Federal Efforts to Fight Health Fraud Seen as Lacking Focus

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By James Swann

Government efforts to fight Medicare and Medicaid fraud have been uneven, lacking an overall strategy that can target the highest fraud risks.

The reason: The Centers for Medicare & Medicaid Services’ efforts to fight fraud may be hampered by low budgets and inadequate fraud risk assessments, sources told Bloomberg Law.

Historically, the CMS has been funded with a tight budget that allocates less than 2 percent for administrative costs like fraud-fighting, Kirk Ogrosky, a health-care attorney with Arnold & Porter Kay Scholer LLP and former head of criminal enforcement for the Department of Justice, told Bloomberg Law Dec. 6.

“It’s not surprising that CMS hasn’t been able to execute an effective and comprehensive fraud prevention plan,” given the budgetary constraints, Ogrosky, a Bloomberg Law advisory board member, said.

Most private health insurance companies allocate over 6 percent for administrative costs, Ogrosky said, allowing them to execute a fraud prevention strategy. It’s hard to understand why the Medicare and Medicaid programs wouldn’t have the same funding to engage in a similar strategy, Ogrosky said.

The lack of fraud risk assessments for Medicare and Medicaid has negatively impacted the development of an anti-fraud strategy, the Government Accountability Office said in a report released Dec. 5. A fraud risk assessment would evaluate all of Medicare and Medicaid, determining what programs are at the highest risk.

The CMS currently identifies individual risk areas without taking a comprehensive look at the Medicare and Medicaid programs, an approach likely to let some fraud slip through the cracks.

Existing Efforts

The CMS may not have a formal risk assessment process in place for Medicare and Medicaid, but the agency and the Health and Human Services Office of Inspector General have been prioritizing resources based on the fraud-related problems that develop in their programs, Louis Saccoccio, chief executive officer of the National Health Care Anti-Fraud Association, told Bloomberg Law Dec. 6.

A good example is the current focus on fraud in the pharmacy and addiction treatment areas stemming from the nationwide opioid crisis, Saccoccio, a Bloomberg Law advisory board member, said.

Under the Affordable Care Act, the CMS “also assesses the risks of providers entering the program based on the provider category and the risks that category presents,” Saccoccio said, noting that there is some risk assessment currently underway at the CMS.

What may be lacking is a comprehensive and overall risk assessment program that anticipates fraud risks before they develop, which can be a challenge in large programs such as Medicare and Medicaid, Saccoccio said.

“The creation of CPI [the Center for Program Integrity], the adoption of the fraud prevention system, and the implementation of the UPICs [Unified Program Integrity Contractors] show that CMS is doing a better job and continues to improve on the anti-fraud front,” Saccoccio said.

The CPI oversees program integrity efforts within Medicare and Medicaid, while the UPICs are a recently launched contractor that consolidates already existing program integrity contractors.

Medicare’s fraud prevention system was rolled out in 2011 and uses predictive analytics to identify improper claims.

The CMS didn’t respond to a request for comment.

Employee Training

The GAO also found that the CMS was lacking in comprehensive anti-fraud training for its employees, Linda Baumann, a health-care attorney with Arent Fox in Washington, told Bloomberg Law Dec. 6.

Some anti-fraud training is already available to CMS employees, Baumann said, but the report stresses that training needs to be provided on a regular basis.

“While the report suggests that CMS should use a more comprehensive approach to risk assessment and strategy, I don’t see this as a major condemnation of CMS efforts,” Baumann, a Bloomberg Law advisory board member, said.

Although the HHS agreed with the report’s finding, it’s unlikely there will be any short-term impacts to Medicare and Medicaid anti-fraud efforts, Baumann said.

Risk Assessments

The CMS has failed to conduct Medicare and Medicaid risk assessments due to a focus instead on specific fraud vulnerabilities, the GAO said. An effective fraud risk assessment includes:

  •  identifying all risks affecting Medicare and Medicaid;
  •  evaluating the impact fraud risks could have on the programs and prioritizing them accordingly;
  •  evaluating existing anti-fraud controls; and
  •  documenting the results of the risk assessment.
The CMS told the GAO that it plans to move forward with Medicare and Medicaid fraud risk assessments once it finishes an ongoing fraud risk assessment of the Affordable Care Act’s federally facilitated marketplace.

The GAO stressed that fraud risk assessments need to be conducted on a regular basis to keep track of the growing threats facing the programs. The report was prepared for a group of lawmakers: Sens. Orrin Hatch (R-Utah) and Claire McCaskill (D-Mo.), and Reps. Greg Walden (R-Ore.), Kevin Brady (R-Texas), Pat Tiberi (R-Ohio), Vern Buchanan (R-Fla.), Michael Burgess (R-Texas), and Tom Cole (R-Okla.).

To contact the reporter on this story: James Swann in Washington at jswann1@bloomberglaw.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bloomberglaw.com

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