CMS Wants to Use Artificial Intelligence to Sniff Out Home Health Fraud

Federal watchdogs and health care policymakers are signaling plans to ramp up oversight of fraud, waste and abuse in 2020, especially when it comes to home health and hospice agencies.

While the efforts are, in part, linked to the misuse of Medicare dollars by bad actors, they’re also simply a result of the U.S. health care sector’s ongoing evolution and increased complexity, according to Centers for Medicare & Medicaid Services (CMS) officials.

President Donald Trump called on CMS to reinforce Medicare program integrity earlier this month in one of his latest executive orders. CMS Administrator Seema Verma provided a sneak peek into her agency’s five-pronged plan on Monday.


“Program integrity must focus on paying the right amount, to legitimate providers, for covered, reasonable and necessary services provided to eligible beneficiaries while taking aggressive actions to eliminate fraud, waste and abuse,” Verma wrote in a CMS blog post. “Our health care programs are quickly evolving; therefore, our program integrity strategy must keep pace to address emerging challenges.”

Broadly, the Government Accountability Office (GAO) has labeled Medicare a high-risk program since 1990, largely due to its size and several different components. Combined, Medicare and Medicaid currently account for nearly 24% of federal spending, a sharp increase from the less than 3% share the programs accounted for back when they first began.

Despite CMS’s efforts, improper payments accounted for 5% of Medicare’s $616.8 billion net costs in 2018.


That’s certainly a lot of money, but improper billing was actually down in key areas — home health care among them. Overall, home health improper payments decreased by roughly $4.59 billion from 2017 to 2018, according to CMS data.

When home health improper payments do occur, they’re often not a result of intentional fraud, industry leaders are quick to point out.

Paperwork typos and similar documentation issues are frequently to blame.

“The vast majority of improper payments are attributable to improper documentation, not eligibility issues like homebound status, medical necessity and the like,” Amedisys Inc. (Nasdaq: AMED) President and CEO Paul Kusserow wrote in an April Home Health Care News piece. “Many are not aware of this and perceive the improper payment rate as driven primarily by fraud.”

Moving forward, CMS will focus on stopping bad actors, preventing fraud and mitigate emerging programmatic risks as part of its Medicare integrity efforts. At the same time, the agency also intends to reduce provider burden and leverage new technology tools, including artificial intelligence.

Along those lines, CMS released a new request-for-information proposal related to AI on Tuesday, publicly available records show.

Medicare processes and pays about 4 million fee-for-service (FSS) claims per day and over 900 million claims annually. Of those, 99.7% are processed and paid within 17 days without any medical review, an area where AI could potentially assist, according to CMS.

When claims are medically reviewed, or when the patient medical record is looked over to confirm compliance with Medicare FFS documentation rules, CMS sees a five-to-one return on investment when comparing cost to recoveries, the agency noted.

Additionally, CMS hopes AI-powered tools will also help it better oversee value-based payment programs and keep track of today’s increasingly integrated providers.

Amedisys, LHC Group Inc. (Nasdaq: LHCG) and many other home health companies have pursued integration by adding personal care and hospice services to better care for patients as they move throughout the continuum of care.

“CMS has implemented a number of value-based payment programs that have improved quality and managed cost, but also bring new challenges in identifying improper payments, beneficiary safety and quality issues, and other program integrity concerns,” Verma wrote. “More challenging cross-ownership issues have emerged, such as one corporate parent owning various providers and provider types.”

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