Riding Herd on Fraud, Waste and Abuse Dan McCullough Judi McCabe Juanita Henry Kim Hrehor 1 Taking Stock: Surveying the Landscape of Fraud, Waste and Abuse 2
How Big is the Problem? The simple truth is that vast sums of money are stolen from the healthcare system every year." Malcolm Sparrow 3 10% of health care expenditures 3 Who s Watching? Recovery Audit Contractors (RACs): Made permanent by Section 302 of the Tax Relief and Health Care Act of 2006 and requires expansion to all 50 states by 2010 Role of RAC is to detect and correct past improper payments Use the same Medicare policies as carriers, FIs and MACs: NCDs, LCDs and CMS Manuals Two types of review: Automated (no medical record needed) 4 Complex (medical record required)
Who s Watching? Medicaid Integrity Contractors (MICs): Three types of MICS: review, audit and education Section 1936 of the Act requires CMS to contract with MICs to perform four key program integrity (PI) activities: Review provider actions Audit claims Identify overpayments Educate providers, MCOs, beneficiaries and others on PI and quality of care 5 Who s Watching? Medicare Administrative Contractor (MAC): Sections1816 and1842 of Social Security Act 15 A/B MAC jurisdictions Specialty MACs DME and home health/hospice Roles: Administer Part A/Part B Medicare claims payment Medical review when atypical billing patterns are identified 6
Who s Watching? Payment Error Rate Measurement (PERM): CMS developed the PERM program to comply with the Improper Payments Information Act of 2002 (IPIA) Measures improper payments in Medicaid and Children s Health Insurance Program (CHIP) Review contractor performs medical and data processing Reviews and conducts difference resolution with states Errors and rate shared with state State develops corrective action plan 7 Who s Watching? Zone Program Integrity Contractor (ZPIC): Program integrity for Part A, B, C and D Coordinate Medicare-Medicaid data matches (Medi-Medi) Interact with MAC to handle fraud and abuse issues within their jurisdiction 8
Who s Watching? State-initiated Medicaid Audits: Surveillance and Utilization Review (SURS) Attorney General Medicaid Fraud Control Unit (MFCU) State Office of Inspector General (OIG) or Medicaid Program Integrity Private audit contractors hired by Comptroller or other state agency 9 Who s Watching? The HEAT Health Care Fraud Prevention and Enforcement Action Team Department of Justice and Department of Health and Human Services agencies sharing resources State of art technology to fight fraud What s going on in your state? See http://stopmedicarefraud.gov 10
How Do You Get Ready? Understand what auditor is looking for: That charges submitted are substantiated by the documentation: Services delivered comply with provider s orders Charges are billed accurately Other documents besides the medical record may be needed to substantiate the charges Policies and procedures specify what documentation must be in the medical record and what is in ancillary records or logs 11 How Do You Get Ready? Prepare for the audit: Assign audit coordinator Gather requested documents Follow instructions exactly,including deadlines Prepare staff for the entrance conference, if applicable Track all communication Document all interactions with auditor 12
How Do You Get Ready? Understand the Halo Effect : Be meticulous, accurate, neat, etc. 13 Steps During the Audit Treat auditors with respect Keep communication open Respond to requests timely Assign point person Point person stays available for any requests for additional information Track and document communication 14
Steps During the Audit If onsite audit: Provide comfortable environment Designate office equipment for auditors (e.g. copier, printer, fax, computer, phone) Assign staff to provide assistance; station them near auditors Provide water, basic office supplies, directions to restrooms, orientation to facility, etc 15 Steps After the Audit If exit conference: Include key personnel Take notes Ask questions to clarify findings If provided draft report: Review carefully and submit comments when appropriate Understand your appeal rights Follow appeal process rules precisely 16
Be proactive Steps to Have a Better Outcome Emphasize documentation Be aware of the various areas of audit vulnerabilities Enhance compliance program s auditing and monitoring Identify opportunities for training and education 17 Shootin Straight: A Case Study in Identifying Fraud, Waste and Abuse 18
