Alert: July Marks New CMS Fraud Detection Technology

Health Care Industry Alert - June 2011

Effective July 1, the Centers for Medicare & Medicaid Services (CMS) will use new predictive modeling technology that analyzes multiple data points (including point of service, provider and beneficiary) to help identify questionable trends and patterns. Once a data point is triggered, the predictive modeling system will generate an alert directing CMS to withhold payment until further review. We expect implementation of the new technology to diminish CMS recovery acts aimed at recouping payments made on claims to providers, in some cases causing claim payments to be delayed or even denied.

So what will this mean for providers? Providers can expect greater delays in receiving payments on submitted claims. The algorithm’s complexity and sensitivity can lead to faulty alerts, which will stop a payment until further information is received. While CMS did not publish the details of the software algorithms, it is reasonable to presume that current CMS/RAC guidelines for post-payment audits will be used to reduce or eliminate payments on unsubstantiated claims. Remember, CMS’s goal is to refuse payment rather than recoup payment on submissions that do not comply with current regulations. Active diagnosis, duration of care provided, and RUG-level captured are expected to be critical elements in this analysis.

We encourage facilities to hold conversations with their software vendors to assess what modifications the vendors have made to assist with tracking anticipated payment inquiries as of July 1, 2011. In the absence of software, assess your paper tracking tools and processes and determine who within your facility will be monitoring claims submitted. Be prepared to bolster your process for “claims denial,” and expect delays for claims that were formerly paid following the initial submission. You may require additional labor to gather the documentation needed to support the submitted claim.

It’s fair to say that, given the extent of recent CMS commentary in the document “Medicare Program, Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Disclosures of Ownership and Additional Disclosable Parties Information,” therapy trends will be closely scrutinized by predictive modeling software. For example, consider the noteworthy rise in higher RUG levels in SNF billing since the advent of the MDS 3.0. Providers should determine the extent to which their rehab care delivery models have changed since the advent of MDS 3.0.

Additional questions to consider include: Are you billing for more group therapy since the MDS 3.0? Have you seen an appreciable rise in RUG-level capture of the higher tiers? Have you conducted objective charting reviews to assess the defensibility of claims billed?