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  • Medicare's Newest Fraud Prevention Tool is Paying Off

    The use of predictive analytics—the same kind of technology credit card companies use to spot questionable spending activities—has enabled the US Centers for Medicare and Medicaid Services (CMS) to recover or prevent more than $210 million in improper payments in 2013. The savings are nearly double the amount identified during the previous year using the system, according to a report issued in June (.pdf).

    According to CMS, the "predictive algorithms and other sophisticated analytics" that are now run nationwide against all Medicare fee-for-service claims are doing a good job of identifying fraudulent billing before payment is made. The process, called the Fraud Prevention System (FPS), is helping to move the agency away from heavy reliance on the "pay and chase" model that has met with mixed success.

    The technology is analogous to the processes used by credit card companies to identify potential fraud. CMS monitors which Medicare identification numbers are used and by who (similar to tracking credit card charges made in one location when the cardholder lives far away from the place of purchase), billing frequency that is outside the norms (similar to flagging excessive credit card charges made in a short amount of time), patterns of billing (similar to credit card charges that echo patterns of known bad actors), and links between a provider and other known bad actors (similar to monitoring certain addresses for credit card charges).

    CMS adopted the technology in 2011 as required by the Small Business Jobs Act of 2010. In its first full year of operation, the system produced a 3:1 return on investment. Last year, that ratio jumped to 5:1.

    "The majority of health care providers enrolled in Medicare are honest, reliable business partners," CMS states in the report. "The FPS, as currently implemented, is not designed to flag transactions from this sort of provider; rather, the FPS is geared towards discovering egregiously improper patterns of billing–often amounting to fraud."

    APTA is helping physical therapists (PTs) understand regulations and payment systems through its Integrity in Practice campaign that puts them in touch with tools and resources to promote evidence-based practice, ethics, and professionalism.

    Check out the latest addition to the Integrity in Practice webpage: Preventing Fraud, Abuse, and Waste: A Primer for Physical Therapists (.pdf) is a free guide that examines not only the laws around these issues but the ways in which PTs can avoid fraud, abuse, and waste with payers, referral sources, and patients.

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