CMS Rolls Out Host of New Anti-Fraud Measures

BALTIMORE–On Oct. 6, CMS unveiled a host of “aggressive
new steps” to prevent fraud and abuse, including the launch
of a national recovery audit contractor (RAC) program.

The agency has named four permanent RACs–to be paid on a
contingency fee basis on both the overpayments and underpayments
they find–that will be responsible for conducting post-payment
reviews of Part A and Part B claims. According to a CMS release, a
three-year RAC demonstration in six states (California, Florida,
New York, Massachusetts, South Carolina and Arizona) collected over
$900 million in overpayments and found $38 million in
underpayments.

The new RACs are:

–Region A: Diversified Collection Services of Livermore,
Calif., initially working in Maine, New Hampshire, Vermont,
Massachusetts, Rhode Island and New York;

–Region B: CGI Technologies and Solutions of Fairfaix, Va.,
initially working in Michigan, Indiana and Minnesota;

–Region C: Connolly Consulting Assoc. of Wilton, Conn.,
initially working in South Carolina, Florida, Colorado and New
Mexico; and

–Region D: HealthDataInsights of Las Vegas, initially working
in Montana, Wyoming, North Dakota, South Dakota, Utah and
Arizona.

While work in the first phase of the program will start with
these states, additional states will be added to each RAC region in
2009.

The RACs will begin outreach this month and in November, holding
what CMS described as “town hall-type meetings” with
providers in each state. To prepare for the program, CMS advised
providers to “consider conducting an internal assessment to
ensure that submitted claims meet the Medicare rules.”

In addition to the RAC program, CMS also said it is working more
closely with beneficiaries and providers, consolidating its fraud
detection efforts and strengthening oversight of home medical
equipment suppliers and home health agencies.

CMS’ new program integrity contractors will look at
billing trends and patterns across Medicare, focusing on companies
and individuals whose billings are higher than the majority of
providers. (See related story “CMS Reveals Edits Used to ID Part B
Claims Errors” in this issue.)

“CMS is also shifting its traditional approach to fighting
fraud by working directly with beneficiaries by ensuring they
received the durable medical equipment or home health services for
which Medicare was billed and that the items or services were
medically necessary,” the agency said.

In particular, CMS is targeting Medicare payment to HHAs and HME
providers in seven states: Florida, California, Texas, Illinois,
Michigan, North Carolina and New York. In these states, the agency
will:

–Conduct more stringent reviews of new DMEPOS suppliers’
applications, including background checks to ensure that a
principal, owner or managing owner has not been suspended by
Medicare;

–Make unannounced site visits to double check that suppliers
and home health agencies are actually in business;

–Implement extensive pre- and post-payment review of claims
submitted by suppliers, home health agencies and ordering or
referring physicians;

–Validate claims submitted by physicians who order a high
number of certain items or services by sending follow-up letters to
these physicians;

–Verify the relationship between physicians who order a large
volume of DMEPOS equipment or supplies or home health visits and
the beneficiaries for whom they ordered these services;

–Identify and visit high-risk beneficiaries to ensure they are
appropriately receiving the items and services for which Medicare
is being billed.

The additional reviews will be focused on DMEPOS equipment and
supplies with high expenditures, such as oxygen equipment and
supplies, power wheelchairs and scooters and diabetic test strips,
the agency said.

Finally, CMS is consolidating the work of its program safeguard
contractors (PSCs) and Medicare Drug Integrity Contractors (MEDICs)
with new Zone Program Integrity Contractors (ZPICs). Eventually,
the agency said, these new contractors will be responsible for
ensuring the integrity of all Medicare claims under Parts A, B, C
and D, as well as coordination of Medicare-Medicaid data
matches.

The first two ZPIC contracts have been awarded to Health
Integrity for Zone 4, which encompasses Texas, New Mexico, Colorado
and Oklahoma; and SafeGuard Services for Zone 7, which encompasses
Florida, Puerto Rico and the U.S. Virgin Islands.

Regarding its new lineup of fraud-fighting efforts, CMS Acting
Administrator Kerry Weems told USA Today, “There are
many reputable, caring durable medical suppliers who do a very good
job. But then there are also some that are, frankly,
rotten.”

Quoted in the same article, published Oct. 7, the American
Association for Homecare’s Walt Gorski, vice president of
government affairs, said the association agrees with many of
CMS’ plans. However, he told the newspaper, “A lot of
what they’re saying is what they should be doing
already.”

Earlier this year, AAHomecare recommended that Congress increase
real-time monitoring of claims; require the National Supplier
Clearinghouse to conduct an additional, unannounced site visit
within the first six months of operation for new HME providers; and
apply a Medicare surety bond requirement to new providers.

The association is also working on a “comprehensive set of
anti-fraud recommendations” that it intends to propose to
Congress.

“We recommend that the federal government improve its poor
enforcement track record by stopping fraud at the front end of the
Medicare claims process,” Tyler Wilson, AAHomecare president
and CEO, said in a statement. “Success depends on a
combination of initiatives designed to further strengthen
procedures regarding the issuance, renewal and revocation of
supplier numbers, as well as use of real-time claims data.

“Also,” Wilson continued, “Congress must
ensure that the agency in charge has the necessary resources to
enforce the law effectively and to stop criminals from stealing
money from Medicare.”

While CMS’ Weems has said many of the new measures would
have been unnecessary had Congress not delayed competitive
bidding–which he said would have addressed some fraud
problems–the AAHomecare statement emphasized “that the
deeply flawed competitive bidding program for home medical
equipment, which was reformed and delayed by [the Medicare
Improvements for Patients and Providers Act], is a price-setting
mechanism, not an anti-fraud measure.”

To read the CMS press release on its new anti-fraud efforts,

click here.

For more information on the RAC program and outreach meetings in
the initial states, check the CMS RAC Web site at
www.cms.hhs.gov/RAC.