CMS Fraud System Detects $210 Million of Improper Medicare Payments in 2013

Medicare fraud continues to be an ever-present area of concern across various industries and home health is no exception as regulators strive to realize cost savings by identifying improper billing behavior.

In fiscal year 2013, the Centers for Medicare & Medicaid Services (CMS) identified or prevented more than $210.7 million in improper payments billed to Medicare through its Fraud Prevention System (FPS), according to a report sent to Congress last month.

Since June 2011, the FPS has run predictive algorithms and tracked other analytics nationwide against all Medicare fee-for-service (FFS) claims prior to payment.


For the first time in the history of the program, CMS is systematically applying the FPS against all Medicare FFS claims on a streaming, nationwide basis as part of its comprehensive program integrity strategy.

The more than $210 million figure represents nearly double the amount identified during the first year of the FPS program, the report notes, resulting in more than a $5 to $1 return on investment, an increase from last year’s $3 to $1.

In the program’s first year, the FPS identified savings of $115.4 million.


What’s new is this year’s report to Congress introduces a concept of adjusted savings, which is an attempt to estimate the dollars that CMS has already returned, or is likely to return to the Treasury in the future from the larger category of “identified savings” based on historical experience with the Medicare program.

“CMS estimates it has prevented from being paid or returned to the [Medicare] Trust Funds, or from an auditing perspective, is likely to prevent payment or return to the Treasury in the future, $54.2 million in adjusted savings,” states the report.

The FPS, which took action against 938 providers and suppliers in its second year of implementation, is also used by CMS as part of an agency focus on home health services, particularly in Florida.

“CMS identified this type of service in South Florida as an area of high risk to our programs,” the report stated.

This claim falls in line with last month’s announcement from CMS that it is extending its moratoria for newly enrolling home health agencies in certain geographic regions by six months. The targeted regions include Miami, Fort Lauderdale, Chicago, Detroit, Dallas and Houston—markets that CMS determined have prevalent instances of fraud related to home health and ambulatory services.

In 2012, CMS noted there were 662 home health agencies active in Miami-Dade County and analyses indicated that the area is an “extreme outlier” in factors the federal regulator identified as high risk for fraud.

In fiscal year 2013, the Miami CMS field office took a multi-pronged approach to address specific home health care schemes that resulted in the revocation of 58 home health agencies, which as a result produced savings of more than $290 million.

“CMS is monitoring the activity of home health agencies across Florida through the FPS to identify changes in billing patterns and the potential migration of fraud schemes to other parts of the state or nation,” the CMS report to Congress stated.

View the report.

Written by Jason Oliva

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