Medicare: CMS Fraud Prevention System Uses Claims Analysis to Address Fraud
Released: 2017-09-29T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: CMS analyzes Medicare fee-for-service claims data to further its program integrity activities. In 2011, CMS implemented a data analytic system called FPS to develop leads for fraud investigations conducted by CMS program integrity contractors and to deny improper payments. In developing leads, FPS is intended to help CMS avoid improper payment costs by enabling quicker investigations and more timely corrective actions. Additionally, in 2012, CMS helped establish the HFPP to collaborate with other health care payers to address health care fraud. One of the key activities of the HFPP is to analyze claims data that are pooled from multiple payers, including private payers and Medicare.

GAO was asked to review CMS's use of FPS and the activities of the HFPP. This report examines 1) CMS's use of FPS to identify and investigate providers suspected of potential fraud, 2) the types of payments that have been denied by FPS, and 3) HFPP efforts to further CMS's and payers' ability to address health care fraud. GAO reviewed CMS documents, including reports to Congress on FPS, contractor statements of work, and information technology system user guides, and obtained fiscal year 2015 and 2016 data on FPS fraud investigations and claim denials. GAO also interviewed CMS officials and CMS program integrity contractors regarding how they use FPS, and a non-generalizable selection of HFPP participants regarding information and data sharing practices, and anti-fraud collaboration efforts.

section_title: What GAO Found
paragraphs: Investigations initiated or supported by the Centers for Medicare & Medicaid Services' (CMS) Fraud Prevention System (FPS)—a data analytic system—led to corrective actions against providers and generated savings. For example, in fiscal year 2016, CMS reported that 90 providers had their payments suspended because of investigations initiated or supported by FPS, which resulted in an estimated $6.7 million in savings. In fiscal year 2016, 22 percent of Medicare fraud investigations conducted by CMS program integrity contractors were based on leads generated by FPS analysis of Medicare claims data. Officials representing Medicare's program integrity contractors told GAO that FPS helps speed up certain investigation processes, such as identifying and triaging suspect providers for investigation. However, the officials said that once an investigation is initiated, FPS has generally not sped up the process for investigating and gathering evidence against suspect providers. CMS has not tracked data to assess the extent to which FPS has affected the timeliness of contractor investigation processes. However, CMS is implementing a new information technology system that tracks such data, and officials said that they plan to use the data to assess FPS's effect on timeliness.

FPS denies individual claims for payment that violate Medicare rules or policies through prepayment edits—automated controls that compare claims against Medicare requirements in order to approve or deny claims. FPS prepayment edits specifically target payments associated with potential fraud. For example, an FPS edit denies physician claims that improperly increase payments by misidentifying the place that the service was rendered, which helped address a payment vulnerability associated with millions in overpayments. FPS edits do not analyze individual claims to automatically deny them based on risk alone or the likelihood that they are fraudulent without further investigation. As of May 2017, CMS had implemented 24 edits in FPS. CMS reported that FPS edits denied nearly 324,000 claims and saved more than $20.4 million in fiscal year 2016.

The Healthcare Fraud Prevention Partnership (HFPP) is a public-private partnership that began in 2012 with the aim of facilitating collaboration among health care payers to address health care fraud. The HFPP had 79 participants as of June 2017. Participants, including CMS officials, stated that sharing data and information within HFPP has been useful to their efforts to address health care fraud. HFPP conducts studies that pool and analyze multiple payers' claims data to identify providers with patterns of suspect billing across payers. Participants reported that HFPP's studies helped them to identify and take action against potentially fraudulent providers and payment vulnerabilities of which they might not otherwise have been aware. For example, one study identified providers who were cumulatively billing multiple payers for more services than could reasonably be rendered in a single day. Participants also stated that HFPP has fostered both formal and informal information sharing among payers.

