By Nancy Lopez

Background

The complexity and size of the U.S. health care system makes it susceptible to fraud and abuse in both the public and private insurance markets. According to the National Health Care Anti-Fraud Association (NHCAA), an estimated 3% of all health care spending is lost to fraud; government and law enforcement agencies have estimated fraud-related loses to be as high as 10% of annual health care expenditures.^[1] Because Medicare and Medicaid are government-sponsored programs, and thus adhere to strict reporting requirements, fraud and abuse within these programs tends to be more publicly visible, but since 1998, more than 95% of private insurers had anti-fraud campaigns.^[2] The majority of health care fraud (80%) is committed by medical providers, most commonly in the form of “upcoding” (billing for more expensive services then rendered), performing unnecessary services to increase payments, and overbilling the patient. The financial ramifications of these fraudulent schemes are enormous to patients, providers and the federal government. Indeed, the U.S. Government Accountability Office (GAO) estimates that for 2010, Medicare alone had $48 billion in improper payments (underpayments and overpayments).^[3] In response to its findings, the GAO recommended that the Centers for Medicare and Medicaid Services find ways to address the vulnerabilities to improper payments and enhance program integrity.^[4]

The Reports Consolidation Act of 2000 (the Act) requires federal agencies to submit an annual financial and performance report to the President, Congress, and the Director of the Office of Management and Budget.^[5] Concurrent with this report, agencies are permitted under the Act to submit an accountability report; this combined report is called the performance and accountability report. If an agency chooses to present a consolidated report, it must include a summary of significant management and performance challenges the agency faces, and a short assessment of the progress the agency is making in addressing those challenges. The challenges are to be identified by each agency’s Inspector General.

Pursuant to the Act, on February 18, 2011, the Department of Health and Human Services Office of Inspector General (OIG) released a performance and accountability report listing the top 10 management and performance challenges facing HHS for fiscal year 2010 as well as its progress in addressing the challenges. Among the challenges (labeled “management issues”) identified by OIG was the capabilities of HHS to identify and effectively protect against an increased susceptibility to fraud and abuse posed by the implementation of several components of the Patient Protection and Affordable Care Act (ACA). The following areas are specifically listed as those in which implementation will be most vulnerable to fraud and abuse, thus requiring vigilant oversight: ACA programs implemented under expedited timeframes; programs involving the collection of large amounts of data; grant programs; payments involving risk corridors and reconciliation payments; changes to Part D and other Medicare and Medicaid payments; and possible insurance scams generated by confusion over the ACA.

As required under the Reports Consolidation Act, the OIG report explains the progress HHS is making towards addressing these challenges. The OIG identified a series of ACA provisions that have the potential to enhance HHS capacity to identify potential fraud and abuse and to provide HHS with effective oversight;

Health Care Reform

Challenge: Program Integrity of Health Care Reform Implementation

• The new ACA implementation structure, including the Center for Consumer Information and Insurance Oversight, the Center for Medicare and Medicaid Innovation, and the Center for Program Integrity, should aid in the challenge through the issuance of implementation guidance and regulations.

Program Integrity of Medicare, Medicaid and CHIP

Challenge: Integrity of Provider and Supplier Enrollment

• ACA §§3313, 6401, 6402, 6404, 6405, 6406, and 6503 addresses this challenge by giving HHS the authority to:
  • establish more rigorous enrollment and screening processes, such as differential screening procedures for providers or suppliers based on the risk of fraud, waste and abuse (ACA §6401, as amended by §10603); see Final Rule issued by HHS on February 2, 2011;^[6]
  • undertake enhanced oversight measures, such as pre-payment review for 30 days to 1 year after enrollment (ACA §6401(a));
  • broaden disclosure requirements, such as requiring suppliers or providers to disclose any affiliation with a provider or supplier that has uncollected debt or has been subject to a payment suspension, exclusion, or revocation or denial of its billing privileges under a federal health care program (ACA §6401(a));
  • impose enrollment moratoriums (ACA §6401(a));
  • create requirements for compliance programs, such as expanding surety bond requirements (ACA §§6401, 6402);
  • restrict durable medical prescribing and referral powers to Medicare-enrolled physicians or eligible professionals, with authority vested in the HHS Secretary to extend this requirement to other Medicare-covered items and services (ACA §6405);
  • require that agents, clearinghouses, or other alternate payees that submit claims on behalf of Medicaid health care providers register with the State and the HHS Secretary (ACA §6503);
  • impose new civil monetary penalties (CMP) for certain types of infractions, including falsifying information on provider enrollment, with concurrent expanded authority in the OIG to exclude from participation in federal health care programs any individual or entity that makes a false statement or misrepresentation of an enrollment application (ACA §6402); and
  • expand the OIG’s authority to obtain any information necessary from individuals or entities to validate claims for payment under Title XVIII or XIX for evaluation of economy, efficiency, or effectiveness of these programs (ACA §3313).

Challenge: Integrity of Federal Health Care Program Payment Methodologies

• The ACA addresses this challenge by implementing new payment models such as accountable care organizations, medical homes and shared savings programs (ACA §§2706, 3022, 10307, 3602, 3021).

Challenge: Promoting Compliance with Federal Health Care Program Requirements

• The ACA addresses this challenge by mandating compliance programs across provider categories. ACA requires that nursing homes develop effective compliance and ethic programs by March 2013. ACA sets out provider screening and enrolment requirements for Medicare, Medicaid and CHIP, which include compliance program mandates for provider and suppliers (ACA §§6102, 6401).

Challenge: Oversight and Monitoring of Federal Health Care Programs

• The ACA addresses this challenge by:
  • creating new directives which require HHS to collect, use and share data, including expanding CMS Integral Data Repository to include claims and payment data from Medicaid, the Department of Veterans Affairs, the Department of Defense, the Social Security Administration, and HIS;
  • creating the ability to assure real-time access by law enforcement to Medicare claims data (ACA §6406);
  • exempting the OIG from prohibitions against matching data across programs and providing the OIG with more direct access to data (ACA §6402); and
  • expanding the Recovery Audit Contractors (RAC) program giving it additional responsibilities to address improper payments in Medicaid and Medicare Parts D and C (ACA §6411).

Challenge: Response to Fraud and Vulnerabilities in Federal Health Care Programs

• ACA §10606 addresses this challenge by:
  • increasing criminal penalties for health care offenses under the Federal Sentencing Guidelines and expanding the definition of what constitutes Federal health care fraud offenses under Title 18 of the U.S. Code (ACA §10606); and
  • authorizing HHS to suspend payments to providers if the Secretary determines, in consultation with OIG, that there is a credible allegation of fraud (ACA §6402).