OIG Challenges Effectiveness of CMS PSCs

WASHINGTON–The Program Safeguard Contractors hired by CMS to
detect fraud and abuse are showing only “minimal results,” and the
agency must be more diligent in its oversight of these contractors,
the Office of Inspector General said in a July 20 report.

While the PSCs are supposed to be one of CMS’ major tools in
fighting fraud, the OIG report challenged their effectiveness,
saying most PSCs “had minimal results from proactive data
analysis.” In addition, according to the report–“Medicare’s
Program Safeguard Contractors: Activities to Detect and Deter Fraud
and Abuse”–the PSCs displayed vast differences in the numbers of
new investigations and case referrals to law enforcement.

The report was based on reviews of 17 PSCs and their fraud
detection activity in 2005. According to the study, the PSCs
produced between 18 and 3,707 new Part B investigations, with a
median of 196. Of those, the PSCs referred between 2 and 39 Part B
cases to law enforcement, with a median of 13.

The OIG questioned the huge differences, noting: “Although PSCs
might be expected to differ from one another in workload activity
levels, neither the size of a PSC’s budget nor its oversight
responsibility (dollar amount of Medicare paid claims) was strongly
correlated with the number of new investigations or the number of
new case referrals to law enforcement produced in 2005.”

Based on its findings, the OIG recommended that CMS review PSCs
with no activity or low levels of activity to “determine whether
these PSCs have taken all the necessary steps to identify potential
fraud and abuse.” CMS should remedy the situation by providing more
guidance to PSCs and even consider contract termination, the OIG
said.

Investigators were also troubled by minimal results from PSCs’
proactive data analysis. As part of their duties, the OIG noted,
the contractors are expected to use data analysis to “identify
previously unidentified patterns or instances of fraud and
abuse.”

But 13 of the 17 PSCs studied reported 18 percent or less in new
investigations stemming from data analysis, the OIG said. Two of
the 17 produced no such investigations, and seven had 8 percent or
less. Nearly half of the PSCs made only a single case referral to
law enforcement originating from proactive data analysis. One had
none.

The OIG noted that the reports submitted to CMS by the
contractors were inconsistent in the level of information provided
and it could not determine whether the contractors were performing
data analysis that did not yield suspected fraud cases–or whether
they were not performing the proactive analysis at all.

CMS needs to require its PSCs to provide more detailed
explanations of their work in their monthly reports, the OIG
concluded, including information about investigations, case
referrals and proactive data analysis projects.

In response to the report, CMS said it was difficult to compare
performance of the PSCs because workloads vary among them. But the
agency pointed out that it is in the process of aligning PSC
jurisdictions with those of its Medicare Administrative
Contractors, which handle payments, to allow for better evaluation
and easier comparison of the contractors to each other.