Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS’s Fraud Prevention System Thwarts $820M in Payment Abuse

By Jacqueline DiChiara

- A 10:1 return on taxpayer money is a rare feat. Nonetheless, an advanced state-of-the-art analytics system – the Fraud Prevention System – courtesy of The Centers of Medicare & Medicaid Services (CMS) is making such a goal tangible reality.

Fraud Prevention System

Currently within its third year of operations, CMS says its Fraud Prevention System has both detected and thwarted $820 million in inappropriate Medicare payments. By using a system that mirrors those of credit card companies, the Fraud Prevention System uses predictive analytics to discern problematic billing algorithms and outlier claims for action.

Created 5 years ago by the Small Business Jobs Act, the Fraud Prevention System, via specific segments of the Affordable Care Act (ACA), protects both Medicare Trust Funds and prevents fraudulent payments.

Last year alone, CMS says it identified or prevented over $450 million in payments which is essentially “a 10 to 1 return on investment,” CMS says.

Comparable numbers exist from the Fraud Prevention System’s earlier years in action. According to CMS’s earlier 2014 press release, the Fraud Prevention System identified or prevented $200 million in improper Medicare payments within its second year of operations. This number is double compared to 2013, says CMS.

"We are proving that in a modern health care 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 key is data," states CMS Acting Administrator Andy Slavitt. "Very few investments have a 10:1 return on taxpayer money," he says.

According to the Department of Health and Human Services (HHS), the concept of false billings is a significant one within the healthcare industry. Over $25 billion was returned back to the Medicare Trust Fund over the course of the past 5 years – certainly no insignificant financial figure.

Last year, the greatest coordinated fraud takedown in the history of the healthcare industry via HHS and the Department of Justice (DOJ) resulted in charges against hundreds of individuals. Physicians, nurses, and a variety of medical professionals were supposedly involved in a variety of Medicare fraud schemes to the financial tune of $712 million in inappropriate billings.

In light of such heavy fraud activity, CMS confirms its positive fraud-thwarting results are helping to advance and strengthen the healthcare industry’s backbone.

“The third year results of the Fraud Prevention System demonstrate our commitment to high-yield prevention activities [and] our progress in moving beyond the ‘pay and chase’ model,” states Shantanu Agrawal, MD, CMS Deputy Administrator and Director of the Center for Program Integrity. “We have learned a lot in the three years since the Fraud Prevention System began, and as we learn, we continue to become more sophisticated in detecting aberrant billing patterns and developing leads for investigations and action,” says Agrawal.

Within upcoming years, CMS anticipates even more growth. “In future years, CMS plans to expand the Fraud Prevention System and its algorithms to identify lower levels of non-compliant health care providers who would be better served by education or data transparency interventions,” confirms CMS.


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