Public-Private Partnership to Prevent Health Care Fraud Announced by Health and Human Services

In July, the Department of Health and Human Services (“HHS”) announced a new partnership between the federal government, state officials, some large private health insurers, and several other groups committed to fight health care fraud each of whom voluntarily agreed to join the partnership.  Although specific details of the program are somewhat limited, the goal is to increase the sharing of information and best practices so as to prevent payment of fraudulent claims rather than paying and chasing claim payments after the fact.  A key goal is to discover and stop scams that affect both public and private payers and to allow those that are on the “front lines” to provide their insights to others in the payer industry, both public and private.  The public-private partnership is an outgrowth of additional anti-fraud measures included in the Affordable Care Act (“ACA”).

    An additional objective of the partnership is to share information on specific schemes and billing codes and geographic fraud hotspots to proactively prevent fraud.  Another goal is to identify and stop payments billed to different insurers for care delivered to the same patient on the same day in two different cities.  The partnership seeks to use technology and analytics industry-wide to predict and detect fraud schemes.

    At this point, several public-private working groups are still working on the structure of the partnership and to develop its initial plan.  The Executive Board, Data Analysis and Review Committee and the Information Sharing Committee.  The entities that have already signed up for the partnership include:

•    America’s Health Insurance Plans
•    Amerigroup Corporation
•    Blue Cross and Blue Shield Association
•    Blue Cross and Blue Shield of Louisiana
•    Centers for Medicare & Medicaid Services
•    Coalition Against Insurance Fraud
•    Federal Bureau of Investigations
•    Health and Human Services Office of Inspector General
•    Humana Inc.
•    Independence Blue Cross
•    National Association of Insurance Commissioners
•    National Association of Medicaid Fraud Control Units
•    National Health Care Anti-Fraud Association
•    National Insurance Crime Bureau
•    New York Office of Medicaid Inspector General
•    Travelers
•    Tufts Health Plan
•    UnitedHealth Group
•    U.S. Department of Health and Human Services
•    U.S. Department of Justice
•    WellPoint, Inc.

Other Increased Efforts to Fight Health Care Fraud

    The ACA increased funding to detect and prevent fraud.  ACA provided mandatory appropriations of $1.7 billion each for fiscal years 2010 and 2011 to fund the fraud enforcement efforts of HHS, the HHS Office of Inspector General, the Department of Justice, and the Federal Bureau of Investigation.  ACA also provided discretionary appropriations of $311 million for 2010 and an estimated $561 million for 2011.  The Department of Justice has doubled the number of lawyers in its Civil Frauds Section. In addition, CMS has established the Center for Program Integrity that has heavily invested in personnel, hardware, software, and programming to verify and crosscheck vast amounts of data.  New initiatives undertaken since the passage of ACA include the following detailed herein.

    The Fraud Prevention System. The Fraud Prevention System (“FPS”) is used by CMS to conduct prepayment review to deny individual claims and/or initiate fraud investigations.   Using "new predictive modeling technology," including  "sophisticated algorithms and models to identify suspicious behavior,” CMS has been screening all Medicare fee-for-service claims, prior to payment, since June 30, 2011. The system also uses historic data and external databases to create profiles of providers and suppliers.  These profiles are used to identify "unusual billing patterns" to determine "the likelihood of fraudulent activity." Based upon all available information, risk scores are calculated and alerts are generated automatically and prioritized according to risk.

    These results are provided to Zone Program Integrity Contractors (“ZPIC”), contractors that work to identify fraud and overpayments by, among other methods, comparing a provider's billings with those of similarly situated providers. The results also are provided to federal law enforcement agencies, state health care agencies, and private insurance plans.

    Potential fraud and abuse cases are referred to law enforcement while the ZPIC pursue administrative actions such as the suspension of payments, the exclusion of providers from Medicare, and the implementation of claims processing edits that limit or stop payment to suspect providers.  ZPIC audits usually are unannounced or initiated with very little notice. They may conduct both pre and post payment review of claims.  Ordinarily they request medical records and because they are authorized to engage in statistical sampling and extrapolation in determining whether there is fraud, may only review a small sample.  ZPICs have the authority to investigate Medicare claims under Parts A, B, C and D.

    Automated Provider Screening (APS). The APS, which was implemented on December 31, 2011, is an automated provider enrollment screening tool that checks information received from providers on their Medicare enrollment applications against public and private sources to verify and supplement the information submitted by providers and continuously monitors the information.  CMS also will make site visits to confirm legitimacy and location and check licensure status.

    The APS also is intended to identify providers that may be high-risk based upon the information in their enrollment applications. CMS will share its information on providers with states, law enforcement agencies, and private insurance plans.  Under the ACA, HHS has the authority to issue a temporary moratorium on new providers of certain categories of services or a certain location if needed to combat fraud, waste and abuse.

    Additional Coordination of Fraud Prevention Efforts. Many of the ACA antifraud provisions increase coordination among states, CMS, and its law enforcement partners at the OIG and DOJ.  For instance, the law expressly authorizes CMS, in consultation with OIG, to suspend Medicare payments to providers or suppliers during the investigation of a credible allegation of fraud.  CMS' implementing regulations define a "credible allegation of fraud" to include anonymous fraud hotline complaints, patterns identified through data mining, and investigations under the False Claims Act.  Allegations are "credible" when they have "indicia of reliability." Prior notice of a suspension is not required nor is notice of the reason for the suspension.  Providers do not have to be informed of the origin or nature of the allegations of fraud or why they are considered to be credible.

    The regulations limit any suspension to 18 months, but a suspension can be extended if administrative action is pending or being considered by OIG, or if DOJ requests a continuation of the suspension based on an ongoing investigation and an anticipated or pending criminal prosecution or civil action. Thus, for all intents and purposes, a suspension can be indefinite, leaving either settlement or going out of business as the only feasible options for many providers.

    This initiative reverses a long-standing Medicare practice of paying claims then attempting to recoup funds if the claim is found to be an error or fraudulent.  States must also withhold payments to Medicaid providers where there is a pending investigation of a credible allegation of fraud unless the state Medicaid agency has good cause not to do so.  

    The ACA also ensures that fraudulent providers and suppliers cannot move easily from state to state or between Medicare and Medicaid by requiring all states to terminate anyone whose billing privileges have been revoked by Medicare or who has been terminated by another state Medicaid program for cause.

    The ACA expands the Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage, and Medicare Part D programs. The Medicaid RAC program became effective on January 1, 2012 and is projected to save $2.1 billion over the next five years, of which $900 million will be returned to states.  These efforts build on the success of the Medicare fee-for-service RAC program which in fiscal year 2011 recouped nearly $800 million in overpayments.

    Under ACA, providers and suppliers must establish compliance programs ensuring they are aware of anti-fraud requirements.  ACA requires compliance plans to contain "core elements" established by the HHS Secretary in consultation with OIG. These "core elements" have not yet been established.  As a result, providers should utilize the OIG Compliance Program Guidance for their industry sector.  They have a number of common elements, often referred to as the "seven pillars of compliance."  These include implementing written policies and procedures; designating a compliance officer and committee; conducting effective training, education, internal monitoring and auditing; enforcing standards through well-publicized disciplinary guidelines; and responding promptly to detected problems and undertaking corrective action.