Fraud Schemes Using unlicensed individuals to provide care Billing for services not performed Billing for unnecessary services Upcoding and unbundling Altering documentation Submitting fraudulent claims Billing for services when recipients are deceased 19 Case Study Data Analysis Review SURS ranking reports: Identify outliers Perform provider profile analysis: Identify aberrant billing practices Identify need for further review (i.e. record review) Identify potential overutilization Review sample of claims to understand practice patterns 20
Case Study Data Analysis Profile Analysis Criteria Results PGA AVG SERVICES/PT 12.89 4.88 PCT HI LEVEL NEW PT OV 80% 3.11 PCT HI LEVEL CONSULTS 90% 2.12 PCT PTS W/LAB SVCS 18.77% 1.48 AVG DIAGNOSTICS/PT W/SVC 11.38 4.33 AVG INJECTIONS/PT W/INJ 107.52 88.85 21 Case Study Record Review Medical record review findings: Documentation does not support number of services billed Documentation insufficient to support level of service billed Documentation insufficient to support medical necessity of service No documentation submitted for DOS requested 22
Case Study Disposition Recoupment of overpayment Provider education Referral to OIG 23 Medicaid Program Integrity Purpose/Overview Medicaid Program Integrity (MPI) is responsiblefor the investigation of activities relating to the prevention, detection and investigation of provider fraud, waste and abuse in Medicaid 24
Medicaid Program Integrity Review, Research and Analysis Review, research and analysis includes, but is not limited to, the following: Verification of the subject s (provider, vendor, facility, recipient, person and/or business entity) Medicaid status Verification of the provider s licensure status, if applicable 25 Medicaid Program Integrity Review, Research and Analysis Determination and review of previous and/or current complaints and/or action(s) taken Review of policies, procedures, rules and regulations for time period in question, specific to the provider type in question 26
Medicaid Program Integrity Review, Research and Analysis Verbal and written communications by letter, telephone, or in person from: Recipients, providers, provider employees Medicaid operating agencies Office of Inspector General (OIG) divisions 27 Medicaid Program Integrity Review, Research and Analysis Licensure board(s), federal and/or other state agencies Subject matter experts/consultants 28
Medicaid Program Integrity Review, Research and Analysis Based on the results of the review, research, and analysis, one or more of the following may occur: Referral to another division Referral to another federal or state agency Closure without further action, and/or Full-scale investigation 29 The Investigative Approach Approach may include, but is not limited to, the following: Review complaint and obtain additional information from complainant, if necessary Contact appropriate licensure or certification boards to determine if disciplinary action has been taken If so, obtain documentation 30
Full-scale Investigation Process Check with program staff and claims administrator to determine if they have received any prior complaints or if any disciplinary action has been taken against the provider in question Review policies, procedures, rules and regulations for time period in question for appropriate program Review provider s payment history 31 Full-scale Investigation Process Request claim information from ad hoc reports that contain historical data for the provider or program type in question Look for suspicious billing patterns Select statistically valid random sample or targeted sample 32
Full-scale Investigation Process Conduct unannounced field investigation Obtain and review copies of medical records for claims in question Conduct clinical examinations, if applicable Conduct complainant, recipient, provider and provider staff interviews, and obtain voluntary statements 33 Possible Outcomes Resulting From Investigation There is no violation of policy There is no overpayment to recover The issue is not within OIG s jurisdiction 34
Possible Outcomes Resulting From Investigation Provider education Prepayment review Vendor hold (suspension of payments) for a definite period of time Vendor hold (suspension of payments) for an indefinite period of time 35 Possible Outcomes Resulting From Investigation Restricted reimbursement for a specified period Recoupment of actual overpayments Recoupment of overpayments developed from a statistically valid random sample Damages and penalties 36
