The Frankel Plan to. Stop. Medicare Fraud. Paid for and authorized by Frankel for Congress.

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1 The Frankel Plan to Stop Medicare Fraud

2 The Frankel Plan to Stop Medicare Fraud Stopping Fraud Before It Happens Everyone agrees that Medicare needs strengthening, and voters will have choice this November about how to do that. Lois Frankel will never cut Medicare benefits, and her plan ensures seniors don t pay the price of Medicare fraud by rooting out over $350 billion in fraud over five years. She ll stop fraud before it happens by using smarter technology, simplifying bills, and demanding better cooperation. Adam Hasner has plans for Medicare too ending guaranteed health care for every senior, making seniors pay thousands more every year. Hasner s plan would cut efforts to fight fraud and force seniors to pay the price. Lois s plan protects Medicare, cuts fraud and abuse, and puts billions into strengthening Medicare. Background Fraud, waste, and abuse in Medicare are side effects of the dramatic expansion of Electronic Health Records (EHRs) over the past decade. The Department of Health and Human Services estimates that in 2010 about $70 billion was lost to fraud. 1 In the $2.6 trillion American health care system, between 3% and 10% of expenditures are lost to fraud, with most experts at the high end of that range. With better data will come a clearer picture of the scope of the problem, but it is clear that the problem is bigger than the tools we currently have to fight it. Existing efforts to crack down on the monumental problem of Medicare fraud are starting to yield real results. The Affordable Care Act provides new tools for law enforcement to address the rising problem Medicare fraud, substantial new funding for law enforcement. Now, we must invest in new tools and technologies that can stop fraud before it ever happens. Summary: The Frankel Plan 1. Simplifying Medicare bills to give patients the power to identify fraud. 2. Requiring more information to check for false claims. 3. Mandating software that makes it harder to defraud Medicare. 4. Tougher identity verification to prevent fraud. 5. Demanding cooperation between the Federal health care agencies. 1 GAO, Fraud Detection Systems, GAO (Washington, D.C.: June, 2011).

3 Types of Fraud Those who want to defraud Medicare use a variety of schemes to do so. These include: Providers submitting claims for procedures that never happened. Billing for visits that never happened, with or without the knowledge of the patient. Providers billing for more expensive services than those provided (upcoding). Providers performing more services than are medically necessary. Providers billing for the more expensive individual components of a service (unbundling). Non-existent companies obtaining provider identification numbers and submitting claims for citizens who never received care. Colluding with citizens to make false claims for unnecessary visits. 2 The Frankel Plan takes a five-step approach to crack down on these kinds of fraud, and others, before it happens and before taxpayer dollars are spent. 2 This list is adapted from ONC, HHS, Report on the Use of Health Information Technology to Enhance and Expand Health Care Anti-Fraud Activities, (Washington, D.C.: Sept., 2005).

4 5 Steps to Fight Fraud 1. Simplifying Medicare Bills to Give Patients the Power to Identify Fraud ACTION: We must simplify Medicare billing to give patients the power to find fraud. We must encourage patient involvement in the Medicare billing process and make it easy to understand what services a provider claims it has performed. We must standardize and simplify patient bills so that beneficiaries can see clearly what services their health care provider is charging Medicare. While Medicare billing can be complex, almost all bills can be boiled down to a collection of diagnostics (e.g., a blood test), procedures (e.g., a hip replacement), and equipment (e.g., a wheelchair). Patient bills should clearly explain what services the patient received, so that the patient can easily identify errors or fraud. Since 2007, over 54,000 South Florida seniors have called a local fraud hotline to report suspected fraud, resulting in the recovery of over $69 million. With simpler billing, patients will be even better equipped to participate in the fight against fraud Mandating Software that Makes it Harder to Defraud Medicare ACTION: We must ensure that the software tools that help providers work with electronic health records (EHRs) do not make it easy to defraud Medicare. We must tighten the certification requirements for software tools that assist providers with EHRs. While many of these tools provide valuable functions for providers, some have features that make it easy to defraud Medicare by assisting in upcoding (fraudulently billing for more expensive procedures than those actually performed) and unbundling (fraudulently billing for the pieces of complex procedures, not the whole procedure). Congress must take steps to define not only what software tools should do, but also what they should not be permitted to do. 3 Bob LaMendola, The South Florida Sun-Sentinel, Seniors blow the whistle on Medicare fraud, 2/14/2012.

5 3. Requiring More Information to Check for False Claims ACTION: We must include essential anti-fraud data in all claims for Medicare payment. Medicare claims are based on visits to clinics that are likely to be documented electronically, but Medicare claims don t include much of the data collected during the visit, called metadata. Such data would greatly enhance the new fraud-detection computer systems developed by the Center for Medicare and Medicaid Services (CMS) to check for anomalies and find fraud. By including metadata information about patient visits, CMS s computer systems can better identify fraud for example, a provider trying to get paid for giving a patient medical help before ever meeting with the supposed client. To facilitate including this information in the claim, we must standardize metadata across many different technologies. This initiative will allow us to detect fraud before any payment is made. Most initiatives to detect and fight fraud look backward and attempt to retrieve money already paid out from the Medicare Trust Fund. By moving away from this pay and chase model, we will be able to save billions of dollars. 4. Tougher Identity Verification to Prevent Fraud ACTION: We must give the States money for pilot programs to verify the identities of both patients and providers to ensure requests and payments for health care services are not fraudulent. A growing kind of Medicare fraud is medical identify theft, in which citizens steal the identity of another person to fraudulently obtain benefits. Many cases of fraud take place when both the provider and the patient use false identities. Often, fraudulent claims are filed based on totally made-up visits involving the stolen identities of both provider and patient. There are several methods of provider identity verification that will prevent criminals from submitting false claims using stolen provider identification numbers. By better checking provider identities, the government will ensure it only pays claims to authorized providers at their business address, reducing the motivation for provider identity theft. Verifying the identity of patients (which can be done quickly using modern technology) before providing them health care will further reduce the incentive for patient identity theft. We must ensure that both the provider and patient identities are confirmed before we pay out money from the Trust Fund.

6 5. Demanding Cooperation Between Federal Health Care Agencies ACTION: We must instruct the Federal government s health care agencies to work together to root out fraud. Efforts to coordinate the many Federal agencies involved in health care billing and fraud prevention at the agency level has proved ineffective. The problems of this lack of cooperation are numerous. As the agency that pays all Medicare claims, CMS is perhaps the agency best suited to identify fraud before it happens, but it does not have the authority or the necessary information to take on this task. It is time Congress instruct the Office of the Inspector General and Office of the National Coordinator for Health Information Technology to work with CMS to proactively find fraud. Implementation As Lois Frankel works to implement this plan, she will be careful not to impact the overwhelming majority of health care providers who do business honestly. Frankel will seek the input of both provider and patient groups to ensure that providers are treated fairly and not burdened with bureaucratic red tape. In fact, if done properly, these changes will protect the overwhelming majority of honest providers from unfair claims of fraud and abuse. The Frankel Plan s approach has worked before to fight financial fraud in the 1980 s. The industry started to use predictive models, looking for indicators of fraud in real time before transactions were approved, adding signatures to the back of credit cards, and adding PIN numbers to debit cards. America has fought fraud before. The lessons we learned from the financial industry can help us strengthen Medicare and protect it for the long haul.