While there may be truth to the old saying that there are “lies, damn lies, and statistics,” the use of claims data to detect fraud in the health care industry has often been thought to be beyond reproach.  Data mining techniques and investigations that stem from billing anomalies have been the bread and butter of the federal government’s Medicare Fraud Strike Force; prosecutions that have arisen from claims data have resulted in significant prison sentences for those convicted of defrauding public health care programs and private insurers; and press releases issued by Department of Justice officials trumpet the importance of claims data in detecting, stopping, and recouping the losses that arise from cases involving health care fraud.

And yet, since just this past summer, a growing controversy has emerged about the reliability and utility of claims data in health care fraud investigations.  In fact, in the few short months since our prior blog post about testimony in which a representative of the United States Department of Health and Human Services candidly acknowledged significant shortcomings in the reliability of Medicaid claims data, the divide has grown only more stark between those who would use such data to launch investigations and conduct civil audits of health care providers, and those who question whether such reliance on potentially flawed data is appropriate, cost-effective and fair.  

Two recent developments underscore the opposing views that have emerged in this deepening and significant controversy.  On July 26, 2012, Attorney General Eric Holder was joined by Kathleen Sebelius, the Secretary of HHS, in touting the creation of a “National Fraud Prevention Partnership” by which private insurers and the federal government would share claims data to detect and pursue health care fraud.  The announcement of this new public/private partnership extolled the virtues of claims data in uncompromising terms.  Indeed, notwithstanding testimony just over a month earlier in which HHS Regional Director Ann Maxwell acknowledged that Medicaid claims data was seriously flawed, and despite withering criticism in a June 8, 2012 hearing before the House Energy and Commerce Committee  regarding the “Benefit Integrity Contractors” that are paid handsomely to utilize claims data for fraud detection on behalf of the Medicare and Medicaid programs, Secretary Sebelius stated that claims analysis has permitted the government to “take away the crooks’ head start,” and has “stopped, prevented, or identified millions in payments that should never have been made.”  Attorney General Holder spoke in similarly glowing terms about the utility of claims data, stating that, for over fifteen years, “the benefits of sharing claims and health care data across the public and private sectors [have been] clear.”    

Subsequently, on July 31, 2012 – just five days after Attorney General Holder and Secretary Sebelius’s announcement of the National Fraud Prevention Partnership and its anticipated utilization of claims data – Senators Hatch and Coburn of the Senate Finance Committee wrote a lengthy and strongly worded letter to Marilyn Tavenner, the Acting Administrator of the Centers for Medicare and Medicaid Services (“CMS”). In their letter, Senators Hatch and Coburn demanded a detailed accounting of the “Fraud Prevention System Program” (“FPS”), which they described as a “predictive analysis tool to reduce fraud, waste and abuse in the Medicare Program.”  Although acknowledging that the FPS “holds significant potential,” Senators Hatch and Coburn noted a “growing chorus of concerns from a wide range of credible entities who have expressed concerns about the FPS,” questioned whether the FPS will indeed be effective in reducing fraud and improper payments, and demanded that CMS address a range of issues, including why “CMS has not to date, been able to solely use FPS to stop any claims before they are paid.”  Further, Senators Hatch and Coburn referred to the recent announcement of the National Fraud Prevention Partnership by which the government and private insurers are to share data in order to detect and investigate health care fraud.  While expressing support for the uncontroversial goal of “revealing and halting scams that cut across a number of public and private payers,” Senators Hatch and Coburn did not express the same faith in claims analysis and data review that Mr. Holder and Ms. Sebelius had displayed only days earlier.  To the contrary, the senators demanded specific information about the National Fraud Prevention Partnership, the methodology it would use, and a description of the capabilities and criteria for the selection of any entity that would be asked to “integrate and analyze such a large amount of information.”  

What benefits, if any, have emerged from this seemingly partisan controversy between an administration that has supported the use of claims data to detect fraud and overbilling, and two Republican senators who have questioned its utility?  For practitioners and those who advise them in connection with potentially burdensome government audits, one benefit is found in the written response that Marilyn Tavenner of CMS provided to Senator Hatch on August 27, 2012.  In the course of discussing the National Fraud Prevention Partnership, Ms. Tavenner noted that CMS is “continually evaluating how our fraud prevention efforts affect providers and beneficiaries,” expressed her “commit[ment] to reducing the impact of auditing on providers,” and stated that CMS is “reviewing this issue across the agency to determine what changes will improve the process.”  If indeed CMS focuses its attentions on the burdens that providers face as a result of analytic tools and data that may be faulty, this alone would be a worthwhile result.  

As to whether any further benefits will flow from the controversy surrounding claims data, an answer may be coming soon.  By September 30, 2012, CMS is statutorily required to release a public report regarding the implementation of the Fraud Prevention System’s claims-based methodology, the results of its first year of use, and an analysis of any monetary savings that the program has brought about.  Growing questions regarding the government’s reliance on claims data should make this report of particular significance.  In fact, the forthcoming CMS report should be mandatory reading not just for Senator Hatch, Senator Coburn and their staffs.  Given the impact that the report may have upon the extent to which claims data alone can trigger lengthy, expensive, and burdensome audits and investigations, the report should be critical reading for health care providers and the counsel upon whom they rely.