CMS Considers Mandating Fraud Reporting By Medicare Advantage Plans

The Centers for Medicare & Medicaid Services (CMS) is ratcheting up its efforts to have Medicare Advantage (MA) organizations take more aggressive actions to combat fraud and abuse. These efforts come on the heels of a recent study by the Department of Health and Human Services Office of Inspector General (OIG) examining the vigilance of MA organizations (also known as Part C insurers) in identifying fraud and abuse.1

Accordingly, it is imperative for MA organizations to reassess the effectiveness of their compliance programs to detect and prevent fraud and abuse. The reassessment should include evaluating the effectiveness of methods used to identify suspicious claims. Such methods include claims monitoring, prepayment reviews, screening software, hotlines and complaint monitoring. Those organizations relying solely on hotlines and complaints should consider employing other methods; the OIG study found hotlines and complaints were the least effective identification methods.

CMS requires MA organizations to have compliance plans that include measures to detect, correct and prevent fraud, waste and abuse.2 In addition, compliance plans must include procedures for ensuring prompt responses to detected fraud and abuse, such as conducting timely inquiries, initiating corrective actions (e.g., repayment of overpayments) and voluntarily self-reporting fraud and abuse to CMS. The need for effective compliance plans is critical given that the MA program accounts for almost one-quarter of the more than $500 billion in total Medicare benefit payments. Fraud in the MA program is estimated to be involved in 11 percent of payments.

Fraud and abuse may be committed by MA organizations themselves, within their networks of contracted providers or by beneficiaries. These are some examples of fraud and abuse:

An MA organization engages in improper marketing and enrollment practices, such as misrepresenting covered benefits to prospective enrollees, or denies payment for Medicare-approved treatment. A contracted provider undertreats patients or uses improper coding. A beneficiary misrepresents eligibility information to obtain services or stockpiles medications. The OIG study found, while all MA organizations included in the study had compliance plans, the volume of potential fraud and abuse incidents identified by organizations varied significantly. Nineteen percent of MA organizations did not identify any potential fraud and abuse incidents related to their...

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