Understanding CMS Claims Processing from a Fraud Detection & Prevention Perspective by Sutherland Global Services

Understanding CMS Claims Processing from a Fraud Detection & Prevention Perspective 2012

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Claims Processing System with various stake holders Banks Bank Instruction

SSA^

Others

Backend System Claims & Other Data1

Information on beneficiaries’ enrollment in other plans like Managed Care Plans etc

Cost Reports Processing3 & information

Seeks Information

Eligibility Files

Other Government Agencies

CWF Checks for eligibility, lifetime limits or cross-contractor utilization

Replies4

Information

Claims Data

CMS*

$$$

On behalf of

Information on beneficiaries’ enrollment

Billing Agents / Clearing Houses

Shared Claims Processing System2 Medicare Administrative Contractor (MAC)

Claims

Providers

Service

Beneficiaries

Enforcement Authorities

ZPIC Notification

Legal or Punitive action

Data ^ SSA: Social Security Administration * CMS supplies shared claims processing systems, including transmission to CWF, installed at the data center that contractor must use. 1. Other data includes provider data, beneficiary, demographic data, claims attachments. 2. Financial Intermediaries Standard System &/or Multi Carrier System 3. Checks for consistency, utilization, covered service, eligible beneficiary & provider & pricing algorithms. 4. CWF responds in the following ways: OK to pay; Reject Claim; Claim needs additional information. © 2010 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Key issues with the data systems maintained by CMS 1.

Fragmented data systems make validation a cumbersome process – CMS has maintained its data in various different files residing in disparate systems that are not well integrated. For example, one system collects summary statistics on CHIP enrollment; one system allows drug manufacturers to submit drug product information for the Medicaid Drug Rebate Program; and several different systems collect Medicaid reimbursement amounts for various drugs paid for by Medicaid. Therefore, the claims editing by MACs are not performed within a single information system but by a combination of different editing functions from different systems which increases the time required to process the claims requests.

Lack of sharing of information between parties involved in claims processing and external agencies – CMS has a large information supply chain where numerous data trading partners and outsourced systems manage CMS program master data with only limited enterprise sources of national program data. There is no single data system at CMS where the management of program data can deliver 360-degree views of patient and provider information. Medicare's antifraud contractors serve specific regions and don't keep databases that allow for national comparisons. Further, systems restrict the ability to share and communicate information for different purposes among CMS components, other government agencies, and providers.

Data is stored at a regional level which becomes an impediment for ZPICs or MACs to detect frauds – CMS stores all its data about beneficiaries and providers at a regional level. CMS uses multiple systems to collect state information, pay states, and monitor operation of state programs. Therefore for effective detection and prevention of fraud it is imperative that there is an integrated system that would be able to flag off duplication of claims or other such relevant details. The absence of the same creates problems for ZPICs and MACs.

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CMS frauds & potential solutions Fraud

Scenario • Provider bills Medicaid for a treatment/procedure/service, which was not actually performed • With or without knowledge of beneficiary

Billing for non-performed Services

For example: Provider A (Orthopedic) bills Medicaid for physiotherapy treatment provided to patient P, when actually no therapy was provided. Patient P might be aware of this and does it for a small commission from Provider A, or might not be aware of it at all.

Incorrect Billing

Potential Flagging Points • Current & historic comparison of provider’s monthly claims quantum with that of similar providers in the surrounding area  Classify providers into categories (on the basis of their services) for comparison  Check the number of patients treated against historic values and spikes  Use historic & expert help for defining illness treatment  Amount of claim per patient against benchmark • Comparison of treatment against treatments that are actually medically correct/justified to identify deviations in terms of  Nature of drugs  Treatment involved • Checking the background of providers & beneficiaries and constantly updating it by correlating beneficiary claims with external records like IRS, criminal records, etc to check  Credit history  Criminal records to ascertain involvement in fraudulent activities  Other sources as mentioned in RFI

In case there is a sudden spike, further checks should be conducted. In this case, the adjudicator would look for the number of patients treated by A during the time frame. This number should be checked to ascertain whether the number of patients is very high vis-à-vis other providers of the same scale/nature in similar populated areas. For example, the number of patients treated by A in a day comes to 10 while historical statistics suggest that only 5 can actually be conducted. This could therefore be a potential flag to suggest that there is a discrepancy in the billing.

