Medicaid Fraud and Abuse Detection ActivitiesHistory
Fraud and abuse in the Medicaid programs across the nation was a suspected problem soon after Title XIX was implemented. As the program expanded in scope over its first 10 years, estimates showed losses of at least $653 million a year. In 1977, the U.S. Congress enacted the federal Medicare/Medicaid Anti-Fraud and Abuse Act, which provided federal funding to states that established Medicaid fraud and abuse control units.[21] Most states, including Texas, developed Surveillance and Utilization Review Systems (SURS) to address the problem. SURS staff compare specific providers’ claims data with the normal procedure coding patterns for that type of provider to identify errors and evidence of possible abuse.In 1997, Texas’ ability to combat Medicaid fraud improved when the Texas Legislature enacted Senate Bill 30, which provided for implementing fraud detection technology, additional monitoring of service providers along with administrative penalties, civil remedies and criminal sanctions for fraudulent and abusive actions. This bill led to the creation of the HHSC’s Office of Investigation and Enforcement to oversee fraud control for the Medicaid program, including the managed care portion.
HHSC Office of Investigations and Enforcement (OIE)
HHSC’s OIE is responsible for detecting, investigating and preventing fraud, abuse or waste in the provision of health and human services, including enforcing state law in relation to these provisions. OIE consist of several divisions to perform these services. The Medicaid Program Integrity unit (MPI) investigates allegations and complaints or referrals. If MPI finds evidence of potential fraud or abuse, they have the authority to impose administrative actions and/or sanctions. MPI refers potential criminal cases to the Medicaid Fraud Control Unit (MFCU) and the Office of the Attorney General for investigation and possible presentation for prosecution.[22]OIE annually reports the results of the various areas they investigate. Table I-1 summarizes the main areas of OIE’s fraud and abuse activities per dollars paid for the past three fiscal years.
Table I-1: Fraud and Abuse Activities for HHSC/OIE
Areas of Investigation Fiscal 2000 Dollars Recovered Fiscal 2001 Dollars Recovered Fiscal 2002 Dollars Recovered Medicaid Program Integrity $8,719,952 $3,565,975 $8,298,634 Civil Monetary Penalties $324,470 $65,827 $2,072,841 Utilization Review
(Hospitals paid by Diagnosis Related Grouping)$31,508,661 $28,352,157 $20,960,086 Utilization Review
(Case Mix-Nursing Homes)$7,090,259 $9,378,194 $7,758,268 Tax Equity Fiscal Responsibility Act (TEFRA) Claims (Children & Psychiatric) $362,341 $143,719 $26,688 Surveillance and Utilization Review Subsystems (SURS) $1,426,859 $1,143,499 $1,002,106 Compliance Monitoring and Referral (CMR) $12,546,475 $9,247,210 $4,326,484 Medicaid Fraud and Abuse Detection System (MFADS) $3,418,564 $1,854,123 $2,200,648 Total $65,397,581 $53,750,704 $46,645,755* *Note: The reduction in retrospective activities is the result of OIE's proactive measures to prevent fraud, abuse and waste in the Medicaid program. While retrospective activities have shown a decrease, perspective (cost savings) activities continue to increase, including reduction of error rates in hospital utilization and nursing home reviews.
Source: Texas Health and Human Services Commission Office of Investigations and Enforcement, November 2002.
The HHSC’s OIE works closely with the Office of Attorney General’s (OAG) Medicaid Fraud Control Unit (MFCU.) Since 1999 the MFCU identified about $25 million in fraudulent Medicaid overpayments. In May 2001, the OAG finalized an agreement with the Driscoll Children’s Hospital in Corpus Christi for repayment of $14.5 million of Medicaid funds due to overpayments.[23]
HHSC Medicaid Fraud and Abuse Detection System (MFADS)
With improved technology, more powerful and comprehensive fraud and abuse detection systems are available to detect illegal or unethical activities in the health care industry. Since December 1997, HHSC has used the Medicaid Fraud and Abuse Detection System’s (MFADS) neural network and learning technology to detect fraud, abuse or waste in the Texas Medicaid Program. [24] This system is administered by the Office of Investigation and Enforcement.MFADS is able to support functions such as compliance monitoring, provider referrals, and utilization review. MFADS supports the OIE by providing additional research on potential fraud and abuse; receiving and accessing licensing board data to compare with provider data; looking for known abusive or fraudulent practices using target queries on procedure or diagnosis codes, and tracking the progress of individual cases, including case hours, investigative cost and travel expenses related to the Medicaid program.
