcement investigations. It can take into account a variety of information from many different sources, and it can

learn, and so it can become more and more sophisticated and more and more reliable over time. The models that we

build are based upon the kinds of fraud that we have seen and the kinds of fraud that we anticipate, and those are the

models that are used to analyze all of that data and information that are within the system. Then what it generates is

a risk level, which then is used to create alerts that we pass on to our investigators to take a look to see whether or

not they represent the kind of problem that we think the alerts represent. And then it is a feedback loop, and that is

why the diagram looks like this, because the system grows and learns over time and is capable of taking in many

different kinds of information, but also learning from what is generated by the system itself.

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Slide 27.

We have also engaged in a variety of outreach activities with the medical community over the last couple of years.

One good example of that is something that the Centers for Medicare & Medicaid Services did in conjunction with the California Medical Association, the Medicaid Agency in the state of California, and others. This was a series of activities -- 1 each week in 5 different cities in California in September 2011 -- to raise awareness about healthcare fraud, and in particular to raise the level of understanding of what physicians, nurses, and other healthcare providers can do, both to protect themselves and their patients from the consequences of fraud and to help us identify and prevent fraud in the first place. This is one of a large number of activities that we have engaged in to bring the medical community into a partnership with us, because the kinds of fraud that we are going after are not things that the legitimate providers and suppliers are engaging in. It is clear now that the medical community recognizes that the best way for us to approach this is to work together with those of you who do represent the honest physicians and honest nurses, and who sometimes know where the problems can be, to work with us to prevent and detect fraud.

We are very much committed to that engagement, and we will continue to do that as we proceed with our fraud-

fighting activities.

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Slide 28.

One particular concern that we have, and that many of you likely have, is with the medical identity theft that some physicians have experienced. This is a bad situation. If a physician has his or her medical identity stolen, then fraudsters can use that identity to bill as if the physician were getting paid, as if the physician were delivering medical services, and in fact it may very well be that the services were never delivered, and the physician might not even know that someone is using his or her identity to bill Medicare and Medicaid.

This is an article from February 2012 that my colleague Dr Shantanu Agrawal and I published in the Journal of the

American Medical Association, describing both the problem and the recent initiatives that we have taken at the

Centers for Medicare & Medicaid Services to help physicians both protect themselves against medical identity theft

and resolve problems that might result if their identities are stolen. The problems can be quite severe if a physician is

credited with hundreds of thousands of dollars of payments that he or she never received. Those funds could trigger a

request from us to return money that was never actually paid. They could trigger a request from the Internal Revenue

Service to pay taxes on money that was never received. And the physician's legitimate patients may also suffer if

they go on the books as having received services or durable medical equipment that in fact they never received, and

then might appear not to need those services or those supplies in the future when they really do need them. So this

is an important aspect of our communication with the medical community, which is to protect yourself against this,

protect your patients, and to work in every way that is available to you to reduce the likelihood of physician medical

identity theft.

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Slide 29.

This new approach is built on top of the activities that we have been engaging in for many years. We have been

involved in fighting fraud and protecting the programs for many years. The approach in the past had largely relied on

what is widely called "pay and chase": to pay claims quickly, as is appropriate when they are legitimate -- and as, of

course, is required under the Medicare statute -- and then to look for problems, and when we see problems after the

fact, to try to recover the monies and to refer to law enforcement. Now we want to move beyond doing those things,

many of which we will continue to do for some time, of course, because they are necessary. But we need to move in

this new direction: to deny claims that should not be paid in the first place and to get that right. To work closely with

our medical community and with the contractors that we use to do our fraud investigations to take action before

payments are made in appropriate circumstances. To kick people out of the program if they do not belong in the

program. To work with our law enforcement colleagues both before, during, and after the law enforcement system is

brought into play. And, of course, we want to identify and work on ameliorating the root cause of the vulnerabilities

that we face in our program, the perverse incentives that might exist, the opportunities that might exist for people to

approach our Medicare and Medicaid programs as a source of revenue -- as a very important source of payment for

medical care for our beneficiaries -- instead of for illegitimate purposes.

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Slide 30.

Thank you very much for joining me today. To "Earn Continuing Medical Education Credit," click on the link below.

Thank you very much.

This transcript has been edited for style and clarity.

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APS = Automated Provider Screening CHMC = community mental health center CME = continuing medical education

CMS = Centers for Medicare & Medicaid Services CPI = Center for Program Integrity

DME = durable medical equipment

DMEPOS = durable medical equipment, prosthetics, orthotics, and supplies MAC = Medicare Administrative Contractor

NPI = National Provider Identifier

NPPES = National Plan & Provider Enumeration System OIG = Office of the Inspector General

PECOS = Provider Enrollment, Chain, and Ownership System PI = Program Integrity

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