CMS Finds New Ways to Stop Fraud

The Centers for Medicare and Medicaid Services (CMS), the federal agency in charge of the Medicare and Medicaid programs, loses billions of dollars every year to unscrupulous healthcare providers and medical billing and coding professionals. In 2010 the Office of Management and Budget estimated there was nearly $48 billion-worth of improperly billed claims to the Medicare program alone. Current estimates put Medicare fraud around $60 billion each year.

The National Priorities Project, an organization that tracks federal spending, calculated that in 2013 22.7 percent of American tax dollars were spent funding health care programs. This figure could be significantly lowered – reducing the costs of Medicare by an estimated 10 percent – if fraud perpetrated against CMS was halted.

There are three main ways dishonest professionals take advantage of the Medicare program:

  • By billing for medical procedures, tests, equipment, or devices that are unnecessary or non-existent, without a patient’s knowledge
  • By upcoding procedures as being more intensive or involved than they actually were
  • Through patient collaboration, by billing for procedures, equipment, or tests that are non-existent

The Office of Inspector General for the US Department of Health and Human Services – shortened to the OIG for the HHS – is the federal agency specifically in charge of combating fraud against CMS programs. Because of the shear volume of Medicare and Medicaid claims, plus other responsibilities of the OIG, initially this agency relied mostly on audits and whistleblowers to detect fraud against CMS. Over the years since Medicare’s creation in 1966 improvements and additions have been made to augment the fight against fraud:

  • In 1977 the Medicare-Medicaid Anti-Fraud and Abuse Amendments were signed into law – this strengthened the detection, prosecution, and punishment of fraudulent acts
  • In 1997 the government allocated $100 million to the FBI to aid in the fight against Medicare fraud
  • In 2007 the OIG for the HHS created the Medicare Fraud Strike Force – this agency combines the resources of the Department of Justice, state, and local investigative agencies to detect and combat fraud
  • In 2009 the Health Care Fraud Prevention and Enforcement Action Team was created to investigate Medicare fraud through a cooperative effort between the FBI, HHS, and the OIG
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New Tools in the Toolbox

Perpetrators of fraud against CMS have always faced stiff penalties, part of which are outlined in the False Claims Act that was passed in 1863. Since that time legislation and technology has come a long way, and today the OIG can now detect fraud more efficiently than ever.

One of the newest innovations in the fight against Medicare fraud is technology. A new analytical software system has recently been developed that uses complex algorithms and formulas to detect fraud by combing through millions of claims. Once the system detects a potential case of fraud, it is able to pinpoint the exact source and automatically notify the suspect medical services provider. If the provider continues to raise flags in the new system, agents can open an investigation to determine if any further action should be taken. During its first year online the new software identified $211 million of potential fraud. As the bugs are worked out and upgrades made, that figure should rise in the future.