The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.

section_title: Letter
paragraphs: In fiscal year 2016, Medicare provided health insurance for approximately  57 million elderly and disabled beneficiaries at a cost of approximately  $699 billion. Since 1990, we have designated Medicare a high-risk  program because of its size, complexity, and susceptibility to  mismanagement and improper payments. Some improper Medicare  payments are due to fraud, which involves willful misrepresentation.  Although the deceptive nature of fraud makes its extent in the Medicare  program difficult to measure in a reliable way, there have been  convictions for multimillion dollar schemes defrauding the program.

The Centers for Medicare & Medicaid Services (CMS)—the agency within  the Department of Health and Human Services (HHS) that administers  the Medicare program—is responsible for conducting program integrity  activities intended to reduce fraud, waste, and abuse. CMS uses  analyses of claims submitted for payment by health care providers as part  of its program integrity activities. In 2011, CMS implemented a data  analytic system—the Fraud Prevention System (FPS)—that analyzes  Medicare fee-for-service claims to identify health care providers with  suspect billing patterns for further investigation and to prevent improper  payments. Additionally, in 2012, HHS helped establish a public-private  partnership—the Healthcare Fraud Prevention Partnership (HFPP)—with  other health care payers, agencies, and organizations to address  healthcare fraud. One of the key activities of HFPP is analyzing claims  data pooled from multiple payers, including Medicare, to identify and  disseminate information within the partnership on providers with suspect  billing patterns.

You asked us to review CMS’s use of FPS and the activities of HFPP.  This report examines  1.  CMS’s use of FPS to identify and investigate providers suspected of  2.  the types of payments that have been denied by FPS; and  3.  HFPP’s efforts to further CMS’s and payers’ ability to address health  care fraud.

To examine CMS’s use of FPS to identify and investigate suspect  providers, we reviewed CMS documents, including CMS reports to  Congress on FPS’s implementation, statements of work for program  integrity contractors, and FPS and other CMS information technology (IT)  system user guides. We interviewed CMS officials and officials from all  seven Zone Program Integrity Contractors (ZPIC)—the contractors  responsible for identifying and investigating potential Medicare fraud,  waste, and abuse—regarding how FPS is used to identify and investigate  potential fraud. CMS is currently in the process of transitioning Medicare  program integrity contracts from ZPICs to new contract entities, Unified  Program Integrity Contractors (UPIC), and we interviewed officials from  the two UPICs in operation as of May 2017. We also obtained and  analyzed fiscal year 2015 and 2016 data from CMS on the sources of  ZPIC investigations and the corrective actions and savings associated  with ZPIC investigations. To assess the reliability of the data, we  reviewed relevant agency documents, interviewed CMS officials,  compared the data to published data, and reviewed the data for any  outliers and obvious errors. We found the data sufficiently reliable for the  purposes of our study.

To examine the types of payments that have been denied by FPS, we  obtained information from CMS on the prepayment edits—automated  controls that compare claim information to Medicare coverage and  payment policies in order to approve or deny claims—that have been  implemented in FPS. We interviewed CMS officials about how FPS’s  edits identify and deny payments. We also interviewed officials  representing Medicare Administrative Contractors (MAC)—the  contractors that process and pay Medicare fee-for-service claims and,  along with CMS, are responsible for implementing prepayment edits— regarding differences between edits in FPS and those in Medicare’s  claims processing systems. In addition, we obtained data from CMS on  the number of claims denied by FPS edits and the associated savings for  fiscal years 2015 and 2016. To assess the reliability of the data, we  interviewed CMS officials, compared the data to published data, and  reviewed the data for any outliers and obvious errors. We found the data  sufficiently reliable for the purposes of our study.

To examine HFPP’s efforts to further CMS’s and payers’ ability to address  health care fraud, we reviewed CMS and HFPP documents, including  HFPP study summaries and findings. We interviewed officials from CMS  and the contractors that have administered HFPP about HFPP  information and data sharing practices. We also interviewed a non- generalizable selection of HFPP participants that reflect HFPP’s  membership. We interviewed officials representing 3 private payers, 5  state agencies, and 4 associations regarding HFPP’s anti-fraud  collaboration efforts. We selected private payers that offer Medicare  Advantage plans, state agencies that use data analytic systems or have  shared data for HFPP studies, and healthcare and healthcare fraud  specific associations.

