AI, Technology Key to Reducing Medicare Fraud and Waste, CMS Says

October 23, 2019 - In light of new value-based care models and creative partnerships between providers, CMS is ditching its pay-and-chase approach to reducing Medicare fraud, waste, and abuse and implementing a new five-pillar approach based on prevention and technology.

In a new CMS blogpost, the agency’s administrator Seema Verma detailed the new approach to reducing Medicare fraud, waste, and abuse, which includes:

• Stopping bad actors
• Preventing Medicare fraud
• Mitigating emerging programmatic risks
• Decreasing provider burden
• Leveraging new technology

Medicare fraud, waste, and abuse costs CMS and taxpayers billions of dollars. In 2018, improper payments represented five percent of the total $616.8 billion of Medicare’s net costs, Verma reported.

CMS actively pursues improper payments and other instances of Medicare fraud, waste, and abuse. However, Verma admitted that the agency sometimes lacks the tools and capabilities to implement all suggestions from legitimate sources, like the Government Accountability Office (GAO).

New models of care and payment, as well as the relationships formed to carry out those arrangements, have also challenged CMS’ traditional approach to reducing Medicare fraud: paying providers and chasing down improper payments once they are identified.

READ MORE: How Providers Can Detect, Prevent Healthcare Fraud and Abuse

“As our programs become more complex, program integrity risks become increasingly difficult to recognize,” Verma explained in the blogpost.

In particular, she highlighted the challenges associated with cross-ownership issues, complex networks of providers, and value-based payment models that require CMS to not only pay the correct amount, but also reimburse providers based on care quality and beneficiary safety.

With improper payment rates still high under the pay-and-chase approach and complex models making fraud detection more difficult, CMS is modernizing its strategy for protecting Medicare program integrity.

Notably, the new approach to reducing Medicare fraud, waste, and abuse will leverage innovations and data from the private sector and use new technology like artificial intelligence and machine learning to develop quicker, more effective workflows for identifying fraud, particularly before it occurs.

For example, through the Healthcare Fraud Prevention Partnership, a private-public partnership dedicated to reducing healthcare fraud, waste, and abuse, CMS is using data from private payers, employers, state and local agencies, and other members to share information and conduct studies to identify possible solutions.

READ MORE: 13 States Still Struggle to Check Providers to Avoid Medicaid Fraud

Looking forward, CMS also plans to add technology developed in the private sector. Specifically, the agency is looking at fraud prevention analytics tools.

The agency is also looking to implement technology to replace clinician reviewers, who go through medical records to identify instances of Medicare fraud, waste, and abuse. Under the manual process, CMS is only able to review less than one percent of medical records. But technologies such as artificial intelligence and machine learning will enable the agency to review compliance on more claims in a cost-effective and less burdensome manner, Verma explained.

Additionally, Verma explained that Medicare may implement more prior authorization requirements to “mitigate emerging programmatic risks.”

“We must be vigilant in monitoring new and emerging areas of risk. To that end, tried and true methods like prior authorization have been effective,” she wrote in the blogpost.

Despite being a major pain point for providers, CMS plans to use the utilization management tool to prevent fraud in high-risk areas, such as durable medical equipment, prosthetics, orthotics and supply (DMEPOS) items. The agency proposed a list of items last year that could be subject to prior authorization.

READ MORE: Aurora Health Care Pays $12M to Settle Healthcare Fraud Claims

“This allows us to capture vulnerable items that were previously excluded from prior authorization, such as orthotics and prosthetics, which have been the target of recent telemarketing fraud schemes,” Verma explained. “The proposed changes also give us the flexibility to respond to future data and trends and tailor our strategies accordingly. Implementing prior authorization for these items as well as additional items in the future will help ensure that services billed are medically necessary.”

While prior authorizations have proven to be a burden for providers, Verma stressed that reducing provider burden is a pillar of the agency’s new approach to reducing Medicare fraud, waste, and abuse. As part of the new approach, CMS plans to focus its efforts on areas of “problematic billing, not all billing.” The agency is also looking to reform certification statements for some hospital transfers, as well as provider screening and enrollment processes.

Technology will also help to cut provider burden, CMS emphasized. With the use of new technologies, CMS predicts the amount of time and resources needed to send medical records to Medicare for review and to participate in the federal healthcare program will decrease. The technology will also allow CMS to perform fraud checks quicker, enabling the agency to target bad actors, rather than compliant providers.