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Medi Cal Fraud

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					                          Audits & Investigations

                                             September 2010
Medical Review Branch                                     1
Audits & Investigations
            Department
Mission:

 Preserve

           Improve

 Health Status of all Californians

                                     2
Accessible Quality Health
          Care

   7 million
    1   in 6 Californians

   32.4 billion Medi-Cal benefits
    (2007)

                                     3
            Approximate Distribution of $32.4 Billion
                  Medi-Cal Benefits Budget

                                 ADHC, $0.4
                                    1%        Dental, $0.6
Managed Care &
                                                  2%       DME, $0.1
 Other, $13.3
     41%                                                     < 1%      Inpatient, $8.0
                                                                            25%

                                                                        Labs, $0.2
                                                                           1%

                                                                    Physician Services,
                                                                           $3.4
                                                     Other Services &      11%
            Other Payments Not                        Supplies, $0.7
               in EDS Claim                                2%
                                   Pharmacy, $2.7
               System, $2.8
                                        8%
                    9%



                                                                                         4
                      Protection
   3.5 million children

   Population
       11% over age 65

       22 % under 18 with chronic condition

       43% over 18 with chronic condition


                                               5
              Health Care Services
   Health Care Services
     Access
     Delivery
          Medicaid
          Child Health & Disability Prevention
          California Children’s Services



       Safety Net
          Rural Hospitals
          Burn Units


                                                  6
Condition of Participation




                             7
Medicaid Integrity Group
         (MIG)
   Deficit Reduction Act - 2005

   Partnership
       Centers for Medicare & Medicaid Services with States


   Oversight

   Technical Assistance


                                                               8
MIG - Four Major Functions
   Comprehensive Medicaid Integrity Plan

   Medicaid Integrity Contractors

   Field Operations

   Fraud Research & Detection


                                            9
        Affordable Health Care Act
   Mandates

       Recovery Audit Contractors (RACs)

       Enrollment & Re-enrollment of Providers

       Exclusions cross state lines



                                                  10
    Audits & Investigations
Mission
     Quality of Care
     Fiscal Integrity



   Goal
       Improve
         Efficiency
         Economy

         Effectiveness

                              11
               Branches
                Audits &
             Investigations

 Financial Audits Branch
 Investigations Branch

 Medical Review Branch


     Responsibilities   & Results


                                     12
    Department Resources


   Fiscal Review

   Beneficiary Review

   Medical Review

                           13
           Financial Audits Branch
   Programs & Institutions
     Financial   Audits
     Payments
        Applicable Laws
        Regulations

        Program Intent




                                     14
                            Institutions
   Institutions
       Hospitals
            Non-contract
            Contract
       Long-Term Care Providers
            Skilled Nursing Level A
            Skilled Nursing Level B
   Programs
       Bioterrorism
       Maternal Child Health

                                           15
              Investigations
   Early Fraud Detection/Prevention
       Validate accuracy of information


   Beneficiary Investigations
       Administrative and Criminal
       Includes Drug Diversion


   Provider Investigations
       Assist other law enforcement entities

                                                16
    Medical Review Branch
   Non-Institutional Providers

       Physicians, Physician Groups

       Pharmacies, Durable Medical Equipment

       Non-Emergency Transportation

       Psychologists, Audiologists, Nurse-Practitioners


                                                           17
       Medical Review Branch
                               237.5 Positions
Sacramento Headquarters        Medical Consultants
    Administration             Nurse Evaluators
    Sanctions and              Nurse Consultants
    Utilization Review         Pharmacy Consultants
    Research                   Lab Examiners
                               Health Plan Auditors
Field Offices                  Research Staff
     Sacramento                Management
     San Francisco             Administrative Support
     Los Angeles               Analysts
     Ontario
     Santa Ana
     Commerce
     San Diego




                                                18
               Mission

   Ensure quality of health services

   Reduce harmful outcomes

   Protect against misuse

   Protect fiscal integrity

                                        19
                     Mandates
   Code of Federal Regulations
       Section 42

   California Welfare and Institutions Code

   Business & Professions Code

   California Code of Regulations
       Title 22
                                               20
                    Quality
                Health Services
   Protect beneficiaries

       Promote Quality Care

       Ensure Access

       Medically Necessary



                                  21
          Maximize Resources
   Partner with Provider Community
       Professional & Trade Associations


   State Resources

   Federal Resources

   Third Party Payers

                                            22
              Data Mining
   Electronic Data Systems, Inc.
    Division of Hewlett Packard (HP)
    Contracted to Monitor Medi-Cal Claims

Fiscal Intermediary contract awarded 2010 to
  Affiliated Computer Services, Inc. (ACS)


