Health Affairs

Eliminating Fraud and Abuse

Bethesda, MD -- A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation focuses on efforts to combat a longstanding challenge: fraud and abuse in health care. These issues constitute compelling problems for the Medicare and Medicaid programs, with related costs of $98 billion last year.

Just last week, the federal government and health insurers announced a new partnership to work together to reduce health care fraud and abuse. And in recent months, the Centers for Medicare and Medicaid Services (CMS) has adopted new antifraud and abuse tools authorized by provisions in the Affordable Care Act and the Small Business Jobs Act of 2010. Use of these tools will enable CMS, whose contractors process millions of claims and thousands of enrollment applications every business day, to better identify fraudulent claims and suspicious providers and suppliers before--not after--they enter the programs' payment and provider systems. This new approach is a paradigm shift from the earlier "pay and chase" model CMS used for many years.

Topics covered in the brief include:

• Descriptions of the new tools. CMS and its contractors now employ an advanced analytics fraud prevention system to flag suspicious claims, and a provider screening program to check licenses, verify identification, and provide cross-state database checks.
  
  
• What's controversial about the renewed fraud and abuse crackdown? Some critics have pointed to overzealous investigators, who are paid by a contingency fee arrangement with CMS, and who are said to focus on punishing providers for technical mistakes rather than fraudulent acts. Federal oversight authorities have also criticized CMS on the ground that there is a lack of coordination among antifraud programs and that audits can be duplicative.
  
  
• Will the latest crackdowns work? In fiscal year 2011 CMS reported $4.1 billion was recovered, the highest recovery amount in a single year, but the Government Accountability Office reported in 2012 that CMS had not followed through on some antifraud initiatives it had adopted. Time and more sophisticated analytics may be needed before significant progress becomes a reality.

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.