LEEDer Group Inc.
8508 North West 66th St.
Miami, Florida 33166 USA

Phone: 305.436.5030
Fax: 305.436.0086
E-mail Address: info {at] LEEDerGroup [dot] com

2011-10 Predictive Modeling Analysis of Medicare Claims; MLN SE1133

MLN Matters® Number: SE1133

Predictive Modeling Analysis of Medicare Claims
  • Provider Types Affected
    This MLN Matters® Special Edition Article is intended for all physicians, providers, and suppliers who submit Fee-For-Service (FFS) claims to Medicare contractors (carriers, Fiscal Intermediaries (FIs), A/B Medicare Administrative Contractors (A/B MACs), Durable Medical Equipment (DME) MACs, and Home Health and Hospice MACs (HH+H MACs)).
  • What Providers Need to Know STOP – Impact to You
    As of June 30, 2011, the Centers for Medicare & Medicaid Services (CMS), has
    implemented a predictive analytics system that will analyze all Medicare FFS claims to detect potentially fraudulent activity.
  • CAUTION – What You Need to Know
    The predictive analytics system uses algorithms and models to examine Medicare
    claims in real time to flag suspicious billing. This article briefly explains the predictive modeling system, its purpose, and how CMS is incorporating the system into its claims payment process.
  • GO – What You Need to Do
    See the Background and Additional Information sections of this article for more
    information about this change.

Section 4241 of the Small Business Jobs Act of 2010 (SBJA) mandated that the CMS implement a predictive analytics system to analyze Medicare claims to detect
patterns that present a high risk of fraudulent activity. Signed by the President in Fall 2010, the SBJA enables CMS to employ real-time, pre-payment claims analysis to identify emerging trends of potentially fraudulent activity. This new process is similar to the pre-payment analysis already done by the financial and credit card industries.
The entire text of the SBJA is available at-CLICK-HERE on the Internet.

  • Real Time Claims Streaming to Build Profiles and Create Risk Scores
    As of June 30, 2011, CMS is streaming all Medicare FFS claims through its predictive modeling technology. As each claim streams through the predictive modeling system, the system builds profiles of providers, networks, billing patterns, and beneficiary utilization. These profiles enable CMS to create risk scores to estimate the likelihood of fraud and flag potentially fraudulent claims and billing patterns.
    Risk scores enable CMS to quickly identify unusual billing activity and flag claims for more thorough review prior to releasing payment. The system automatically prioritizes claims, providers, beneficiaries, and networks that are generating the most alerts and highest risk scores. CMS is leveraging the benefits of its new high-tech system to complement, not replace, the expertise of its experienced analysts:
    • Analysts review prioritized cases by closely reviewing claims histories,
    conducting interviews, and performing site visits as necessary.
    • If an analyst finds only innocuous billing, the outcome is recorded directly into the predictive modeling system and the payment is released as usual. This feedback loop refines the predictive models and algorithms to better target truly fraudulent behavior.
    • Analysts who find evidence or indicators of fraud will work with the CMS Center
    for Program Integrity, MACs, and Zone Program Integrity Contractors to enact
    targeted payment denials, and in cases of egregious fraud, revoke Medicare
    billing privileges. Program integrity entities may also, as appropriate, coordinate
    with law enforcement officials to investigate cases for criminal or civil penalties.
  • Effect of Risk Scores on Claims Payment
    Risk scores alone do not initiate administrative action and serve only to alert CMS to the necessity of more careful review of claims activity. While providers will be unable to appeal risk scores, CMS’s new technology will in no way alter a provider or supplier’s existing rights to appeal administrative actions or overpayment recovery efforts.
    Currently, CMS is not denying claims solely based on the alerts generated by
    predictive models. CMS is focused on developing and refining models that
    identify unusual behavior without disrupting its claims processing for Medicare
    Working closely with clinical experts across the country and of every provider specialty, CMS is developing and refining algorithms that reflect the complexities of medical treatment and billing. The new technology will ultimately benefit the program’s many honest providers and suppliers by enabling the agency to prioritize the highest-risk cases for investigation and review. Prioritizing the alerts will minimize the disruption to providers who may occasionally exhibit unusual but honest billing.
    CMS’s predictive modeling technology also enables automated cross-checks of
    provider, beneficiary, and claim information against historical trends and external
    databases. Automating checks that were previously performed manually will help
    CMS to more quickly identify and resolve any issues that may delay payment to
    providers and suppliers. Even as CMS implements a more thorough claims screening process, the Agency remains dedicated to ensuring prompt payment for the providers. Prompt payment of claims is a statutory requirement; only in exceptional and urgent circumstances will CMS leverage its authority to waive prompt payment to conduct further investigation or review.
  • Additional Information
    If you have any questions, please contact your Medicare contractor (carrier, FI, A/B MAC, HH+H MAC, or DME MAC) at their toll-free number, which may be found at-CLICK-HERE
    on the CMS website.