     Claim Data
     Analysis

                                               23
         Beneficiary Information
   Claims
     Personal information
     Utilization patterns


   Health profile
     Diagnosis
     Prescriptions
     Referrals


                                   24
         Other Data Sources
   Provider Information
       Provider Master File
            Provider Enrollment

       Consumer Affairs


   Hotline (800-822-6222)
       Other Providers & Beneficiaries

                                          25
         Law Enforcement
   Department of Justice (DOJ)

   Drug Enforcement Administration (DEA)

   Office of Inspector General (OIG)

   Local District Attorneys (DAs)

                                            26
     What Does Fraud Look Like?

   Fraud presents itself in many shapes and forms:
      Exploits people/services/programs



       Illicit Drug Use
          Cost of addiction
          Cost to program

          Costs to California (criminal, social services)



     Kickbacks
     Collusion
                                                             27
                           Abuse
   Overutilization
       Providers paid for services
          Not needed
          Not performed

     Beneficiaries get products not needed
     Patients don’t get needed medical care




                                               28
             Fraud and Abuse…
   Profit at the expense of others

     Identity theft
     Incompetence

     State pays more than its rules allow




                                             29
     Building the Medi-Cal Anti Fraud Program
California adopted an Anti-fraud Control Strategic Plan modeled after fraud control
    strategies recommended by Malcolm Sparrow.



1.    Commitment to routine systematic measurement
2.    Resource allocation for controls based upon an assessment of the seriousness of the problem
3.    Clear designation of fraud control responsibilities
4.    Adoption of problem solving approach to fraud control
5.    Deliberate focus on early detection of new types of fraud
6.    Prepayment review of claims (PPM)
7.    Every claim faces some risk of review


                            “Rapid growth in an industry that relies on government funding is an
                               indicator of an industry that has attracted fraud and abuse.”
                                                                                 Malcolm Sparrow




                                                                                                    30
             1. Commitment to Routine
              Systematic Measurement
   MPES
       Medi-Cal Payment Error Study
       Began in 2004
       Computes potential loss due to
            Billing and payment errors
            Fraud and abuse
       Determines program risks
       Directs deployment of resources to program risks




                                                           31
                     MPES Results
   Since 2004
       Steady decline
       MPES 2007 rate is almost 10 percent less than the rate for
        the MPES 2006.
       MPES 2006 is13 percent lower than the MPES 2005.
       Approximately $500 million less dollars were paid for claims
        that contained errors over the three-year time period of these
        reports.




                                                                     32
        Medi-Cal Payment Error
         Study (MPES) 2007

   Results & Costs

       93% Correct

       7% Incorrect – 1.05 billion dollars

       Statistical Sampling

           95% accuracy


                                              33
Sample Dollars by Error Type
   46.0%

                      40.2%




                                         10.4%


                                                           3.4%


   Provider     No Medical Necessity   Coding Error   Policy Violation
Documentation


                                                                         34
        MPES Error Rate with Potential Fraud Rate
                        Subset
          Error Rates with Potential Fraud Rates
8.40%

                        7.27%
                                                      6.56%




        3.23%                     2.75%
                                                              2.53%




MPES 2005                    MPES 2006                 MPES 2007

                Error Rate     Potential Fraud Rate
                                                                      35
              Types of Errors


   Provider Documentation
       45%


   Medical Necessity
       41%



                                36
                  Problems
   Up-coding

   Documentation
     Legibility
     No records
     Insufficient Information


   Unbundling

   Substandard Care
                                 37
                   MPES 2007 Distribution of
                 Sample Dollars Paid in Error by
                         Error Type


                             Coding Error,         Policy Violation,
   Provider                    10.40%                   3.30%
Documentation,
    46.10%




                                No Medical
                                Necessity,
                                 40.20%

                                                                       38
    2. Resource Allocation for Controls
      Based Upon Assessment of the
        Seriousness of the Problem
   MPES identifies weakness
   Return on Investment
       Maximize limited resources
       Identify greatest area of return

   Examples: Hospice providers are more at risk as claims
    equal hundreds of dollars vs. $10 to $20 claims in
    Non-Emergency Medical Transportation (NEMT)
    claims

                                                         39
    3. Fraud Control Responsibilities
   Centralization of Sanctions (Prevent Payment)
       Withhold
          W&I 14107.11, Title 42CFR 455.23
          Reliable evidence of fraud or willful
           misrepresentation
       Temporary Suspension
          W&I 14043.36(a); 14043.7 (c), 14043.1
          Under Investigation, failure to remediate significant
           discrepancies, unsound fiscal, business or medical
           practices

