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Oversight Subcommittee Continues Efforts to Combat Fraud in Medicare Program

July 18, 2018

The House Ways and Means Oversight Subcommittee, chaired by Rep. Lynn Jenkins (R-KS), held a hearing on “Combating Fraud in Medicare: A Strategy for Success.” The hearing reviewed the Centers for Medicare and Medicaid Services’ (CMS) antifraud efforts and alignment with the “Fraud Risk Framework” – an initiative developed by the Government Accountability Office (GAO) in 2015 to provide agencies guidance on their efforts to combat fraud.

The purpose of the hearing was for Subcommittee Members to receive updates specifically on CMS’s antifraud efforts and how lawmakers can work to reduce the impact and frequency of fraud moving forward.

Chairman Jenkins said in her opening remarks:

As it stands now there’s no comprehensive risk-based strategy for combating fraud in Medicare. And CMS has not conducted an assessment of Medicare using the framework that would allow it to develop such a strategy. Without a strategy in place it is very difficult to address fraud. Today’s hearing will cover ways in which CMS can continue to improve its antifraud efforts including the development of a comprehensive antifraud strategy… Unfortunately, at CMS there seems to be some level of acceptance of the improper payment amount. …this is something every member of this Subcommittee wants to improve. Particularly given that every dollar lost to fraud is a dollar that could be spent on patients.”

Subcommittee Members heard from officials from GAO, the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG), and CMS.

Seto J. Bagdoyan, Director of Forensic Audits & Investigative Service at GAO, discussed GAO’s December 2017 report on how CMS managed fraud risk in its programs. Unfortunately, Mr. Bagdoyan told the Subcommittee that CMS has not taken the steps needed to combat fraud in the Medicare program:

CMS has not conducted a fraud risk assessment for Medicare as a whole or developed a risk-based antifraud strategy.”

Chairman Jenkins asked Mr. Bagdoyan about the purpose of an effective antifraud strategy.  He responded:

“A strategy is the best way to organize and target the disparate measures that CMS and CPI have in place already, plus any new ones that might be needed to target those against prioritized risks – you certainly cannot address each and every risk so you have to prioritize them and a strategy provides the roadmap to do so.”

Alec Alexander, Director of the Center for Program Integrity at CMS, told the Subcommittee that CMS is taking some steps to align its efforts with the Fraud Risk Framework:

“CMS is strengthening our efforts to engrain fraud risk assessment principles throughout the agency to cultivate a culture of program integrity and to ensure that this critical work does not occur in a silo. We will continue to work closely with GAO and other stakeholders as we take steps to expand our capacity to conduct fraud risk assessments to make the process more standardized – more efficient.”

Gloria L. Jarmon, Deputy Inspector General of Audit Services at HHS OIG, addressed the need to continue to lower the improper payment rate and improve antifraud efforts in Medicare:

“Mr. Alexander mentioned the decrease in the error rate for Medicare but still the numbers are so large. I think it went from 11 percent in 2016 to 9.5 percent in 2017 but there’s still a lot of Medicare fraud out there.  So I think we’ve made some progress but there is still a whole lot that needs to be done…better use of data analytics and information, targeting areas where we need to use our resources.  I think we need better use of all of that.” 

Rep. Jackie Walorski (R-IN) asked Mr. Bagdoyan:

It’s my understanding that in order to implement a strategy for Medicare in line with GAO’s framework a fraud assessment must be first conducted. Can you talk about that?”

Mr. Bagdoyan answered:

“An assessment is basically a bottom-up buildout, if you will, from looking at all the–in this case Medicare’s—various parts and identifying risks that are known and perhaps speculating on ones that are emerging. Fraud risk is not static — it’s very dynamic. It shifts from region to region, state to state, city to city as program design or counter fraud measures take effect, those schemes evolve. So an assessment is a thoughtful process from all stakeholders to determine essentially a portfolio of risks and then also determine their likelihood, and their impact and those assessments, as I mentioned earlier, feed into a risk profile, which is the more formal documentation of an assessment.”

Rep. Carlos Curbelo (R-FL) stressed the need for Medicare antifraud efforts to focus on prevention – a leading practice of the Fraud Risk Framework:

“While I’m grateful for the work to bring bad actors to justice…we still need to do more to cut down on pay-and-chase methods and focus on prevention measures.”

Rep. Brad Wenstrup (R-OH), a podiatric surgeon with over two decades of health care experience, noted that CMS’s program integrity efforts should not have the effect of burdening providers:

There’s a difference between innocent miscoding and intentional over coding and I hope that you are addressing that in a more proper way…but I think that’s important too from the standpoint of our providers. Can we be a little more parental with someone ‘hey, you’re not doing this right, let’s correct it now,’ rather than raiding their office without any type of warning.”

The Subcommittee on Oversight looks forward to continuing its work to help promote integrity and combat fraud in the Medicare program.

CLICK HERE to learn more about the hearing.