HHS Issues Final Rule for Medicaid Recovery Audit Program to Save $2.1 Billion

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Original story posted on: August 9, 2012

The Department of Health and Human Services (HHS) released its final rule for the Medicaid Recovery Audit Program to curb waste, fraud and abuse on Wednesday, September 14. This program comes as the Medicare Recovery Audit Program completes its second year of being used nationally.

HHS projects the program will save $2.1 billion over the next five years, of which $900 million will be returned to states, according to a news release issued today by the agency.

The announcement came at the same time as Vice President Joe Biden’s cabinet meeting, which he convened to discuss waste reduction at federal agencies as part of the administration’s Campaign to Cut Waste. The vice president said the new program is based on the Medicare Recovery Audit Program, which, he noted, has already recovered nearly $670 million to date in 2011—increasing the $75 million recovered in 2010 by nearly 800 percent.

The new Medicaid Recovery Audit Program will help states identify and recover improper Medicaid payments. It will be largely self-funded, paying independent auditors a contingency fee out of any improper payments they recover that took place in the previous three years, said the Centers for Medicare & Medicaid Services (CMS).

Under these expansions, RACs will help identify and recover over and underpayments to providers across Medicare and Medicaid for the first time.

Other New Tools

HHS noted some of the accomplishments its new program-integrity tools have produced in preventing and fighting waste, fraud and abuse in these programs. These include the following:

New Resources to Fight Fraud

The Affordable Care Act provides an additional $350 million over 10 years and an annual inflation adjustment to ramp up anti-fraud efforts, including increasing scrutiny of claims before they’ve been paid, investments in sophisticated data analytics, and more “feet on the street” law enforcement agents and others to fight fraud in the health care system.

These efforts build on our recently awarded predictive modeling contract under which the Centers for Medicare and Medicaid Services (CMS) is using the kind of technology used by credit card companies to stop fraud. Since June 30 2011, CMS has been using this technology to help identify potentially fraudulent Medicare claims and uncover fraudulent providers and suppliers, flagging both for investigation and referrals to law enforcement. This new tool allows CMS for the first time to use real-time data to spot suspect claims and providers and take action to stop fraudulent payments before they are paid.

Tough New Rules and Sentences for Criminals

The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50% for crimes that involve more than $1 million in losses, establishes penalties for obstructing a fraud investigation and makes it easier for the government to recapture any funds acquired through fraudulent practices. The law also makes it easier for the Department of Justice to investigate potential fraud or wrongdoing at facilities like nursing homes.

Enhanced Penalties to Deter Fraud and Abuse

The Affordable Care Act provides the Department of Health and Human Services’ Office of the Inspector General (OIG) with the authority to impose stronger civil and monetary penalties on those found to have committed fraud. The Secretary also is provided new authority to prevent problematic providers from participating in Medicare or Medicaid. Under the new law:

  • Providers and suppliers who lie on their application to enroll in Medicare or Medicaid may be excluded from the programs;
  • Providers who identify an overpayment from Medicare or Medicaid but do not return it within 60 days may be subject to new fines and penalties; and
  • Providers who are terminated from Medicare, a State’s Medicaid program, or both will be terminated from Medicaid programs in other states.

Enhanced Screening and Other Enrollment Requirements

On Jan. 24, 2011, CMS announced some of the Affordable Care Act’s new fraud prevention tools, including new screening requirements for all Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) providers and suppliers. These new rules require all providers to go through licensure checks and subject those who pose higher levels of risk to undergo site visits and in some cases, criminal background checks before being allowed to bill the Medicare program. One of the new tools is the new authority to suspend Medicare payments to providers or suppliers when there is a credible allegation of fraud. The new rules also give the Secretary new authority to impose a temporary moratorium on newly enrolling providers or suppliers in certain geographic areas to prevent or combat waste, fraud and abuse. These new tools are also available to states to enhance their program integrity efforts in the Medicaid and CHIP programs. Already, revocations, payment suspensions and enrollment denials have taken place as a result of this increased scrutiny.


 

Increased Coordination of Fraud Prevention Efforts

Many of the Affordable Care Act provisions increase coordination between states, CMS, and its law enforcement partners at the Office of the Inspector General and the Department of Justice, according to HHS.

The law deters fraudulent providers and suppliers from moving from State to State or between Medicare and Medicaid by requiring all states to terminate anyone who has been terminated by Medicare or by another State.