                                                               40
       Procedure Code Limitation
            W&I 14044 (excessive services or abuse)


       Permanent Suspension
            Title 22, CCR, 51458


   Centralization of criminal investigations



                                                       41
              Utilization Controls

Allow Payment with Safeguards

   Civil Money Penalties
     Welfare & Institutions 14123.25 (c) (submits a claim)
     W&I 14123.2 (causes a claim)

   Post Payment Monitoring
       CCR Title 22 51460


                                                         42
   Prior Authorization
       CCR, Title 22 51455


   Audit for Recovery of Overpayments
       CCR, Title 22 51458.1




                                         43
     4. Problem Solving Approach
   Match approach to type of problem
     Ring of fraudulent providers—attacked in concert
      with other agencies, including federal and law
      enforcement through a sweep.
     Network of providers billing through self audit
      process employed, i.e., lab project, UBL project,
      IUD project.
     Upcoding problem—Provider Report Cards,
      Provider education, Educational Outreach.


                                                          44
Types of Reviews

   Non-Institutional Providers

       Desk Audits

       Claim Reviews

       Enrollment Inspections

       Onsite Reviews

                                  45
5. Early Detection of New Fraud
   Medi-Cal Payment Error (MPES)

   Partnerships identify emerging trends.

   Data mining and link analysis identify problems
    in early stages.



                                                      46
     6. Prepayment Review of Claims
    7. Every claim faces risk of review
   Random Claim Review
       Limited scope
       All provider types
       Unsupported claims denied
   FY 09/10
       A total of 660 claims representing 589 unique provider numbers have
        been reviewed.
       A total of 588 claims or 89 percent were determined to be valid.
       A total of 72 claims or 11 percent were determined to be improper.
       This process also generates cases for more in-depth reviews; i.e., upper
        billing limit project, which has generated over $12 million in recoveries.




                                                                                     47
                       Anti-Fraud Partners                                    Medical
                                                                             Board of
   California                                                                California
   Department
                   Medicare Data                                               OIG
   of Justice                          Medical Review        HP FTB
                     Sharing
                                          Branch
 Fiscal Intermediary
     & Contracts                                                     Provider Enrollment
      Oversight                                                             Division
                                                                                 Internal
              Managed                                                            Audits
               Care                                                   Investigations
  Inspector                              FRAUD                            Branch
  General
                                                                                   U.S.
Federal Bureau of                                                                Attorney
  Investigations                                                        Financial
                                                                     Audits Branch
    Medical
Implication Task                                                                   HALT
                   State Controller     Food & Drug       District Attorney
     Force
                                          Branch
                                                                          Board of
     District                 Medi-Cal             Department
                                                                         Pharmacy
     Attorney                Task Force            of Insurance
                                                                                          48
                                                                                                                                                                                                                    Keep
                                                                                    Anti-Fraud Activities Flowchart                                                  Close
                                                                                          September 09, 2010                                                         Case
                                                             MCFPB                                                                                                                               Meet and Confer
                                                                                                                                         DOJ or FBI                          No
                                                             Research
                                                                                                                                        Investigation
                                                                                                                                                               Conviction
     Referral From:                         PED             MCFPB Fraud                                             IB
                                                                                                                                                                                                                    Settle
                                         Referral for        Prevention                                                                                 SCO Audit
     A&I MRB Research Staff                                                                                        AFR
  HP Scenario Engine & SURS
                                         Provisional         Surveys &
                                                                                                                                                        MRB Audit
                                                                                                                                                                                  1
                                          Providers           Reviews
              Medstat                                                                                        Licensing Board
             CMMDAC                                                                                                                                   Feedback to
               MPES                                                                                         SB 1699 & Referral                          OLS for
                                        DHCS Audits &                                                                                                  Mandatory
     Random Claims Reviews                                                                                   to other agencies                                               MRB Review
                                        Investigations                                                                                                Suspension
        DHCS Organizations                                                                                       (i.e. F&D)                                                    for policy
             Including:                   MRB & IB
                                                                                                                                                                              (MCPD) or
 PCFH/FPACT, CPSP, MCOD                  Research &                                                                                           Temp. Susp. Withhold              system
            PED Dental                     Analysis                                                            MRB                                                              change
Provider & Beneficiary Hotlines &                                                                            Sanctions/                                 PCL                      (PED)
                                                                             A&I MRB or IB
              Website                               A&I MRB or IB             Field Work                     Utilization
                                                                                                                                                        CMP
    IB Confidential Complaints                     Case Development                                           Controls
          Other Entities                                                                                                                            Withhold                      PED       HP
 (i.e., Dept. of Aging, Alcohol &                                                                            Close Case
             Drug, Etc)                                                                                                                                 PA
          Medical Board
                                    PED Refers High                                                                                                     PPM                   1
        Board of Pharmacy
                                    Risk Enrollment
           Public Health
                                       Reviews                                                                                                 Withhold Weekly
               CPSP                                                                                                                            Check Until Clean
                L& C                                                                                                                           Claims Review is                             Glossary
              F-PACT                                                                                                                               Complete                                 A&I: Audits and Investigations
               EWC                                                                                                        Yes or No                                                         ADMIN: Administration Division
                                                                 MRB Reviews for:
                                                                                               Recommendation for                                                         Deny              AFR: Audit for Recovery
                                                                   Enrollment /                                                         Provider                                            BIPP: Beneficiary Interview Pilot Program
                                                                                             Enrollment / Re-enrollment                                                Enrollment/
                                                                  Re-enrollment                                                        Enrollment                                           CMMDAC: Center for Medicare and Medicaid
                                                                                                                                                                      Re-Enrollment
                                                                                                                                                                                            Data Analysis Center
                                                                                                                                                                                            CMP: Civil Money Penalties
                                                                                                                                        Approval                                            DOJ: Department of Justice
                                                                                                                                       Enrollment                                           HP: Hewlett Packard
                                                                                                                                                                                            ITSD: Information Technology Division
                                                                                                                                                                                            MCFPB: Medi-Cal Fraud Prevention Bureau
                                                                                                                                             Administrative Support Functions
                                                                                                                                                                                            MCOD: Medi-Cal Operations Division
                                                                                                                                            ITSD                 Fiscal Forecasting         MCPD: Medi-Cal Policy Division
                                                                                                                                                                                            MMCD: Medi-Cal Managed Care Division
                                                                                                                                       (BIC Issuance)             ADMIN (Support)
                                                                                                                                                                                            MRB: Medical Review Branch
                                                                                                                                                                Statistical Sample for      OPA: Office of Public Affairs
                                                                                                                                                                  Error Rate Study          OLS: Office of Legal Services
                                                                                                                                                                                            PA: Prior Authorization
                                                            Yes            OLS—Legal                                             Yes                                                        PCFH: Primary Care and Family Health
                                                                                                               Stipulation                      TPL
                                                                          Hearing Office                                                        HP                                          PCL: Procedure Code Limitation
                                                                                                               Agreement                                                                    PSD: Payment Systems Division
                                    1              Appeal
                                                                                                                                                                                            SCO: State Controllers Office
                                                                                                                           No                                                               SCR: Special Claims Review
                                                                          AR/Collections                                                                                                    TPL: Third Party Liability
                                                            No             TPL / EDS                          DHCS Upheld
                                                                                                                                                                                                                     49
          Return on Investment (ROI)
     The ROI is based on FY 2009/10 year-to-date cost, savings, and avoidance. Program
  Integrity activities from MRB resulted in an average return on investment of $15 in savings
 and avoidance for every $1 invested in the effort. The table below demonstrates the ROI for
                                  each activity for FY 09/10.