NOTE: 1) In addition to the above flagging points, for all the claims, a check should be run on the medical records of the patient across the US states, for any medication received around the same period – An integrated CMS database is a must for this. 2) The master repository of CMS can also be linked to external websites that constantly collects information on individuals to identify people with greater propensity to conduct frauds. © 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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Incorrect Billing

CMS frauds & potential solutions Fraud

Scenario

private health insurance company H for a knee replacement surgery conducted on patient P.

• Only original documents should be submitted for claims • Annual exchange of provider-wise claims data, without exchanging patient information – Run analytics on this data • Integrate claims data across providers (private and public) and run checks across providers prior to claims processing  Run checks to flag same codes for beneficiary and treatment  Check for same beneficiary and date  Integrated data would indicate that patient may receive payment from Medicaid and H

•

Double Billing

Co-payment Fraud

Potential Flagging Points

Provider attempts to bill Medicaid and either a private insurance company or patient for same treatment

For example: Provider A bills both Medicaid and a

Billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract

•

Setup helpdesk (call center) and encourage patients to call this helpdesk every time they are charged by a provider for copayment. Save charge details against provider id in database Run checks to identify if there are any overlapping charges

For example: Provider A bills Medicaid and patient P for a kidney transplant which has a total cost of $50,000. The terms of co-payment shows that P should pay 20% ($10,000) while the balance 80% ($40,000) would be paid by Medicare

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Incorrect Billing

CMS frauds & potential solutions Fraud

Scenario •

Wrong Cost Reports

Provider includes inappropriate expenses in claims made to Medicaid (for e.g. remodeling of their own home is falsely described as work done at the nursing facility and charged)

Potential Solution •

Manual checking of all non-medical claims

•

Historic analysis of non-medical & medical claims by the provider

•

Designate codes for non-medical claims and store them against providers • Check non-medical claims made by provider against the usual norm • Check the nature of claim to verify that claim is related to the line of treatment which is offered by the provider

•

Setup helpdesk (call center) and encourage patients to call this helpdesk every time their prescription was substituted by another drug. Save details against provider id in database

•

Keep track of prescription substitution for each provider

For example: Provider A bills Medicaid for installing an ECG machine while the actual expense was for home furnishing. Verify that similar expense has not been billed

•

Substitution of Generic Drugs

Pharmacy bills an insurance carrier for the cost of a name brand prescription when in fact a generic substitute was supplied at a substantially lower cost

For example: Pharmacy A bills Medicaid for $100 for providing patient P with a branded medicine X when a generic brand Y would have cost $20.

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Incorrect Billing

CMS frauds & potential solutions Fraud

Scenario

•

Billing for same services on the same patient (e.g. Right arm amputation twice)

Potential Solution

•

Track and compare the treatment given with historic patient treatment analysis Previous ailment and treatment records of the patient

Physically Impossible Services

For example: Provider A bills Medicaid for

Major surgeries to identify impossible duplication such as amputation of same hand twice

conducting right arm amputation of patient P. Claims adjudicator should check the treatment history of P to determine that P has not undergone right arm amputation earlier as well.

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CMS frauds & potential solutions Fraud

Unnecessary Services / Misrepresenting Treatments

Scenario • Provider misrepresents the diagnosis and symptoms of a patient and conducts unnecessary lab tests, surgeries, or other unnecessary services

Misrepresentation of Diagnosis

Potential Solution •

Based on symptoms, compare diagnosis involved in actual treatment against what was done

•

Run checks on the costs incurred against actual treatment / laboratory cost for different types of ailments

For example: Provider A directs patient P to undergo five different tests and bills Medicaid. The tests though are unwarranted given the actual symptoms of the P.