Under the Affordable Care Act, CMS must work hand-in-hand with the Office of the Inspector General on suspending payments to suspect providers. CMS is also helping to provide the Office of the Inspector General and the Department of Justice improved real-time data access to enable investigators and law enforcement agents to more quickly detect and prosecute fraud schemes, said HHS.

In addition, the Senior Medicare Patrol (SMP) program, led by the Administration on Aging (AoA), empowers seniors to identify and fight fraud through increased awareness and understanding of Federal health care programs. Since the program’s inception, the program has educated over 3.84 million beneficiaries in group or one-on-one counseling sessions and has reached almost 24 million people through community education outreach events, reported HHS.

Sharing Data to Fight Fraud

The law requires certain claims data from Medicare, Medicaid and CHIP, the Veterans Administration, the Department of Defense, the Social Security Disability Insurance program, and the Indian Health Service to be centralized, making it easier for agency and law enforcement officials to identify criminals and prevent fraud on a system-wide basis. The Affordable Care Act and new initiatives like the interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force between DOJ and HHS has already improved access to data for law enforcement, and DOJ and OIG continue to benefit from improved access to Medicare data to help identify criminals and fight fraud while protecting patient privacy.

Targeting High Risk Entities

The Affordable Care Act also imposes more stringent payment and enrollment requirements to target high-risk items and entities. On Nov. 17, 2010, CMS published final rules requiring a face-to-face meeting for Medicare and Medicaid home health and Medicare hospice and durable medical equipment (DME) items and services. CMS also issued a final rule on May 5, 2010 to require providers and suppliers who order and refer certain items or services for Medicare beneficiaries to enroll in Medicare and maintain documentation on those orders and referrals.

New Focus on Compliance and Prevention

Under the new law, providers and suppliers must establish compliance programs ensuring they are aware of anti-fraud requirements and good governance practices and have incorporated these into their operations. Nursing homes are also subject to new compliance and ethics plan requirements. Other preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies suppliers, and Community Mental Health Centers.

Raising the Bar on DME Suppliers through Expanded Competitive Bidding

As part of competitive bidding, CMS is implementing new requirements for DME suppliers, which have historically presented a high risk of fraud. CMS last month announced that it is expanding the DME Competitive Bidding program to 91 new areas of the country. In the first five years, it is estimated to save $2.9 billion – over the first ten years, the savings are estimated at $17 billion, said HHS.

Greater Oversight of Private Insurance Abuses

The new law gives new powers to the Secretary and Inspector General to investigate and audit the health insurance exchanges when they are operational. This, plus the new rules to ensure accountability in the insurance industry, will protect consumers and increase the affordability of health care.

Department of Labor Involvement

During today’s cabinet meeting, the vice president also unveiled new Labor Department efforts to reduce improper Unemployment Insurance payments and hold states accountable for progress as part of the administration’s comprehensive efforts to crack down on waste, fraud and abuse. The vice president was joined by Department of Labor Secretary Hilda Solis who discussed the department’s next steps in combating these improper payments:

Monitoring States’ Improper Payment Performance:

The DOL is launching a new effort to clearly show every state’s performance on improper payments. The agency unveiled an online map that will show citizens their state’s payment errors, which types of problems are driving its error rate, and the steps it has taken to address its rate.

Comprehensive Turnaround Plans for High Priority States:

Six high priority states -- Virginia, Indiana, Colorado, Washington, Louisiana, and Arizona -- based on their high rate of improper payments have been identified by DOL. The department is working with these states to ensure they develop a comprehensive turnaround plan to reduce their improper payments, according to HHS. In addition, high-performing states will be paired with these states to offer guidance and aid as the plans are developed and implemented. High priority states will be subject to additional monitoring and technical assistance until they achieve an improper payment rate under 10 percent and sustain that performance for at least six months.

New Awards to States to Automate and Improve Unemployment Insurance Data Collection:

The DOL today awarded nearly $192 million to 42 states to implement waste-cutting initiatives and improve the Unemployment Insurance program, including upgrading technology systems to more accurately collect data and process claims.

“The Unemployment Insurance system is a unique partnership between the federal government and the states. States bear the responsibility of operating an efficient and effective benefits program, but as partners the federal government must be able to hold them accountable for doing so,” said Secretary Solis. “These new measures, demonstrate our commitment to working closely with states to ensure the integrity of the system, turnaround underperforming programs and save taxpayer dollars.”

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Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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