We conducted this performance audit from April 2016 to August 2017 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Fraud Prevention System
paragraphs: To advance CMS’s efforts to prevent fraud, waste, and abuse in the  Medicare fee-for service program, the Small Business Jobs Act of 2010  appropriated $100 million for CMS to implement a data analytic system.  The law required CMS to implement a system that could analyze claims  prior to payment to identify suspect claims and provider billing patterns  and prevent payment of improper and potentially fraudulent claims,  among other things. In April 2011, CMS awarded almost $77 million to a  contractor to implement, operate, and maintain FPS and design analytic  models for the system. CMS awarded about $13 million to a second  contractor in July 2011 to develop additional analytic models for FPS. As  the original FPS contract was set to end, CMS awarded a nearly $92  million contract in April 2016 for a new, upgraded FPS system—FPS 2.0.  FPS 2.0 was fully implemented in March 2017.

CMS’s Center for Program Integrity (CPI)—which oversees the agency’s  Medicare program integrity efforts—employs FPS as a key component of  its strategy to move beyond the “pay and chase” approach of recovering  improper and potentially fraudulent payments to focusing on prevention.  FPS screens fee-for-service claims prior to payment in order to help  identify and prevent improper and potentially fraudulent payments by  performing two primary functions:

Develop leads for fraud investigations. FPS compares provider billing  patterns and other data against models of potentially fraudulent  behavior to identify providers with suspect billing patterns. For  example, an FPS model identifies providers that bill for a  disproportionate number of services in a single day relative to other  providers. FPS simultaneously risk-scores providers identified by the  models to prioritize them for potential investigation. In developing  these leads, FPS is intended to help CMS prevent potentially  fraudulent payments by furthering the agency’s ability to more quickly  identify and investigate suspect providers, and take more timely  corrective actions.

Execute automated prepayment edits. FPS edits deny certain  improper payments, and some edits compare information from  multiple claims to do so. For example, FPS may deny physician  outpatient claims based on information from an inpatient claim  associated with the same episode of care.

CMS submitted three annual reports on FPS’s implementation to  Congress in response to requirements established by the Small Business  Jobs Act of 2010. In these reports, CMS provided information on the  corrective actions taken and savings achieved from FPS. In its most  recent report, CMS reported that FPS had cumulatively helped prevent or  identify nearly $1.5 billion in improper and potentially fraudulent payments  from its implementation through the end of calendar year 2015.

section_title: Medicare Program Integrity
paragraphs: CMS uses contractors to support the agency’s program integrity activities,  including program integrity contractors to identify and investigate  providers engaged in potential Medicare fee-for-service fraud. CMS is  currently in the process of transitioning Medicare program integrity  contracts from ZPICs to new contract entities, UPICs. ZPICs operated in  seven geographical jurisdictions across the country. UPICs will operate in  five jurisdictions and combine Medicare and Medicaid program integrity  efforts under a single contracting entity (fig. 1 depicts the geographic  jurisdictions of ZPIC and UPIC zones). As of May 2017, two of the five  UPICs—the Midwestern and Northeastern—were operational.

The program integrity contractors identify leads for provider investigations  from three categories of sources:

Referrals. A number of entities, including CMS, law enforcement  agencies, and the MACs, refer leads about suspect providers to the  program integrity contractors. The program integrity contractors also  receive leads based on beneficiary and provider complaints and  allegations.

Program integrity contractor data analysis. Program integrity  contractors use postpayment claims to conduct their own data  analyses to identify providers with suspect billing patterns.

FPS. FPS identifies providers with suspect billing patterns and  prioritizes leads based on provider risk-scores.

The program integrity contractors generally have a triage process to  review leads and determine whether the leads are indicative of potential  fraud (see fig. 2 for information on program integrity contractor  investigation processes). Leads that are determined to be suspect  become formal investigations, and the program integrity contractors  perform a range of investigative activities to gather evidence and  determine if providers are engaged in potential fraud. These activities  include conducting beneficiary and provider interviews, site visits of  provider facilities, and manual reviews of provider claims.