• Misrepresenting non-covered treatments as covered treatments to obtain insurance payments

Misrepresentation of Facts For example: Provider A bills non-covered cosmetic procedure like "nose jobs” as deviated-septum repairs to Medicaid

• Prepare a list of treatments which can be potentially misrepresented with costs involved  For treatments that are close to the above identified treatments compare current billing against historical amount to identify spikes  In cases of anomalies in billing, follow-up should be done in the form of visits to the provider and beneficiary

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CMS frauds & potential solutions Fraud

Up-coding

Up-coding & Unbundling

Scenario • Provider exaggerates the level of service performed (For e.g., if a patient sees a doctor for ten minutes on a simple matter such as a cold and the doctor then submits a bill for an hour-long complex visit)

Potential Solution •

Claims should be compared against pre-set benchmarks of costs for similar treatments by providers to identify significant deviations

•

Analyze the treatment offered against those that are needed in actual cases to identify anomalies

•

Compare billing of provider against similar providers in comparable areas

•

Establish benchmarks in terms of necessary steps involved in treatment of a particular ailment

•

Compare claims against benchmark costs for treatment of similar ailments

•

Identify large uptick in billing against historical claims by the provider

For example: Provider A bills Medicaid for an hours visit by patient P while the actual visit lasted only ten minutes

• Provider breaks one medical event into its component parts to charge for each action separately

Unbundling

For example: Provider A, a dentist, unbundles tooth

extraction to charge for pulling the tooth, and the subsequent visit charges while it is a part of a common package)

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CMS frauds & potential solutions Fraud

Identity theft

Wrong Identity

Scenario • Criminals steal identity of providers and seek false claims from CMS • Criminals use identity of providers who are already dead, and make claims from CMS for medical services/products

Potential Solution • Identify spikes or any other abnormal pattern in claims by the provider, and also compare quantum and type of claims with neighboring providers • Link Medicare / Medicaid database with federal records that register death of individuals across all states

For example: Criminal X steals the identity of Provider A, and bills Medicaid for services from a different zone which is not under the same MAC’s purview as A.

Fake Providers

• Criminals register as physicians or equipment providers by faking proofs and credentials, and seek false claims • Fraudulent or shell companies with hidden owners bill for equipments that are actually never provided • Beneficiaries may also enter into an agreement to receive a part of the claims made

• Link external sources of information to verify the credentials of a medical practitioner while enrollment

For example: Criminal X provides fake credentials

• Promote and protect whistleblowers and reward them accordingly. Some states already have provisions to reward whistleblowers with 25-30% of award.

and becomes a registered Medicaid provider and thereby bills for services that technically cannot /

• Comparison of quantum of claims against similar practitioners in comparable area • Similar solution as for ‘Misrepresentation of Diagnosis’ and ‘Misrepresentation of Facts’

• Invite competitive bidding for supply of medical equipments to create a list of preferred DME suppliers

should not be rendered NOTE: 1) In addition to the above flagging points, for all the claims, a check should be run on the medical records of the patient across the US states, for any medication received around the same period – An integrated CMS database is a must for this. 2) The master repository of CMS can also be linked to external websites that constantly collects information on individuals to identify people with greater propensity to conduct frauds. © 2013 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.

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MAC and their important functions (1/2)

Annexure

Medicare Administrative Contractor (MAC): These are private organizations appointed by the CMS which provide specified health insurance benefit administration services. Some of the key functions are – • Enroll new providers – Process Initial Enrollment Applications & process changes, updates, reassignments or Corrections; Revocations; maintain state-specific licensure/certification information. • Defining Local Coverage Determinations (LCDs) – MACs develop and enter into the Medicare Coverage Database (MCD) information on LCDs. LCDs specify under what clinical circumstances a medical service is considered to be reasonable and necessary. • Provider Education – MAC conduct programs to help providers understand the Medicare program and thereby reduce provider compliance error rate and claims payment error rate • Data Analysis – perform inquiry analyses, claims submission error analyses etc • Claims Processing: This involves a number of steps – 

Validates format and conformance with HIPAA syntax. Thereafter, it translates HIPAA electronic transactions to a file that the shared claims processing systems can receive as input.



