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OIG report: CMS' fraud system has promising first year

December 17, 2012
by Pamela Tabar, Associate Editor
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The Office of Inspector General (OIG) has reviewed the data from Year One of the Centers for Medicare and Medicaid Services’ (CMS) new Fraud Prevention System and has found both progress and room for improvement.

The Fraud Prevention System (FPS), currently halfway through its second year, was launched to curb fraudulent activities in federal healthcare billing and to reduce the “pay and chase” problem by sniffing out claim problems before payments were made.

The FPS system employes predictive modeling technology to screen Medicare claims for suspicious behavior, much like the technology used in banking and telecommunications.

In the OIG’s “Report to Congress: Fraud Prevention System: First Implementation Year—2012,” examiners noted that the “substantial progress of the FPS in its first implementation year reflects the concerted efforts of many stakeholders… CMS effectively integrated the FPS into its overall fraud prevention strategy, reducing implementation costs and ensuring synergies with other fraud prevention components.” For example, Zone Program Integrity Contractors (ZPICs) now use the FPS as a primary source of leads that require review actions.

The FPS has saved CMS almost $32 million in “costs avoided due to revoking providers’ billing privileges, costs avoided due to clear changes in providers’ billing behaviors, claims denied through prepayment edits and auto-denial edits, and dollars held due to payment suspensions,” according to the report. “For every dollar spent on the FPS in its first implementation year, CMS estimates that more than three dollars were saved.”

The report also notes that CMS needs to improve its reporting of payments paid and avoided within the fee-for-service program and didn’t fulfill its full mission in determining return on investment of the data analytics technology. The OIG also recommends that contractors be required to track recoveries that stem from FPS leads and to coordinate more with local law enforcement.

CMS plans to continue to integrate the FPS and the Automated Provider Screening System (APS), and will begin to capture ZIPC activities and actions in real time. The preventive analytics technology used in the FPS is also being considered for application in Medicaid billing, the report adds.

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