Based on their investigations, the program integrity contractors may take  corrective actions by referring providers engaged in potential fraud to law  enforcement and initiating administrative actions. Specifically, if the  program integrity contractors uncover evidence of potential fraud, they  refer the investigation to the Department of Health and Human Services  Office of Inspector General (HHS OIG) for further examination, which may  lead to possible criminal or civil prosecution by the Department of Justice.  The program integrity contractors may also recommend a range of  administrative actions to CMS for approval and implementation. Such  actions include revocation of providers’ billing privileges and payment  suspensions (table 1 describes the administrative actions the program  integrity contractors may recommend against providers).

section_title: CMS’s Prepayment Edits Process
paragraphs: CMS’s claims processing systems apply prepayment edits to all Medicare  fee-for-service claims in an effort to pay claims properly. Most of the  prepayment edits are automated, meaning that if a claim does not meet  the criteria of the edit, it is automatically denied. Other prepayment edits  flag claims for manual review, in which trained clinicians and coders  examine claims and associated medical records to ensure that the claims  meet Medicare rules and requirements. Many improper and potentially  fraudulent claims can be identified only by manually reviewing associated  medical records and beneficiary claim histories, and exercising clinical  judgment to determine whether services were reasonable and necessary.  Whereas automated edits are applied to all claims, manual edits are  applied to very few—less than 1 percent of claims undergo manual  review.

CMS contracts with the MACs to process and pay Medicare fee-for- service claims and implement prepayment edits in the Medicare claims  processing systems. The claims processing systems consist of three  systems—the MAC front-end systems, shared systems, and Common  Working File—that carry out a variety of functions and execute  prepayment edits (see fig. 3). When implementing FPS, CMS integrated  FPS with the claims processing systems and claims are screened by FPS  prior to payment. Unlike the claims processing systems, CPI maintains  FPS.

section_title: Healthcare Fraud Prevention Partnership
paragraphs: HFPP is a voluntary public-private partnership established by HHS and  the Department of Justice to facilitate collaboration in addressing  healthcare fraud. The membership includes Medicare- and Medicaid- related federal agencies and several state agencies, other federal  agencies with responsibility for federal health care programs such as the  Department of Defense and Department of Veterans Affairs, law  enforcement agencies, private payers, and antifraud and other healthcare  organizations. HFPP was established, in part, to help payers identify  schemes and providers engaged in potential fraud that individual payers  may not be able to identify alone. HFPP began in 2012 with 20 members  and, as of June 2017, had grown to 79 members. As of the end of  calendar year 2016, CMS had cumulatively spent $30.3 million on HFPP.

section_title: CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes and Has Contributed to Program Savings
subsections: section_title: CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes, and CMS Is Taking Steps to Track Data on Timeliness
paragraphs: ZPIC officials stated that FPS helps them identify suspect providers  quickly. Because FPS analyzes claims prior to payment, providers with  suspect billing patterns can be identified quickly relative to other sources  of leads. In particular, several ZPIC officials stated that the leads they  develop from their data analyses of postpayment claims are not as timely.  Officials from two ZPICs estimated that the postpayment claims they use  for their analyses may have been for services rendered 1 to 2 months  prior, while the claims analyzed by FPS may have been for services  recently rendered.

ZPIC officials also said the information associated with FPS leads allows  them to examine and triage those leads quickly to determine whether to  initiate investigations. FPS leads provide specific information about the  type of potential fraud identified, along with claims data and other  supporting information. ZPIC officials further stated that they use  information from FPS when triaging leads from other sources. In contrast  to FPS leads, several ZPIC officials noted that reviewing and triaging  leads based on referrals often necessitates additional time and resources.  In particular, allegations associated with some referrals can be vague,  which makes it difficult for ZPICs to identify the relevant provider claims  data and other information needed to assess the validity of the  allegations.

