BALTIMORE — In a transmittal issued on New Year's Eve, CMS said the National Supplier Clearinghouse Medicare Administrative Contractor will begin a "fraud potential analysis" of all DMEPOS applicants and current providers.
According to the 27-page document, the NSC MAC will develop a "fraud level indicator" representing "the potential for fraud and/or abuse" of each provider, using four levels ranging from low risk to high risk.
CMS gave the following examples of the risk level indicators:
- Low Risk (e.g., national drug store chains);
- Limited Risk (e.g., prosthetist in a low fraud area);
- Medium Risk (e.g., midsize general medical provider in a high fraud area);
- High Risk (e.g., very small space diabetic supplier with low inventory in a high fraud area whose owner has previously had a chapter 7 bankruptcy). High fraud areas shall be determined by contractor analysis with concurrence of the NSC MAC's project officer.
In assigning a fraud level indicator, CMS said factors to be considered would include experience as a DMEPOS provider with other payers, prior Medicare experience, the geographic area, the fraud potential of products and services listed, site visit results, inventory observed and contracted and accreditation.
Based on the fraud level indicator, a "review plan" will be set up including the frequency of unscheduled site visits, maximum billing amounts before recommendation for prepay medical review and maximum billing spike amounts before recommendation for payment suspensions/prepay medical review, etc.
The fraud level indicator will be updated annually for each enrolled supplier. The NSC MAC will also monitor geographic trends to assess areas with a higher potential "for having criminals posing as legitimate HME providers," the instruction said.
A special alert code will be used for any provider that meets the supplier standards "but appears suspect in one of the areas that are verified by the NSC MAC," according to the document. The alert will be shared with the DME MACs and with Medicare's Program Safeguard Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs), and "notifies the contractors that a supplier may be inclined to submit a high percentage of questionable claims."
Additional alert codes will be used for circumstances such as violation of the supplier standards or a sanction by the Office of Inspector General. A note in the transmittal said while the alert codes will have no effect on claims payment, the DME MACs may use them as guidance in their review of claims payment or any claims-related initiatives or investigations.
With its instruction to take effect Feb. 2, CMS said an MLN Matters article on the new fraud level indicators would be available shortly.
View the Dec. 31 transmittal.