Possible Outcomes Resulting From Investigation Exclusion for a specified period of time Exclusion for an indefinite period Cancellation of provider contract or agreement 37 Possible Outcomes Resulting From Investigation Referral to sanctions Referral to state licensing boards Referral to other state and/or federal agencies 38
Possible Outcomes Resulting From Investigation Referral to state MFCU for criminal investigation and potential prosecution Referral for civil investigation Referral to U. S. Attorney, HHS Inspector General or local prosecutor(s) for action and potential prosecution 39 The Roundup: Ideas for Decreasing Risk and Improving Compliance 40
Be Proactive Know federal and state regulations Know resources to ask questions Get answers in writing Self report Texas process Documentation 41 Assess Your Compliance Program Auditing and monitoring Training and education Evaluation of effectiveness Opportunities for improvement Vigilance and perseverance 42
Use the PEPPER PEPPER short for Program for Evaluating Payment Patterns Electronic Report can help you proactively identify potential risks related to inappropriate admissions or billing Use PEPPER to support your auditing and monitoring program 43 What is PEPPER? PEPPER is an Excel workbook containing one hospital s Medicare claims data statistics for areas identified as at risk for payment errors PEPPER compares your hospital s data with aggregate data for the state, Medicare Administrative Contractor (MAC)/Fiscal Intermediary (FI) jurisdiction and nation to identify where your hospital is an outlier 44
History of PEPPER PEPPER was developed by TMF Health Quality Institute in 2003 to provide hospitals with data to proactively prevent payment errors PEPPER was distributed by Quality Improvement Organizations (QIOs) through July 2008 PEPPER is now distributed by TMF 45 Short-term Target Areas Admission-focused: Chest Pain One-day Stays Medical Back Problems 30-day Readmissions to Same Hospital or Elsewhere One-day Stays Excluding Transfers Three-day Skilled Nursing Facility (SNF)- qualifying Admissions One-day Stays for Medical MS-DRGs Coding-focused: Stroke/Intracranial Hemorrhage Respiratory Infections Simple Pneumonia Sepsis Medical MS-DRGs with a CC or MCC 46
Long-term Target Areas Admission-focused: Rehabilitation Short Stays Coding-focused: Sepsis Excisional Debridement 47 PEPPER Worksheets Compare Worksheet Summarizes hospital findings Data tables and graphs Top MS-DRG reports: MS-DRGs and medical MS-DRGs for one-day stays for the hospital and the jurisdiction (short-term) MS-DRGs for the hospital and the nation; includes short-stay outlier count (longterm) 48
How to Prioritize PEPPER Findings Use the Compare Worksheet Consider outlier status compared to: 1. Nation 2. Jurisdiction 3. State Consider Target Sum Medicare Payments Use graphs to examine trends over time Use Top MS-DRGs worksheets to supplement analysis 49 PEPPER Case Study Review the sample Compare Worksheet, data tables and graphs Which target area might be prioritized first? What questions do you have from the data table? What questions do you have from the graph? What would you do next? 50
Maximizing PEPPER Refer to the User s Guides Share internally Guide auditing and monitoring Look for trends and sudden spikes Identify root causes of trends Review medical records Be proactive and preventive Avoid pay and chase 51 Some Examples of How Hospitals Have Used PEPPER Coding data source for DRG validation audits Compliance quarterly PEPPER audit in annual compliance implementation plan; used audit results to develop specific action plans for ensuring compliant documentation, educating physicians regarding medical necessity of inpatient stays and improving system coding accuracy 52
Some Examples of How Hospitals Have Used PEPPER Utilization review/quality monitor oneday stays, short stays and readmissions; guide monitoring to assess appropriateness of admission 53 Applying the PEPPER Concept to Other Settings Look at your own data If system-wide data are available, coordinate to compare facilities Search for comparative data in other settings (state hospital or medical association) 54
Questions or Comments? 55 Contact Information Dan McCullough dan.mccullough@tmf.org Juanita Henry juanita.henry@hhsc.state.tx.us Kim Hrehor kim.hrehor@tmf.org Judi McCabe judi.mccabe@tmf.org 56