MFADS and other efforts by Texas are important in developing the programs and systems that discourage and prevent fraud. This study also plays a role in Texas’ fraud and abuse prevention and detection effort by identifying areas of potential fraud and abuse that may be occurring in the Medicaid program. OIE uses the information about potential fraud and abuse in its investigative efforts, especially to expand its targeted queries on procedure codes and billing practices. Such efforts, as well as the continued awareness of fraud patterns uncovered by the federal government, is crucial in arming Texas with the necessary knowledge and tools to maintain the integrity of the Medicaid program.
HHSC/OIE continues to improve the identification and recovery of questionable Medicaid payments using the MFADS. Table I-2 shows the cases and dollars recovered; Table I-3 shows OIE’s areas of investigation and cost savings.
Table I-2: Number of Cases and Actual Dollars Recovered by HHSC/OIE using MFADS
Performance Measure Fiscal 2000 Fiscal 2001 Fiscal 2002 Actual Cases Identified 2,567 2,309 2,386 Total Dollars Identified for Recovery $6,108,139 $18,354,733 $3,090,332 Actual Dollars Recovered $3,418,564 $1,854,123 $2,200,648 Source: Texas Health and Human Services Commission Office of Investigation and Enforcement, November 2002
Table I-3: Cost Savings Activities for HHSC/OIE
Areas of Investigation Fiscal 2000 Cost Savings Fiscal 2001 Cost Savings Fiscal 2002 Cost Savings Medicaid Program Integrity $13,802,760 $6,347,920 $26,714,974 Utilization Review (Hospitals paid by Diag-nosis Related Grouping) $31,500,000 $11,365,244 $7,739,431 Utilization Review (Case Mix-Nursing Homes) $7,056,000 $65,413,046 $16,423,600 Surveillance and Utilization Review Subsys-tems (SURS) $1,426,859 $1,143,500 $315,005 Compliance Monitoring and Referral (CMR) $12,546,475 $9,247,210 $1,885,061 Medicaid Fraud and Abuse Detection System (MFADS) $3,418,564 $1,900,000 $1,192,169 Policy and Procedure Changes Initiated by OIE $2,380,787
Dental:
Periodontal policy change
Actual $ paid to codes for March - August 1999$1,837,891
TCADA-licensed facilities OIE requested change in age for two codes - actual dollars saved from payments
$2,380,787
Periodontal policy change - OIE requested a change in recipient age for this procedure - actual dollars saved from payments
$145,000
Nutritional Counseling - procedure code eliminated effective 9/1/00
$332,000
Behavior Management - procedure code eliminated except for specific type of patient and with prior authorization
$92,500
Reduction of Hospital Call Fee - reimburse for its procedure code reduced from $75 per patient per day to $38 per patient per day, effective 6/1/01NA Total $72,131,445 $100,205,098 $54,270,240 *Based on total dollars identified; does not include civil monetary penalties
Source: Texas Health and Human Services Commission Office of Investigation and Enforcement, November 2002
HHSC/OIE January 2001 Medicaid Study Follow-up Activities
Following the publication of the January 2001 Medicaid study, the OIE department began investigating the providers identified with potentially fraudulent claims and recouping the monies identified as overpayments. A total of $10,458 was recouped from providers with overpayments.Research conducted by the OIE staff revealed widespread billing abuse of some of the procedures identified in the study, especially in the counseling and private duty nursing programs, that initiated more targeted query reviews and stricter documentation requirements. In addition to the study being a source of new areas of billing abuse, two of the providers in the study with overpayments were investigated and prosecuted by the Texas Attorney General’s office. One of these providers was incarcerated and fined for $250,000 for billing Medicaid for services not provided. The other provider was fined $50,000.
