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 Congressional Hearing Urges Medicare Providers To Model Credit Card Companies To Combat Fraud

​Congress encouraged the Centers for Medicare & Medicaid Services (CMS) to “work smarter” at combating Medicare fraud in a hearing that took place earlier on this week in the House Committee on Ways and Means.

“Last year, the federal government lost $124.7 billion dollars in improper payments across 124 programs. Of that $124 billion, one program accounted for $60 billion—or nearly half of the losses: Medicare,” said Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-Ill.) in his opening statement. “Each dollar we fail to secure from fraud and improper payment is a dollar that isn’t going to needed health care services for our seniors.”

Each year, Medicare loses billions of dollars through fraud and improper payments. Previously, CMS has used a “pay and chase” method for processing Medicare payments—the agency would first pay for a charge and then look back to check the validity of the transaction and recover the money if an improper payment was made. Fraudsters, either individuals such as health care professionals or networks that steal the identity of physicians or business owners to set up a sham corporation, got around this system by closing and reopening their scam operations under a new name.

The Fraud Prevention System (FPS) replaced this flawed system in 2010. Used by credit card companies, FPS uses cutting-edge predictive analytics technology to look at transaction data in real time and identify and stop potentially fraudulent charges before any money is exchanged.

Last year, the Office of Inspector General (OIG) reported that FPS had returned $1.34 for each dollar invested, totaling about $54.2 million in savings. Rep. Roskam partially praised this achievement but called the return “a drop in the bucket” compared to the $60 billion in wasted funds from Medicare programs last year.

Gary Cantrell, deputy inspector general for investigations, represented OIG at the hearing. He outlined partnerships with other governmental agencies, such as the Department of Justice, the Offices of U.S. Attorneys, and the Federal Bureau of Investigation. Cantrell also mentioned that OIG has international partners such as INTERPOL and the Bureau of Diplomatic Security. Lastly, OIG partners with private sectors such as private health insurance organizations and health care antifraud associations. He proposed that CMS should: restrict certain Part D beneficiaries to a limited number of pharmacies or prescribers, require Part C (Medicare Advantage) and Part D plan sponsors to report fraud and abuse incidents, encourage providers to meet face-to-face with home health care beneficiaries, and remove Social Security Numbers from Medicare cards.

Former CMS employee and current President and Chief Executive Officer of CF Health Advisors Charlene Frizzera suggested that greater attention should be given to the current rules and processes that CMS is required to operate under because these regulations prohibit the use of more advanced fraud detection systems and processes. For example, when she was at CMS’ Miami Regional Office, all suspected fraud cases had to be sent first to OIG for a decision on whether an investigation will occur. While waiting for the decision, CMS continued to pay for these questionable claims, she said.

“A simple change in the rules to expedite this process or freeze payments pending the OIG investigation could have saved months of fraudulent claims from being paid,” said Frizzera.

The credit card company Visa boasts a global fraud rate of six hundredths of a percent, or “six cents for every hundred dollars transacted,” said Senior Vice President of Risk Products and Business Intelligence Mark Nelsen, who detailed that his company’s analytics examine factors such as transaction history, geo-location, transaction velocity, and recent fraud.

“There is no silver bullet solution to protecting against fraud,” Nelsen said. “A layered approach that includes a combination of technology, processes, and people is required.”

Jackie Oberst is Provider’s managing editor. Email her at

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