Republican leaders in Congress are calling on CMS to impose stricter safeguards against fraudulent Medicare billing by physicians.

The chairmen of the Senate Finance Committee, the House Ways and Means and Energy and Commerce Committees, and the chairmen of key House subcommittees said that the Centers for Medicare & Medicaid Services relies too heavily on the “outdated” pay and chase method and should focus more energy on preventing payment for potential fraudulent claims.

“Improper payments remain an enormous problem for the Medicare program,” the chairmen wrote in a Sept. 12 letter to Acting CMS Administrator Andy Slavitt. “In 2015, the Medicare program had an error rate of 12.1% or $43.3 billion dollars. The billions of dollars lost to Medicare fraud each year underscore the importance of stopping potentially fraudulent payments before they’re made,”

Some health law experts, however, argue that CMS already has a process for in place for pre-identifying inaccurate claims via prepayment audits and reviews. Such efforts can be devastating for physicians who come under scrutiny for unintentional mistakes, said Daniel F. Shay, a Philadelphia health law attorney.

“I can understand why, particularly in an election year, elected officials might send a letter reiterating the need to curb ‘waste, fraud, and abuse,’” Mr. Shay said in an interview. “It’s true that it’s more efficient for the government to investigate a physician’s claim for reimbursement first, and then pay. However, I think we have to take into account the physicians’ perspective, especially physicians in smaller, independent practices.”

The legislators’ letter acknowledges that CMS has taken some proactive steps to prevent health fraud, including creation of the Fraud Prevention System (FPS), which highlights questionable billing patterns and identifies providers who pose high risk to the program. FPS runs analytics on 4.5 million claims daily and has led to more than $820 million in savings, according to CMS. However, legislators said they are still concerned that CMS too often pays claims before investigating whether they’re false. The letter requests that CMS clarify its implementation of the FPS program, including details on fraud investigations and how the agency monitors FPS’s effectiveness.

Houston, Tex.–based health law attorney Michael E. Clark disagrees that CMS is overusing the pay-and-chase method. Quite the contrary, he said.

“The federal government cannot seem to find the right balance on how to address program fraud,” Mr. Clark said in an interview. “While ‘pay and chase’ once was a problem, now the government can effectively destroy health care service providers under a very low threshold without the businesses having a meaningful right to appeal that determination.”

Specifically, CMS can withhold Medicare reimbursement from health providers under an amended 2011 law that permits payments to be suppressed when “credible” allegations of fraud have been made, but are disputed. The term “credible” is a new, lower standard for the administrative action, which was meant to address the pay-and-chase problem, Mr. Clark said. The law defines a “credible allegation of fraud” as an allegation from any source, including but not limited to fraud hotline complaints, data mining of claims, patterns identified through provider audits, civil false claims cases, and law enforcement investigations.

“That standard is easy to meet and agencies have every incentive to claim they’ve got so-called credible allegations of fraud in order to avoid being criticized later on for not preventing the monies from being dissipated,” he said. Because the law precludes health providers from appealing the fraud allegation to a federal court until all administrative remedies have been exhausted, “a health care services provider can quickly be put out of business, even if it turns out that the investigation proves not to be actionable.”

Prepayment reviews of claims can drag on for months, severely impacting a physician’s income, Mr. Shay added. In his experience, the majority of physicians under investigation are not trying to game the system, but rather don’t understand all of the administrative requirements related to filing claims. In some cases, the physicians’ notes are not complete, their bills are too high for services provided, or not enough documentation exists to support medical necessity.

“In the midst of that, you have doctors who are likely well-meaning, who have provided a service to a patient in need, and who are facing real economic hardship without an effective mechanism to challenge or end the prepayment review process,” he said.

Rather than more prepayment investigations, Mr. Shay would like to see CMS focus on physician education.

There needs to be “more emphasis on provider education in terms of compliance with program requirements,” he said. “It shouldn’t require a lawyer getting involved to find out what specifically [CMS] wants them to do. That should be part of the process as a standard.”

agallegos@frontlinemedcom.com

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Legislators: Investigate Medicare fraud before paying doctors