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Date: Tuesday, March 17, 1998
FOR IMMEDIATE RELEASE   
Contact: HCFA Press Office (202) 690-6145

MEDICARE TO HIRE SPECIAL ANTI-FRAUD CONTRACTORS

Announcement Highlights HCFA Conference on Fraud, Waste and Abuse

"We are determined to drive out the scam artists who are stealing from the health care of seniors and the disabled," said Shalala, who made the announcement at a Health Care Financing Administration Conference on Fraud, Waste and Abuse.

"Now we can hire special contractors to help us fight fraud. Fighting fraud and abuse is one of our highest priorities, and this is another important tool we need to succeed," said Shalala. "We set records for convictions, collections and kicking bad providers out of our programs in 1997, but we can and must do more."

Medicare alone saved more than $7.5 billion through anti-fraud and abuse efforts in fiscal 1997, and with its law enforcement partners returned another $1 billion to the Medicare Trust Fund. Efforts of the highly successful Operation Restore Trust anti-fraud program identified $23 in money owed back to the Trust Fund for every $1 spent on fraud detection and recoveries. Lessons learned in that pilot project are now being applied nationwide.

"We are extremely eager to start using these new anti-fraud contractors to further step up our fight against fraud, waste, and abuse," said Nancy-Ann Min DeParle, Administrator of HCFA, which runs Medicare. "These contractors will work together with our contractors who process claims, the HHS Inspector General, the Department of Justice, and our other partners in fighting fraud, waste and abuse."

Until now, only insurance companies whose primary responsibility is to process Medicare claims have been able to conduct audits, medical reviews, and other activities that attack waste, fraud and abuse. Under new authority provided by the Health Insurance Portability and Accountability Act, Medicare is expanding its contracting authority to include more firms from the private sector who can bring new energy and ideas to this essential task.

A new proposed regulation, on display at the Federal Register, sets parameters for specific activities that special anti-fraud contractors can undertake to protect Medicare and the taxpayers who fund it. These include:

• medical reviews, to ensure that services billed to Medicare were medically necessary;
• cost report audits, to ensure that Medicare only pays for services and overhead costs that it is legally supposed to pay;
• secondary payer determinations, to ensure that Medicare does not pay bills for Medicare beneficiaries that should be paid by another insurer;
• provider and beneficiary education about what can and cannot be billed to Medicare, and how to spot and report potential fraud and abuse; and
• establishing a list of durable medical equipment, such as wheelchairs, that will require prior authorization before being billed to Medicare.

There is a 60 day public comment period on the proposed regulation. Medicare expects to publish a final regulation and begin hiring these anti-fraud contractors as quickly as possible.

DeParle also announced at the conference that Medicare is stepping up efforts to address abuse of physician billing number reassignment. Physicians sometimes have a legitimate need to reassign billing numbers to clinics where they furnish care. However, reassignment can be a source of abuse, with bills submitted for care that is not provided or is inappropriate, and which the physician knows nothing about.

Targeted reviews of physicians in Florida with many reassignment arrangements revealed situations where reassignment was clearly being abused. Some clinics were submitting claims under billing numbers of physicians who had not worked at their clinic in more than two years. In other cases, claims were being submitted for care provided by a single physician in a single day from clinics that are hundreds of miles apart.

"Sen. Bob Graham and I personally visited clinics in Florida where we saw how this kind of abuse had to be stopped, and I am determined to do something about it," said DeParle.

DeParle is directing that targeted reviews of physicians with large numbers of reassignments be done nationwide. Medicare is evaluating whether it should limit the number of reassignments a physician can make or whether some other approach is necessary to deter abuse. In addition, Medicare is stepping up enforcement of existing rules requiring that physicians have information about what is billed in their names.

The Conference on Fraud, Waste and Abuse includes experts from across the country who will discuss other new ideas for fighting health care fraud and abuse.

"We need to keep working harder and smarter to catch criminals who try to stay one step ahead of every loophole we close and every scam we shut down," said DeParle. "This conference will help us learn how to build on our successes and develop a plan for doing even more to protect consumers and taxpayers from health care scams and unscrupulous providers."