Converts paper claims to electronic to join input data stream of HIPAA-compliant electronic data interchange (EDI) claims.



Core processing activities – edits for consistency, utilization, covered service, eligible beneficiary and provider, and pricing algorithms. Claim is sent to the Common Working File (CWF) for eligibility and other checks such as lifetime service limits, or cross-Contractor utilization editing.



Carry out back-end processing – closing the claim by sending notices to beneficiaries and providers, checks and electronic funds transfer (EFT), bank notices, and financial data

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MAC and their important functions (2/2)

Annexure

• Direct Data Entry Support – provide connectivity for the remote providers to access Direct Data Entry (DDE), security clearance for such access, training for the providers. • Back-end processing and update claims history files – MACs provide information related to the claims which are thereafter included in the Common Working Files (CWF). • Generate payment and deliver Remittance Advices (RAs) to providers and Medicare Summary Notices (MSNs) to beneficiaries. For example, NHIC, Corp. was appointed as the MAC for Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.

About NHIC Corp.: It is a private company based out of Massachusetts, USA and operates as the MAC for Jurisdiction 14 and also as the Durable Medical Equipment Medicare Administrative Contractor Jurisdiction A Contractor for Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. NHIC Corp. was formerly known as National Heritage Insurance Company. The company was founded in 1976 and is based in Hingham, Massachusetts. NHIC, Corp. operates as a subsidiary of Electronic Data Systems, LLC.

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ZPIC and their functions

Annexure

Zone Program Integrity Contractors (ZPIC): These are private organizations appointed by CMS, under the Medicare Integrity Program’s (MIP), to perform a wide range of medical review, data analysis and Medicare evidence-based policy auditing activities of Part A and Part B health care providers. Therefore through the establishment of the ZPICs, some or all of the program safeguard duties have been removed from the scope of responsibility of fiscal intermediaries and MACs. Some of the key functions performed by ZPIC include – • Medicare fraud investigations, including referrals to law enforcement • Medicare data analyses (discovery, detection, investigation, and overpayment projection) • Medical reviews to support fraud case development, including coverage and coding determinations • Reviews, audits, settlements, and reimbursement of cost reports, and conducting specified audits • IT systems activities for case and decision tracking and data warehousing • Interface services with Medicare contractors, the medical community (outreach & education), and law enforcement • Medicare / Medicaid data matching program safeguard work for each state in their particular zone. • Recommending recovery of federal funds through administrative action • Referring cases to law enforcement There are 7 ZPICs that have been appointed by CMS. For example, the ZPIC contract for Zone 7 (which encompasses Florida, Puerto Rico, and the US Virgin Islands) was awarded to Safeguard Services, LLC.

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CWF

Annexure

Common Working File (CWF): It is a decentralized Medicare claims validation and benefits authorization process. Key features of the CWF are – • Nine host sites have been set up at different locations to help in the claims settlement process. Under CWF, each Medicare beneficiary is assigned to one of nine host sites. Each host then becomes the repository for all of the official information pertaining to that beneficiary. • Therefore, all beneficiary entitlement information, such as Part A and Part B entitlement dates, Medicare secondary payer (MSP) information, group health plan election and other third party payer information is housed at the host site. • Every time the host authorizes payment, the beneficiary’s utilization history is updated in the CWF. The CWF host sites also forward claims data to HCFA central office. This data is used to produce HCFA’s National Claims History File and other claims and utilization files. • CWF returns information to the MAC regarding the entitlement status of the beneficiary, information on actual or potential duplicate billing. The fact that all claims sent by providers need approval from the CWF before they are paid makes it an important entity in claims management.

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End of Presentation