$60.00
              $51.68                                                      Audits for Recovery
$50.00

$40.00

$30.00

$20.00
                                $12.78                                            $15.00
$10.00                                                            $5.91
                                                $1.94
 $0.00
              Audits for       Field Audit   Re-Enrollments   Pre-Enrollments      Average
              Recovery           Review

                                                                                             50
  Anti-Fraud Activities and Estimated
               Actions
                           FY 2009/10 Anti-Fraud Activities
                           FY 2009/10 Estimated Actions
250
       216          210
200
             172                                                        174

150
                          120                            133
                                      102 113
100


50


 0
       Withold &    Audits for     Post Service         Procedure     First Warning
       Temporary    Recovery       Prepayment              Code        Civil Money
      Suspensions                     Audit             Limitations
                                                                                      51
         Examples of Collaboration
   Partners
   Investigative Branch (IB)
   CMS
   FBI
   California DOJ

   Wheelchair Crossover Project: 678 beneficiary confirmation letters (BCL) to
    beneficiaries requesting information regarding wheelchairs prescribed to the
    beneficiaries.
   233 responses (35%), 121 of those (52%) responded with problems specific
    to 18 providers.




                                                                                   52
     Wheelchair Crossover Project
   Project Findings:

   Medical suppliers did not supply wheelchairs.
   Doctor orders were forged.
   Orders written without an exam of the patient.
   No medical necessity for the wheelchairs.




                                                     53
Wheelchair Crossover Project Effect on Providers

                                    Closed


  5                   4
                                    TS due to forged dr.
                                    orders/failure to deliver
                                    wheelchair
                                    TS or PCL due to
                            5       ordering chairs w/out
      7                             clinical basis
                                    Claimed in excess of
                                    UBL




                                                                54
                  Results
   Assure Public Safety

   Improve Quality of Care

   Conserve Resources

   Fix Program Weaknesses

                              55

				
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