However, once an investigation is initiated, officials stated that FPS has  generally not sped up the process for investigating providers. Several  ZPIC officials noted that investigations based on FPS leads are similar to  those from other sources in that they require further investigation, such as  manual claim reviews or site visits of provider facilities, to substantiate the  leads and gather evidence of potential fraud. However, while ZPIC  officials said that FPS does not speed up investigations, officials from  several ZPICs noted that FPS can help improve the quality of beneficiary  interviews. Since FPS leads are based on prepayment claims data,  ZPICs can conduct beneficiary interviews shortly after the services have  been rendered, when beneficiaries may be better able to recall details  about their care.

CMS has not tracked data to assess FPS’s effect on the timeliness of  investigation processes. CMS has lacked such timeliness data because  of limitations with its IT system for managing and overseeing ZPICs.  However, as of May 2017, CMS was in the process of implementing a  new IT system that could be used to assess FPS’s effect on the  timeliness of program integrity contractor investigation processes. In  transitioning to UPICs, CMS is implementing a new contractor workload  management system that will capture data on the timeliness of UPIC  investigation processes. For example, the system will be able to capture  information on the amount of time it takes a UPIC to evaluate a lead or  conduct an investigation. CMS officials said that the agency plans to use  the information tracked by the system to monitor program performance,  including assessing FPS’s effect on UPIC investigation processes and the  timeliness of corrective actions. The officials also stated that they may not  be able to conduct such an assessment for several years as CMS is still  in the process of transitioning to UPICs and implementing the new IT  system. Further, the officials said that they subsequently would want to  collect several years’ worth of such data to ensure a reliable assessment.

section_title: FPS Accounted for About 20 Percent of Investigations in 2015 and 2016 and Contributed to Program Savings
paragraphs: In fiscal years 2015 and 2016, about 20 percent of ZPIC investigations  were initiated based on FPS leads, according to our analysis (see table  2). In both years, nearly half of ZPIC investigations were based on  referrals.

The proportion of investigations based on FPS leads is poised to increase  as CMS changes program integrity contractor requirements for using FPS  with the transition from ZPICs to UPICs. CMS has required the ZPICs to  review all FPS leads that met high-risk thresholds. CMS is instead  requiring that the UPICs derive 45 percent of new investigations from  FPS. ZPIC officials stated that the new UPIC requirement should allow  UPICs flexibility to focus their reviews on the FPS leads that are most  applicable to their geographic region. For example, a UPIC with high  levels of home health agency fraud within its jurisdiction can focus its  reviews of FPS leads on those providers.

For total actions, CMS tracked the number of investigations referred to law enforcement. For actions  associated with FPS, CMS tracked the number of providers referred to law enforcement. These data  are not directly comparable.

In addition to tracking the corrective actions and savings associated with  FPS, CMS also measures the extent to which investigations initiated from  FPS leads result in actions against providers engaged in potential fraud.  CMS reported that, in fiscal year 2015, 44 percent of FPS-initiated  investigations resulted in administrative actions, which met the agency’s  fiscal year goal of 42 percent of investigations leading to administrative  actions. In fiscal year 2016, 38 percent of FPS-initiated investigations  resulted in administrative actions, which did not meet the agency’s fiscal  year goal of 45 percent.

section_title: FPS Denies Payments Based on Medicare Rules or Policies and Not Fraud Risk
paragraphs: FPS prepayment edits screen individual claims to automatically deny  payments that violate Medicare rules or policies. For example, some FPS  edits deny claims that exceed coverage utilization limits for a service.  FPS edits do not analyze individual claims to automatically deny  payments based on risk alone or the likelihood that they are fraudulent.  According to CMS officials, the agency does not have the authority to use  FPS to automatically deny individual claims based on risk without further  evidence confirming that the claims are potentially fraudulent.

Although the prepayment edits in FPS are functionally similar to those in  CMS’s claims processing systems, the FPS edits specifically target  payments associated with potential fraud schemes. Like edits executed  elsewhere in the claims processing systems, FPS edits deny payments  based on rules or policies. Unlike the edits in the claims processing  systems, all of the edits in FPS are designed to address identified  payment vulnerabilities associated with potential fraud, according to CMS  officials. Payment vulnerabilities are service- or system-specific  weaknesses that can lead to improper payments, including improper  payments that may be due to fraud. For example, CMS implemented an  FPS edit that denies physician claims that improperly increase payments  by misidentifying the location that the service was rendered. The  payments are denied based on the rule that physician claims must  correctly identify the place of service. The edit helped address a payment  vulnerability identified by HHS OIG that found millions of dollars in  overpayments.

