“[T]he Affordable Care Act may help encourage States to be more aggressive in rooting out fraud and overpayments.”   Dr. Peter Budetti, JD, Director, CMS Center for Program Integrity

With Medicaid Integrity Contractors (MICs), Medicaid Fraud Control Units (MFCU), state attorneys general, and countless False Claims Act whistleblowers, there is certainly no shortage of people and government agencies engaged in aggressive Medicaid fraud enforcement.  Apparently, however, more is needed.  The Affordable Care Act (ACA) has enlisted state Medicaid agencies in this effort by giving them a powerful financial incentive to be even more aggressive in recovering overpayments, fraudulent or otherwise, and the federal Centers for Medicare & Medicaid Services (CMS) is providing state Medicaid agencies with new tools with which to carry out this mission.

Medicaid is a jointly funded Federal-State program under which each state designs and administers its own plan. Federal financial participation (FFP) is available to a state as long as the state’s Medicaid program complies with federal requirements.

Section 6506, a relatively obscure provision in the ACA, extended the time limit from 60 days to one year for states to recover overpayments from providers, and return the corresponding FFP to CMS.  Shortly after the enactment of the ACA, CMS sent State Medicaid Directors a letter providing "initial guidance on Section 6506."  Final Rules implementing § 6506 were adopted on May 29, 2012.

In testimony to a House subcommittee, Peter Budetti, Director of CMS’ Center for Program Integrity (CPI), articulated the reason for this extension of time: “CMS appreciates this new flexibility [§ 6506 gives to] States.  The additional time provided under the Affordable Care Act may help encourage States to be more aggressive in rooting out fraud and overpayments.”  The not so subtle message here is (1) that because the states have been given this additional time, there is no longer any excuse for failing to recover overpayments from providers; and (2) the FFP portion of any overpayments will be returned to the federal government, either from funds recouped from providers or from the state treasury.  And if any state failed to get the message, it is being delivered personally by the Office of Inspector General and/or CMS.  Increasingly, state Medicaid agencies are being told by OIG/CMS that they have misinterpreted federal law in paying claims, resulting in overpayments to providers. In such instances, the states have acted quickly to recoup the overpayments from the providers within the one-year deadline to ensure that the appropriate FFP is not repaid by the state treasury. 

In addition, as I’ve discussed previously, CPI has implemented data mining/data matching systems to detect improper Medicare claims: the Fraud Prevention System (FPS), which screens Medicare fee-for-service claims prior to payment in order to identify suspicious billing patterns; and the Automated Provider Screening (APS) system to identify ineligible providers prior to enrollment or revalidation. In testimony before a Senate subcommittee, the Director of CPI testified that CMS hopes to adapt these systems for use in the Medicaid program:

CMS is evaluating many of the tools used in Medicare for opportunities to transfer the knowledge and lessons learned to the Medicaid program. Specifically, CMS is evaluating the use of the twin pillars, FPS and APS, on State data. CMS is also actively pursuing ways to apply advanced data analytics technology, including predictive analytics, to the Medicaid program. 

Several states, such as North Carolina, Virginia, and Massachusetts have already implemented their own systems using software intended to detect suspicious billing behaviors. 

As I will discuss in a forthcoming posting, however, before extending these systems to Medicaid, CMS must first satisfy Congress that the FPS and APS systems are effective against Medicare fraud.