HCFA emphasizes proactive abuse probes

National objectives’ to come for intermediaries

The Health Care Financing Administration says it plans to develop "specific national objectives" for the internal fraud squads of Medicare fiscal intermediaries.

The announcement came in response to a scalding report from the Office of Inspector General (OIG) criticizing the fraud units of the private fiscal intermediaries used to process Medicare payments for not initiating efforts to identify holes in the system that could leave the claims processing system open to fraud.

While HCFA says it "emphasizes the importance of doing proactive work," half of all the fraud units at Medicare’s fiscal intermediaries failed to open any new fraud investigations during 1996, the OIG said in its Dec. 2 report.

Of the 4,008 cases being investigated by Medicare intermediaries, only 5% (184) were opened as a result of "proactive case development," the OIG reported. "Furthermore, the fraud unit opening the largest number of proactive cases (97) was responsible for more than half the national total," notes the report.

"Rarely did the size of the fiscal intermediary, or the resources of the fraud control unit, correlate to the number of cases opened proactively," found the OIG. For example, "half the large, medium and small fraud units had no such cases, and one small fraud unit had seven" such cases.

Key congressional figures are reported to be outraged at the OIG’s findings. Sen. Charles Grassley (R-IA), chairman of the Senate Special Committee on Aging, for instance, calls this lack of investigative initiative "unacceptable. It especially disturbs me that half of the fraud units didn’t proactively identify fraud and simply took complaints as they came in," says Grassley. "If some of [the fraud units] aren’t doing their job, the taxpayers have little assurance of a fraud-free Medicare system."

Indeed, while identification of program vulnerabilities is the first item on the official list of fraud unit responsibilities in the Medicare Intermediary Manual, "39% of fraud units [16 of 41] did not identify any [vulnerabilities]," the OIG said in its report. In addition, while "fraud units are required to keep track of identified program vulnerabilities . . . at least one fraud unit that [did] identify vulnerabilities had to rely on memory to describe them."

Bottom line: This lack of action and follow-through probably means most of these fraud investigation units are not doing the job they were designed to do, sums up the OIG report.

Even through HCFA currently conducts performance evaluations of its various fraud units, the OIG is recommending the agency shore up its monitoring and oversight of these contractors’ efforts to identify fraud and abuse. HCFA officials, in turn, say the agency plans to develop a specific set of national objectives intermediaries must implement and then to design a new management information system to help track and achieve these objectives.

Of the 61 program vulnerabilities the fraud units did identify, 52% "seemed to be systematic problems that make the Medicare program vulnerable to abuse, such as loose guidelines that promote inappropriate billing for a service," the OIG said.

Another 41% were described as "instances of wrongdoing," such as billing a noncovered service as a covered service. The report also notes that "key words and terms related to fraud unit work vary in meaning . . . hindering HCFA’s ability to interpret fraud data and measure fraud unit performance."

The report is based on a fiscal year 1996 survey of the 41 fiscal intermediaries contracted by HCFA to process Medicare payments. These intermediaries process 75% of Medicare payments. Since 1993, HCFA has required all intermediaries and carriers to have distinct units to detect and deter Medicare fraud.

But before HCFA’s initiatives get off the ground, they apparently will face aggressive questioning in the U.S. Senate.

Sen. William Roth (R-DE), chairman of the Senate Finance Committee, is not happy with the way the agency is doing its job, and he says he plans to hold "vigorous" oversight hearings of the agency in the coming months.

Roth is particularly upset with what he calls "serious setbacks" in implementation of the Medicare+Choice program, saying he believes "HCFA is undermining our efforts to create this new program."

Specially, Roth is concerned that HCFA is making the Medicare+Choice rules so difficult to follow that managed care plans are reluctant to participate. "It has become clear that there may be a conflict of interest that creates some bias at HCFA against reforming the Medicare program to permit private managed care plans to compete with the traditional fee-for-service program," says Roth.