Chapter 19
Program Safeguards

19.1 Overview

This section contains information on various programs conducted by HGSAdministrators to safeguard Medicare program funds. These programs range from focused medical reviews to investigations of potentially abusive or fraudulent activities.

HGSAdministrators cooperates closely with the government to detect fraud and abuse and to prosecute illegal acts when necessary.

19.2 Focused Medical Review

In 1993, the Health Care Financing Administration implemented the Focused Medical Review program (FMR) in which Medicare carriers provide a targeted medical review of those items, services, and providers that present the greatest risk of inappropriate Medicare part B program payment. The primary goal of Focused Medical Review is to educate the provider community about the Medicare Part B program.

Through Focused Medical Review, carriers identify procedures which are reported at a higher volume or reimbursed with a larger percentage of dollars when compared to national data supplied by the Health Care Financing Administration. These procedures are then defined as aberrant. When aberrancies have been identified, educational letters are sent to the identified providers. To increase the educational efforts, articles clarifying Medicare's medical policy and correct reporting of these procedures are published quarterly in our Medicare Report.

In situations where aberrancies have resulted in overpayments to the provider, a refund may also be requested.

The Focused Medical Review has improved protection of the Medicare Program, enhanced cost-effectiveness in medical reviews, and decreased in the provider "hassle-factor" through decreased denial rates .


19.3 Medical Reviews

a. Purpose

The predominant purpose of medical reviews is the protection of the Medicare Trust Fund to ensure that the program remains fiscally viable for present and future generations. Section 1842 (a)(2)(B) of the Social Security Act requires carriers to apply "safeguards against unnecessary utilization of services furnished by providers" and conduct prepayment and postpayment reviews to identify inappropriate, medically unnecessary or excessive services, and to take actions where questionable practice patterns are found.


b. Process Summary

Both prepayment and postpayment medical review utilizes the same set of medical policies. Claims received on a prepayment basis are processed, in part, on the assumption that provider integrity results in the reporting of correct information on the claim. This claim data must be supported by medical documentation contained in the provider’s patient files, and must be made available upon request by the carrier. This documentation is further confirmed through the retrospective review of supplemental patient information.

The key elements of the medical review process are as follows:

Sources of identification of potential areas of misutilization and/or abusive billing practices include carrier data analysis, Medicare fraud and abuse alerts, the carrier medical review staff, the Carrier Medical Director, HCFA, OIG, provider professional relations staff, and other external referrals.

 c. Comprehensive Medical Reviews

Postpayment medical review of a provider is conducted through a process called a Comprehensive Medical Review (CMR) which is outlined in section 7510 of the Medicare Carrier’s Manual. In the absence of unusual circumstances, e.g. possible fraud, CMR’s originate from the suspicion that the physician/provider has an abusive/aberrant "practice patter." Focusing on the provider’s entire practice is the first step in the identification process. Specific issues/codes are further defined for concentrated review efforts. A thorough analysis is conducted on a sample of processed claims and all pertinent data such as medical records and beneficiary payment history for a selected provider is considered.

Postpayment pattern or practice comparisons are made based upon the provider’s unique physician identification number (UPIN) and individual provider identification numbers (PIN) for nonphysicians. Physicians and suppliers selected for a CMR are chosen because they exceed established norms within their specialty and locality, submit claims that resemble patterns on Medicare’s alert list of abuses, or exhibit other abnormal patterns of practice.

Beneficiaries are systematically identified according to the suspected abuses within the physicians’ practice. Medical records and any other supporting documentation are requested from the provider for a specific timeframe. Once the information is received, the claims and medical record documentation are reviewed. The Medicare Carriers Manual guidelines and local medical review policy in effect at the time of payment are used as a basis to determine whether the items/services were medically necessary and whether the documentation supports the level of the service being billed. Internal medical review staff, the Carrier Medical Director and other physician consultants, as necessary, review the claims and documentation.

Upon completion of the CMR, the provider is notified of the results of the review. If the claims and corresponding medical records substantiate the item/service billed, the case is closed and the provider is notified. If corrective action is required, it must be initiated within 12 months of the date that the provider was selected for review. Provider education and recoupment of any identified overpayments are the most common corrective actions. Overpayments would be requested when review of the medical records indicate that the services were not medically necessary, the level of care was not justified by the documentation, or the frequency of services rendered was not appropriate. Other forms of corrective action may include development of prepayment screens or referral to the fraud unit if fraudulent issues are suspected.

A follow-up analysis is conducted on each provider reviewed within six to twelve months to determine whether additional corrective actions are warranted. Providers are monitored until there is evidence that the utilization problem has been corrected.

19.4 Office of the Inspector General

The Office of Inspector General (OIG) was established by law as an independent and objective oversight unit of the Department of Health and Human Services (HHS) to carry out the mission of promoting economy, efficiency and effectiveness through the elimination of waste, abuse and fraud. In furtherance of this mission, the organization engages in a number of activities for maintaining public confidence in the Medicare Program. These include:

The Office of Investigations within the OIG is staffed with professional criminal investigators and is responsible for all HHS criminal investigations, including Medicare fraud.

19.5 Benefit Integrity Unit

The opportunity for fraud and abuse is great because of the size of the Medicare Program, which provides reimbursement for health care services for millions of beneficiaries and involves thousands of physicians and other providers of health care services. Sections 1128, 1128A and 1128B of the Social Security Act provides for penalties for persons perpetuating fraud or misrepresenting services to illegally obtain payment from the Medicare Program. Section 14000 of the Medicare Carriers Manual (MCM) provides instruction for the processing of fraud and abuse complaints.

The Benefits Integrity Unit has the responsibility within HGSAdministrators for preventing, detecting, and deterring Medicare fraud and abuse. The Benefits Integrity Unit works closely with a number of different public organizations and government agencies as well as other internal departments. Complaints and allegations of fraud may come from these sources, as well as beneficiaries and/or their representatives, and providers.

The Benefits and Integrity Unit:

a. What is Fraud?

Fraud is the intentional deception or misrepresentation that an individual knows to be false or does not believe to be true and makes, knowing that the deception could result in some unauthorized benefit to himself/herself or some other person. The most frequent kind of fraud arises from a false statement or misrepresentation made, or caused to be made, that is material to entitlement or payment under the Medicare Program. The violator may be a health care provider, an employee of a medicalprovider, a beneficiary, or some other person or business entity.

Examples of fraud are:

b.What is Abuse?

The term ’abuse’ describes incidents or practices of providers that are inconsistent with accepted sound medical
practice. Abuse may directly or indirectly result in unnecessary costs to the program, improper reimbursement, or program reimbursement for services that fail to meet professionally recognized standards of care or which are
medically unnecessary. The type of abuse to which Medicare is most vulnerable is overutilization of medical and health care services. Such overutilization occurs when a patient receives services that are not medically necessary or reasonable. Abuse takes such forms as, but is not limited to:

Although these types of practices may initially be categorized as abusive in nature, under certain circumstances, they may develop into fraud.

c. Recognizing Fraud and Abuse

Signs of potential fraud/abuse include but are not limited to, the following: