government

Tougher health fraud prevention measures proposed

Doctors' offices and medical suppliers would face new screening procedures and payment penalties under the CMS rule.

By Chris Silva — Posted Oct. 4, 2010

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Some physician practices and medical suppliers may face new screening measures and payment penalties if a proposed rule from the Centers for Medicare & Medicaid Services goes into effect.

CMS introduced the rule Sept. 21, saying the more stringent measures would help the agency continue to transition from a "pay and chase" system to one increasingly based on fraud prevention.

"CMS is pursuing an aggressive program integrity strategy that prevents fraudulent transactions from ever occurring, rather than simply tracking down fraudulent providers and chasing fake claims," said Peter Budetti, MD, deputy administrator and director of CMS' center for program integrity.

The agency outlined its plans for implementing the new provisions -- called for under the new health system reform law -- during a hearing Sept. 22 before the House Energy & Commerce committee.

The proposed rule would:

  • Establish new screening measures for physicians and suppliers in Medicare, Medicaid and the Children's Health Insurance Program, including licensure and database checks, unscheduled or unannounced site visits, and criminal background checks and fingerprinting for those in the highest risk category.
  • Implement a $500 application fee for hospitals beginning March 23, 2011. The fee would be adjusted annually by a statutory formula.
  • Allow the government to place a temporary moratorium on the enrollment of new Medicare physicians and suppliers if high-risk fraud trends are detected, such as a rapid increase in enrollment applications within a category.
  • Suspend payments in cases where there is a credible allegation of fraud against a physician or supplier.
  • Require state Medicaid programs to deny or terminate a physician who had billing privileges revoked under Medicare, CHIP, or another state's Medicaid program.

CMS hopes to establish consistent screening standards with the proposed rule by designating physician and supplier categories. Potential categories could be "newly enrolling durable medical suppliers," or "currently enrolled home health agencies."

Each category would be subject to screening procedures based on the potential for fraud, waste and abuse and would be assigned to one of three levels: limited, moderate and high. The risk rating would consider several factors, including geographical region, CMS fraud experiences and studies done by the Office of Inspector General or the Government Accountability Office.

The degree of administrative oversight would increase with the increased risk of fraud associated with a category. For example, a new supplier in Miami might face more scrutiny than a new supplier in another area, because Medicare fraud cases have been documented at a higher rate in South Florida.

Dr. Budetti said CMS expects to conduct a number of pilot studies that will focus on identifying fraudulent physicians and suppliers on the front end and recognize complex patterns in improper claims and billing schemes.

Comments on the proposed rule are due Nov. 16.

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