CMS Touts Use of Technology in Blocking Improper Payments

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By Nathaniel Weixel

July 14 — The CMS's Fraud Prevention System identified or prevented $820 million in inappropriate Medicare payments in the program’s first three years, the agency said in a July 14 report.

The system, which uses predictive analytics technology to identify potential fraud before it happens, identified or prevented $454 million in calendar year 2014 alone, a 10:1 return on investment, the agency said.

“Very few investments have a 10:1 return on taxpayer money,” acting CMS administrator Andy Slavitt said in a statement. “We are proving that in a modern healthcare system you can both fight fraud and avoid creating hassles for the vast majority of physicians who simply want to get paid for services rendered.”

The Fraud Prevention System was created in 2010 by the Small Business Jobs Act and implemented in June 2011. The Centers for Medicare & Medicaid Services has extensively used its tools to help protect the Medicare trust funds and prevent fraudulent payments, the agency said. For example, the agency credited the FPS with helping the largest coordinated fraud takedown in history, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings.

During the third year of the FPS (calendar year 2014), the agency said it took administrative actions on nearly 2,000 providers based on FPS information. Actions included revocation of billing privileges, implementation of local auto-denial and prepayment review edits, referrals to law enforcement, requests for the return of overpayments and suspension of payments, the report said.

Projected Savings

By law, the report must specify the “actual and projected savings to the Medicare fee-for-service program” as a result of the use of predictive analytics technologies. Peggy Sposato, a former health-care program analyst at the Department of Justice, told Bloomberg BNA July 14 she questioned the accuracy of projected savings.

“If we have had any impact over time in the fraud fight—if you had an impact you should be able to see that without looking forward,” Sposato said. The CMS “shouldn't be taking credit” for potential money saved three to four months out, Sposato said. “How far are you willing to take it into the future? You can't move indefinitely forward.”

Expansion Ahead

In future years, the CMS said it plans to expand the FPS and its algorithms to identify lower levels of noncompliant health-care providers who would be better served by education or data transparency interventions.

However, the agency in the report said it's not feasible yet to expand the system to Medicaid and the Children's Health Insurance Program (CHIP). It's not feasible “to systematically expand predictive analytics to all states due to policy differences between programs, program structure, information technology readiness, staff resources, data availability, and cost,” the report said.

The agency said there is opportunity to support expansion in the coming years. “CMS will work with the states that are in the process of applying predictive analytics to provide technical assistance and partner on model development and best practices,” the agency said in the report.

To contact the reporter on this story: Nathaniel Weixel in Washington at

To contact the editor responsible for this story: Janey Cohen at

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