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November-December 2010 St@teside

Increased Efforts at Combating Medicare and Medicaid Fraud and Abuse

The Obama Administration has taken several steps to increase efforts aimed at eliminating waste, fraud, and abuse within the health care system using new tools and resources that were included in the Patient Protection and Affordable Care Act (Affordable Care Act or ACA). The Centers for Medicare & Medicaid Services (CMS) released new rules to comport with the statute. Among those rules is a proposal for CMS to create enhanced screening procedures that would ensure “that only legitimate providers and suppliers are enrolled in Medicare, Medicaid and CHIP, and that only legitimate claims will be paid”[1] as well as a proposal for states to establish a Medicaid Recovery Audit Contractor (RAC) program.[2]
In an effort to ensure that only legitimate providers and suppliers enroll in the federal programs, on September 23, 2010, CMS released a proposed rule that would place all providers in one of three risk levels (limited, moderate, and high) and apply the most stringent requirements to the highest-risk group. The proposed rule also would authorize CMS and the states to impose moratoria on the enrollment of new providers when deemed necessary to protect against a high risk of fraud and would authorize the suspension of payments pending an investigation of a credible allegation of fraud. In addition, the rules also give guidance on the compliance program requirements included in the ACA.
According to proposed rules issued on November 10, 2010, the Medicaid RAC program would help reduce improper payments for Medicaid health care claims. Similar to the Medicare RAC program, the Medicaid RAC program would employ Medicaid RAC contractors to audit payments made to health care providers to identify and correct overpayments and underpayments. Payment for Medicaid RACs would be made on a contingency fee basis, whereby the fees are based on a percentage of the recovered payments and are equal to the highest Medicare RAC contingency fee rate. 
According to the proposed rule, a state can use its current administrative appeals process or modify it for Medicaid-related appeals. Medicaid RAC payments would be made after all appeals have been exhausted. States must establish Medicaid RAC programs by December 31, but the programs would not have to be fully implemented until April 1, 2011. Comments on the proposed rules are due January 10, 2011.
Other activities aimed at reducing fraud include the establishment of a joint task force between the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) in May 2009. The task force, known as the Health Care Fraud Prevention and Enforcement Action Team or Project HEAT, led to Medicare Fraud Strike Force operations taking place in seven health care fraud hot spots including Houston, Texas; Detroit, Michigan; Brooklyn, New York; Baton Rouge, Louisiana; and Tampa, Florida. The partnership that HEAT created led to improved collection of both Medicare and Medicaid claims. As a result, Medicaid claims data that used to be scattered among several databases belonging to different contractors will be combined in a single searchable database.[3]
Reflecting the Administration’s belief that the fight against Medicare fraud can be strengthened with increased involvement from seniors and Medicare beneficiaries, on Oct. 1, 2010, CMS announced the award of $9 million in grants to each state’s Senior Medicare Patrol (SMP) program.[4] SMP programs have been funded by HHS and the Administration on Aging to recruit and train retired professionals and other senior volunteers about how to recognize and report instances or patterns of health care fraud. 

[1] Health Insurance Programs; Additional Screening Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Suppliers Proposed Rule (75 Fed. Reg. 58238). Retrieved on Nov. 22, 2010 from
[2] Medicaid Program; Recovery Audit Contractors Proposed Rule (75 Fed. Reg. 69037). Retrieved Nov. 23, 2010 from
[3] Department of Health and Human Services and Department of Justice team up to crack down on health care fraud News Release. (2010, Nov. 5). U.S. Department of Health & Human Services. Retrieved on Nov. 23, 2010 from