Washington state using technology to go after improper payments
Washington state using technology to go after improper payments
Although Washington state may have less of a problem with Medicaid fraud than many other states, that hasn’t stopped state officials from signing a contract to implement what they believe is the most technologically advanced fraud and abuse detection system in the country. Aggressive recovery is expected to repay the $12 million cost of the system within one year, and the state’s contract with its vendor calls for a 5-1 return on the state’s investment.
"We believe it’s very important to beat the crowd on this," says Heidi Robbins Brown, manager of the fraud and abuse detection unit of the Washington Department of Health and Human Services. "Few states are ahead of us. Our vendor says no state is taking on this issue as comprehensively as we are."
Ms. Robbins Brown’s unit is located in the management services area of Health and Human Services, rather than in Medicaid operations. It reports to a steering committee, chaired by a deputy secretary, that includes the heads of each of the Medicaid operations areas and other relevant agency executives. The independence from operations reflects a belief that there is an inherent conflict when an agency’s payment system also is configured for detection of fraud and abuse. "Their goals are different," Ms. Robbins Brown says.
The department’s request for proposal (RFP) called for the vendor to:
1. provide targeted leads to enable the department staff to focus their time where there is likely to be the highest return on investment;
2. provide improved access to data and the technological resources necessary for staff to perform investigations on-line;
3. improve management of fraud and abuse and waste cases as well as related documents.
At the heart of the new system is a high-speed data warehouse to be loaded with three years of Medicaid Management Information System data configured for analysis and data-support purposes. Along with the data warehouse comes inquiry software, fraud and abuse detection software that uses rules-based algorithm filters, advanced fraud and abuse detection software to analyze payment patterns, and a strong case management system for follow-up. Algorithms that the vendor provides are to reflect known fraud, abuse, and waste practices including timed billing; hit-and-run scams; unbundling; double-billing; improbable procedure frequencies; mutually exclusive procedures; out-of-specialty billing; interdependent services; multiple new office visits; utilization comparison of providers with their peer group; and abuses in ambulances/transportation, podiatry, home health, nursing homes, laboratories, pharmacies, mental health, and durable medical equipment.
Although the system will be used only for Medicaid in the first two years, after that it will be turned loose on the social services payment system and may then move on to interdepartmental applications such as cross-checking worker’s compensation files with Medicaid. "There’s no end in sight for the number of data sets we can add to the data warehouse," Ms. Robbins Brown says.
The agency and Ms. Robbins Brown are determined to hit the ground running, and she wrote the RFP and the contract with that in mind. She says that being an attorney helped her get the terms she wanted in the contract. The RFP was issued at the beginning of the year, and a contract with HWT Inc. in Portland, ME, was signed March 31. HWT will work in conjunction with HNC Insurance Solution in Irvine, CA, on the system, that uses sophisticated mathematical techniques to find unusual billing structures and patterns across millions of claims.
Under Ms. Robbins Brown’s phased approach, within the first three months, the system must identify some "easily verifiable overpayment leads" — Ms. Robbins Brown calls them "slam dunk" cases — that will be taken to the Office of Financial Recovery to show some immediate success.
The contract allows the state to bail out after three months if it’s not satisfied with HWT’s performance in getting up and running, including this requirement.
Ms. Robbins Brown says that already an internal analyst has run some correct coding software against a group of 13 provider numbers that had been identified as outliers. The analyst found overpayments totaling $50,000, representing an error rate of 0.5%. Ms. Robbins Brown says that if the system can save 0.5% across all Medicaid payments, it will give the state $55 million. She points out that not all the cases found are the result of fraud. Many are simply incorrect or inappropriate billing situations that the system flags. So far, she says, 70% of the initial $50,000 in overpayments found has been returned to the state without dispute. "Providers are generally willing to work with the agency and acknowledge that they missed a code," Ms. Robbins Brown says. "We don’t want to ruffle feathers in the provider community unnecessarily, but we do have a duty to maintain payment integrity. We need to be sure that our findings are solid. We take very seriously our commitment to reduce the number of false positives."
Although the Medicaid operations staff have expressed some concern that Washington’s aggressive stance may lead to some providers dropping Medicaid, Ms. Robbins Brown stresses the state’s belief that most cases they handle reflect errors rather than fraud. In addition, she says a small percentage of medical service providers are responsible for most of the inappropriate billings; information from Kentucky indicates that less than 10% of the providers are responsible for more than 80% of the billing errors.
[Contact Ms. Robbins Brown at (360) 664-6052.]
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