Federal Fraud and Abuse Activities
The Centers for Medicare and Medicaid Services (CMS) provides technical assistance, guidance and oversight in policing for fraud and abuse in the Medicaid program. Since fraud schemes often cross State lines, CMS has developed a partnership of state and federal agencies known as the Medicaid Alliance for Program Safeguards to fight fraud and abuse. Some of the partners are the State Medicaid programs, State Program Integrity Units, the Department for Health and Human Services’ Office
of Inspector General, the Federal Bureau of Investigation and the Department of
Justice.[25]The Alliance is based in CMS’s central office in Baltimore with a network of coordinators who represent all ten of the CMS’s regional offices across the country. The Regional Office Coordinators and the Central Office team enable CMS to perform oversight through a series of program integrity reviews.[26] The Alliance has produced guidance manuals and reports, such as the “Resource Guide of State Fraud and Abuse Systems,” that discuss Medicaid fraud and abuse detection and prevention and are available on the Internet at (http://cms.hhs.gov/states/fraud/reports.asp). The National Program Integrity Review reports by CMS on the state Medicaid programs are also available at this site.[27]
CMS Payment Accuracy Measurement (PAM) Demonstration project
As part of their effort to identify fraud and abuse, CMS initiated a demonstration project “to build on the experiences of various states in the development of a Payment Accuracy Measurement System (PAM) for Medicaid.”[28] This project is framed around several years of studies performed by states to develop a PAM model that is state-specific and can be used at both a state and national level to measure payment accuracy. This project provides funding to the participating states to identify and develop measurement methodologies.These studies measure payment errors (overpayments) using review methodologies and tools to determine a payment accuracy rate. The common theme with the participating states’ methodologies is a review of Medicaid patient’s medical records to confirm a service was provided as billed and paid by a Medicaid program.
Texas is one of the participating states for CMS’ PAM project. Texas used the enhanced methodology and tools of the Health Care Claims Study as the model for this year one PAM project. The federal grant awarded by CMS for the project funded the January 2003 Medicaid studies.
Endnotes
[21] US Department of Health and Human Services, Office of Inspector General, Annual Report, State Medicaid Fraud Control Units: Fiscal Year 2001 (Washington, DC, Fiscal Year 2001), p. 1, http://oig.hhs.gov/publications/mfcu.html/. (Last visited January 16, 2003.)
[22] Texas Health and Human Services Commission, Texas Medicaid in Perspective, Fourth Edition (Austin, Texas, May 2002), p. 3-16, http://www.hhsc.state.tx.us/Medicaid/reports/PB/2002pinkbook.html/. (Last visited January 16, 2003.)
[23] Office of the Attorney General, “Cornyn, Driscoll Children’s hospital Reach Accord” (Austin, Texas), http://www.oag.state.tx.us/newspubs/releases/2001/20010524driscoll.htm/. (Last visited January 16, 2003.)
[24] Texas Health and Human Services Commission, “MFADS FY2000 Third Quarter Performance Report,” (Austin, Texas), p. 1, (http://www.hhsc.state.tx.us/OIE/OIE_Reports.asp/. (Last visited January 16, 2003.)
[25] Centers for Medicare and Medicaid Services, “Medicaid Alliance for Program Safeguards,” (Baltimore, Maryland), http://cms.hhs.gov/states/fraud/. (Last visited January 16, 2003).
[26] Centers for Medicare and Medicaid Services, “Medicaid Alliance for Program Safeguards - Background”, (Baltimore, Maryland), http://cms.hhs.gov/states/fraud/backgrnd.asp/. (Last visited January 16, 2003.)
[27] Centers for Medicare and Medicaid Services, “Medicaid Fraud and Guidance Reports,” (Baltimore, Maryland), http://cms.hhs.gov/states/fraud/reports.asp/. (Last visited January 16, 2003.)
[28] U.S. Department of Health and Human Services, Health Care Financing Administration, Centers for Medicaid and State Operations. (Baltimore, Maryland, July 3, 2001.) http://cms.hhs.gov/states/letters/. (Last visited January 16, 2003.)