According to CMS officials, the advantage of using FPS to implement  prepayment edits is that the system allows CMS to prioritize edits  intended to address payment vulnerabilities associated with potential  fraud. Because CPI maintains FPS, CMS can quickly implement edits into  FPS. In contrast, edits that are implemented in the claims processing  systems are queued as part of quarterly system updates, and may need  to compete with other claims processing system updates. CPI is not  subject to such limitations when implementing edits in FPS, and officials  said that edits can be developed and implemented in FPS more quickly  compared to the claims processing systems.

As of May 2017, CMS had implemented 24 edits in FPS. CMS reported  that in fiscal year 2015, FPS edits denied nearly 169,000 claims and  saved $11.3 million. In fiscal year 2016, the edits denied nearly 324,000  claims and saved $20.4 million. CMS officials stated that the number of  prepayment edits implemented in FPS thus far has been limited, but that  the agency is taking steps to address certain challenges that would allow  the agency to develop and implement edits more quickly. For example,  because of their role and expertise in processing claims, the MACs  advise CPI and help develop and test FPS edits before they are  implemented in the system to ensure they will work as intended.  However, CPI has been limited in the amount of MAC resources that it  can engage to help develop FPS edits under existing contracts.  According to officials, CPI is planning to take steps to more directly  involve the MACs in FPS edit development, which officials said should  accelerate the edit implementation process. Additionally, CMS officials  said that they plan to utilize FPS functionality to implement new edits by  expanding existing edits to apply to other services. All of the 24 current  FPS edits were developed from the ground up, a time and resource  consuming process, according to CMS officials. In contrast, developing  new edits by expanding existing edits will allow CMS to more quickly  develop and implement new edits.

section_title: Participants Reported That HFPP Efforts Furthered Their Ability to Address Health Care Fraud
subsections: section_title: Participants Reported That Information Sharing through HFPP Furthered Efforts to Address Fraud
paragraphs: HFPP participants we interviewed, including CMS officials, reported that  sharing data and information within HFPP has been useful to their efforts  to address health care fraud. The principal activity of HFPP is generating  studies that pool and analyze multiple payers’ claims data to identify  providers with patterns of suspect billing across multiple payers. Study  topics examine known fraud vulnerabilities important to the participating  payers and are selected through a collaborative process. As an example,  one study used pooled data to identify providers who were cumulatively  billing multiple payers for more services than could reasonably be  rendered in a single day. In another study, HFPP pooled payer  information on billing codes that are frequently misused by providers  engaged in potential fraud, such as codes commonly used to  misrepresent non-covered services as covered. See table 4 for a  description of HFPP’s completed studies as of May 2017.

Participants reported that HFPP’s studies helped them to identify and  take action against potentially fraudulent providers that would otherwise  have gone unidentified. For instance, both public and private payers  reported that HFPP’s non-operational providers report uncovered  providers that they had not previously identified as suspect. CMS officials  and one private payer we interviewed said that they used information  from this study to conduct site visits of reportedly non-operational  providers. CMS officials told us that they revoked a number of the  providers after confirming that they were indeed non-operational. CMS  officials also said that they review the results of HFPP studies and  provide information on potentially fraudulent providers to ZPICs when  appropriate. The information may either serve as new leads or help  support existing investigations.

Participants also reported that study results have helped them uncover  payment vulnerabilities of which they might not otherwise have been  aware. For example, CMS officials stated that they used the HFFP report  on misused procedure codes to evaluate several Medicare payment  vulnerabilities and then implemented edits to address them. In instances  where participants reported that HFPP studies revealed suspect providers  or schemes that were known to them, participants stated that HFPP study  results helped them to confirm suspicions, better assess potential  exposure, and prioritize and develop internal investigations.

