Commercial carriers doing more audits

Florida carrier garners $458 million

Many Medicare carriers and contractors, still smarting from a recent Office of the Inspector General report criticizing them for not being "proactive" enough in investigating fraud and abuse, are gearing up to increase their audit activity.

For instance, Blue Cross and Blue Shield of Florida (BCBSF) — the parent company of Florida’s primary Medicare administrator, First Coast Service Options (FCSO) — recently reported it prevented or recovered over $458 million in Medicare fraud, waste, and abuse during the fiscal year ending Sept. 30, 1998. This is nearly a 15% increase over the $400 million in questionable payments it either identified or recovered the year before.

The $458 million in potential inappropriate payments included:

• $192 million identified through prepayment medical reviews;
• $99 million in unallowable provider costs recovered through retrospective financial audits;
• $44 million collected from retrospective medical audits of physicians and suppliers.

The biggest single source of questionable problem payments identified by Blue Cross and Blue Shield of Florida last year: $107 million in claims where Medicare was inappropriately billed or paid as the primary insurer.

These audits also produced some 50 cases of outright fraudulent or abusive billing activity, which BCBSF turned over to law enforcement officials for further investigation.

"We are feel we’re making significant progress in eliminating much of the blatant fraud, waste, and abuse in Florida’s Medicare program," says Patricia A. Williams, FCSO’s senior vice president and chief operating officer. "For every dollar we spent in safeguard efforts, we recovered $18."

Williams credits much of FCSO’s success in increasing its inappropriate payment recovery ratio to the installation of powerful computer programs capable of more precisely pinpointing both outright fraud and "wasteful activities" by identifying provider billing trends that seem inconsistent with bona fide Medicare claim profiles.

This new technology is needed because professional Medicare con artists have improved their own techniques beyond the old, less subtle method of simply billing for services that were never rendered or falsifying the Medicare provi der’s and/or beneficiary’s identity, Williams notes.

Increased scrutiny on medical necessity

"These days, we find more activity — and, in turn, focus more attention — on what seem to be suspicious instances of claims submitted for services that don’t meet Medicare guidelines or do not appear to be medically necessary," says Williams.

According to Karen Monson, director of benefits integrity for BCBSF and FCSO, both organizations use a claims review strategy that stresses closer scrutiny of claims before they are paid to identify potential instances of Medicare fraud, waste, and abuse.

FCSO’s prepayment review strategy focuses on the following areas:

Paying for the right service. This is done by paying closer attention to medical necessity to ensure payments are only issued for the medical care a beneficiary actually needed and received.

Paying for services on behalf of the right beneficiary. This ensures payments are only made to eligible beneficiaries.

• Paying the right provider. This ensures that payments are going to entities that are legitimate, act in a reasonable manner, and render quality care.

• Paying the right amount. This ensures accuracy of reimbursements by using correct fee schedule prices and properly applying deductible and coinsurance amounts.

Focusing on these four areas should allow the companies to keep ahead of anyone intending to challenge the integrity of the Medicare program, says Monson.