Several participants we interviewed noted that even though HFPP study  results can help them identify suspect providers, they may still face  challenges using the information to take corrective actions. HFPP  participation rules require payers to examine their internal data and  claims to investigate and build cases against suspect providers before  taking any corrective actions, partly in order to minimize the risk of payers  taking action on false positive study results. For certain types of fraud  schemes, however, the participants’ internal information alone may not  provide enough evidence of improper billing. For instance, although an  HFPP study may reveal clear evidence that a provider is billing multiple  payers for an unreasonable number of services in a single day, the  provider may have only billed individual payers for a limited, reasonable  number of services.

Participants reported that HFPP has also facilitated both formal and  informal information sharing among payers, and indicated that it has  helped them learn about fraud vulnerabilities and strategies for effectively  addressing them. Formal information sharing includes presentations at  HFPP meetings and a whitepaper on how payers can help address  beneficiary opioid abuse and reduce opioid-related fraud. HFPP also  manages a web portal where participants can share individual best  practices and post “fraud alerts” about emerging fraud schemes or  suspect providers. Informal information sharing includes knowledge  exchanged through the networking and collaboration that occurs among  HFPP participants, both at in-person HFPP meetings and through  collaboration that occurs via the web portal’s participant directory.

section_title: HFPP Addressed Initial Data Sharing Concerns and Is Pursuing a New Data Sharing Strategy to Further Participants’ Ability to Address Fraud
paragraphs: Although HFPP began operations in 2012, participants we interviewed  stated that much of the initial work of the partnership involved negotiating  the logistics for collecting and storing participants’ claims data. CMS  contracts with a trusted third party (TTP) entity to administer HFPP. The  TTP consolidates, secures, and confidentially maintains the claims data  shared by participants, and conducts studies that analyze the pooled data  to identify potential fraud across payers. According to several participants  we interviewed, some payers were initially reluctant to share claims data  with the TTP because claims contain sensitive provider and beneficiary  information and private payers may view them as proprietary.  Accordingly, it took time for the TTP to demonstrate to payers its ability to  securely store and use pooled claims data. Payers’ reluctance resulted in  an early time- and resource-intensive data sharing strategy that relied  upon payers submitting a limited amount of claims data on a study-by- study basis, in a particular format, stripped of beneficiaries’ personally  identifiable information and protected health information.

Recently, HFPP began to pursue a new data sharing strategy. According  to the TTP and participants we interviewed, payers will send in  generalized data, reducing the data sharing burden on payers and  enabling HFPP to conduct new types of studies to combat fraud. The data  can be submitted in various formats, relieving payers from the need to  extract and clean study-specific data. All participant data will be pooled  and stored, and multiple studies will be run on the data submitted. Payers  may voluntarily submit data that includes beneficiaries’ personally  identifiable information and protected health information. According to  CMS officials, collection of personally identifiable information and  protected health information will allow HFPP to conduct studies that  involve identifying beneficiaries across payers, such as studies examining  fraud schemes in which multiple providers fraudulently bill for the same  beneficiaries.

Several HFPP participants we spoke with indicated their support of the  new strategy and willingness to provide beneficiaries’ personally  identifiable information and protected health information for more in-depth  HFPP studies. As of May 2017, 38 partners had signed data sharing  agreements with the new TTP. However, not all payers that previously  shared claims data have agreed to participate in the new data sharing  strategy and those payers are still working with the TTP to formalize  agreements regarding how their claims data will be stored and used.

section_title: Agency Comments
paragraphs: GAO provided a draft of this report to HHS. HHS provided technical  comments, which GAO incorporated as appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Health  and Human Services, the Administrator of CMS, appropriate  congressional requesters, and other interested parties. In addition, the  report will be available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-7114 or at kingk@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff that made key contributions to this  report are listed in appendix I.

section_title: Appendix I: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Martin T. Gahart (Assistant  Director), Michael Erhardt (Analyst-in-Charge), Muriel Brown, Cathleen  Hamann, Colbie Holderness, and Jennifer Whitworth made key  contributions to this report.

Fast facts: The Centers for Medicare & Medicaid Services has an IT system—the Fraud Prevention System— that analyzes claims to identify health care providers with suspect billing patterns. Program integrity contractors get leads from the system to pursue fraud investigations.

We found that the system accounted for about 20 percent of CMS's fraud investigations in fiscal years 2015 and 2016. It also helped the contractors identify leads and triage them faster (shown below).

The system also uses automated controls that identify payments associated with potential fraud and deny claims that violate Medicare rules or policies before the claims are paid.

Question-summary annotations: questions: question: What claims for payment does FPS deny?
answer: FPS denies individual claims for payment that violate Medicare rules or policies through prepayment edits—automated controls that compare claims against Medicare requirements in order to approve or deny claims.
child_questions: question: What do these prepayment edits target?
answer: FPS prepayment edits specifically target payments associated with potential fraud. For example, an FPS edit denies physician claims that improperly increase payments by misidentifying the place that the service was rendered, which helped address a payment vulnerability associated with millions in overpayments.

question: How are claims analyzed?
answer: FPS edits do not analyze individual claims to automatically deny them based on risk alone or the likelihood that they are fraudulent without further investigation.

question: How was this process effective in 2017?
answer: As of May 2017, CMS had implemented 24 edits in FPS. CMS reported that FPS edits denied nearly 324,000 claims and saved more than $20.4 million in fiscal year 2016.

questions: question: What is the HFPP?
answer: The Healthcare Fraud Prevention Partnership (HFPP) is a public-private partnership that began in 2012 with the aim of facilitating collaboration among health care payers to address health care fraud.
child_questions: question: How has the HFPP benefited participants?
answer: The HFPP had 79 participants as of June 2017. Participants, including CMS officials, stated that sharing data and information within HFPP has been useful to their efforts to address health care fraud.

question: What does the HFPP do?
answer: HFPP conducts studies that pool and analyze multiple payers' claims data to identify providers with patterns of suspect billing across payers.
child_questions: question: How are such studies useful?
answer: Participants reported that HFPP's studies helped them to identify and take action against potentially fraudulent providers and payment vulnerabilities of which they might not otherwise have been aware. For example, one study identified providers who were cumulatively billing multiple payers for more services than could reasonably be rendered in a single day. Participants also stated that HFPP has fostered both formal and informal information sharing among payers.

questions: question: Why does CMS analyze Medicare fee-for-service claims data?
answer: CMS analyzes Medicare fee-for-service claims data to further its program integrity activities.
child_questions: question: How does the CMS analyze Medicare claims data?
answer: In 2011, CMS implemented a data analytic system called FPS to develop leads for fraud investigations conducted by CMS program integrity contractors and to deny improper payments.  In developing leads, FPS is intended to help CMS avoid improper payment costs by enabling quicker investigations and more timely corrective actions.

question: Why did CMS establish the HFPP in 2012?
answer: Additionally, in 2012, CMS helped establish the HFPP to collaborate with other health care payers to address health care fraud.
child_questions: question: What is the purpose of the HFPP?
answer: One of the key activities of the HFPP is to analyze claims data that are pooled from multiple payers, including private payers and Medicare.

questions: question: What was GAO asked to review?
answer: GAO was asked to review CMS's use of FPS and the activities of the HFPP.

question: What does this report examine?
answer: This report examines 1) CMS's use of FPS to identify and investigate providers suspected of potential fraud, 2) the types of payments that have been denied by FPS, and 3) HFPP efforts to further CMS's and payers' ability to address health care fraud.
child_questions: question: How did GAO Collect data for this report?
answer: GAO reviewed CMS documents, including reports to Congress on FPS, contractor statements of work, and information technology system user guides, and obtained fiscal year 2015 and 2016 data on FPS fraud investigations and claim denials. GAO also interviewed CMS officials and CMS program integrity contractors regarding how they use FPS, and a non-generalizable selection of HFPP participants regarding information and data sharing practices, and anti-fraud collaboration efforts.