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(ZPICS), (RAC) and Healthcare Fraud Waste and Abuse - Research Paper Example

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The practice of auditing has experienced numerous stages of evolution. The Medicare and Medicaid programs were developed in 1965 in which legislation provided framework for Medicare and Medicaid services in the country through strong administrative and regulatory authority; …
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(ZPICS), (RAC) and Healthcare Fraud Waste and Abuse
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ZPICS), (RAC) And Healthcare Fraud Waste And Abuse CMS has been ized to protect Medicare Trust Funds by detectingand preventing fraud, abuse and waste. For this purpose, ZIPCs and RACs have been mandated to oversight specific programs and ensure transparency in these programs. And the objective of transparency is achieved through conducting inspection and audit of various claims for Medicare and Medicaid payments. The result indicates that tendency for fraud and abuse is diminishing due to several legal and administrative actions will be taken against those involved in such actions. 4. Introduction The practice of auditing has experienced numerous stages of evolution. The Medicare and Medicaid programs were developed in 1965 in which legislation provided framework for Medicare and Medicaid services in the country through strong administrative and regulatory authority; and to control improper and mal practices and strengthen this body, (About CMS, n.d.). Fundamentally, the practice of auditing started with the concept of oversight in which conventional Medicare auditing commenced with the practice of peer review organizations, commonly known as quality improvement organizations (QIOs) as was formerly established in 1982; and this program was designed to improve both efficiency and quality of Medicare services to the relevant patients; after this enactment, four major areas of Medicare were chosen for the purpose of scrutiny: care transitions, beneficiary protection, prevention and patient safety ((Blumen and Lenderman, 2010). the important legislation in the form of Medicare Modernization Act (MMA) was signed by George W. Bush on December 8, 2003 (About CMS, n.d.). In the following parts of this paper, first, background information has been provided in which basic information about healthcare system, fraud and abuse definitions have been given. It is followed by development segment in which more detailed view of the ZPICS and RACS have been included. Subsequent to that, the HEAT uses have been elaborated in which examples pertaining to HEAT program and efficiency for delivering or satisfying the ultimate objectives of CMS. After this segment, impact section has been included in which the practical effort of these programs on the ground practices has been detailed. Before the summary part, strengths and weaknesses of these programs with regard to fraud, abuse and waste have been elucidated. i. Background Fraud, waste and abuse pose severe threat to the efficacy of the health care system (Carpenter et al., 2011;Olson, 2012). And both fraud and abuse are serious problem (Medicare Learning Network, 2012).The Centers for Medicare and Medicaid Services (CMS) has not only defined both fraud and abuse but also makes a clear distinction between these acts. Fraud takes place “when someone intentionally executive or attempts to execute a scheme to obtain money or property of any health care benefit program” (Centers for Medicare and Medicaid Services, 2014, p. 4). In this regard, it is important to mention that the fraud definition is composed of three main practices: intention, execution and scheme. In other words, it is highly essential that these conditions should exist before proving the existence of fraud or possibility of fraud in others. More clearly, the first element of fraud is intention or willingness to conduct fraudulent activity. Second, there should be an objective for committing a fraud. For example, the definition clearly signifies money, property or any other material benefit can be obtained through the act of fraud. And for obtaining this objective, a source, such as any Medicare practice of activity that can be used for getting the objective. Moreover, as far as the objective in the fraud is concerned, the definition has highlighted three important aspects in that- money, property or any health care benefit program. In other words, the first two objectives are commonly understood as they the one which are normally pursued by medical practitioners. And third mentioned part includes all those possible objectives which can be desired as this part covers all those aspects which cannot be summarized in the first two objectives of the definition. The CMS also defines the concept of abuse. Abuse occurs “When health care providers or suppliers perform actions that directly or indirectly result in unnecessary costs to any health care benefit program (Centers for Medicare and Medicaid Services, 2014, p. 4). This definition is pretty specific in determining the act of abuse in any medical health care facility. The definition starts with the term “health care providers or suppliers” and this clearly demarcate the boundary in which only health care providers or suppliers remain the main suspect for potentially using their position and authority to abuse any health care program. In this regard, it is important to highlight that proving abuse relies on certain material facts. For example, the definition insists that the act of health care providers should directly or indirectly highlight the occurrence of unnecessary costs to any health care benefit program. However, this definition has certain drawbacks as well. For example, this definition has not further elaborated the term “unnecessary costs”. In other words, this loophole can be used by the health care providers and they can use it for defending their perspective on any reported case of abuse. At the same time, the use of “directly or indirectly” in the definition can be availed by any suspect. For example, it is very difficult to link any unnecessary costs with the actions since indirect association may not be an easy way to proving the occurrence of abuse. The CMS has also made a clear distinction between fraud and abuse. The primary distinction between abuse and fraud is intention (Centers for Medicare and Medicaid Services, 2014, p. 4). Fundamentally, both practices are illegitimate as they do not provide benefit instead misuse power, position and authority for obtaining their objectives. Additionally, waste is ultimate result of both actions. Waste can be in the form of time, effort and cost that was designed to obtain certain objectives. For example, a health care program was envisioned to obtain the objective of providing medic services to 150 patients in one month period with the governmental subsidy funding of $3 million for a specific health care unit. After the end of the month, the statistics revealed that only 100 patients were able to receive medical benefit from the funding and the remaining 50 patients were not able to access this benefit. In other words, certain amount of funding was wasted. For example, in the initial allocation of funds, it was decided that each patient would receive $20000 medical support from the program for the period of one month. However, the actual statistics highlighted that $30000 medical support was given to 100 patients. In other words, $10000 additional was given to each of 100 patients. As a result, this amount can be termed as waste as the program did not support to 150 patients. ii. Development To protect and efficiently utilize the Medicare Trust Funds, CMS has put in place strong Fraud Prevention System (FPS) (Department of Health & Human Services and Centers for Medicare & Medicaid Services, 2014).The CMS has been authorized to ensure efficient utilization of public funds in all medical support programs throughout the country (Centers for Medicare and Medicaid Services, 2014). Every year, both programs (Medicare and Medicaid) provide billions of dollars to millions of beneficiaries. For example, Medicare provides more than $566 billion to around 52 million beneficiaries whereas Medicaid is given to 3.9 billion claimants, reflecting around $430 billion payment every year (Centers for Medicare and Medicaid Services, 2014). Both these programs are designed to provide government funded medical support to the eligible patients in the designated hospitals and health care units across the country. In this regard, it is important to mention that the magnitude of the amount involved in this medical support program clearly highlights that it attempts to cover every eligible citizen needing medical assistance from the government funded medical and health care programs. At the same time, these programs also necessitate a higher level of transparency of payments made to the medical and health care hospitals. For ensuring transparency in all these programs, CMS has developed different programs in which audit and oversight process has been developed and implemented as well. For example, to bring transparency in such programs, the CMS has divided into different zones and areas as well. At the same time, the program has also hired the services of RACs and other similar firms to detect prevent and recover the amount that is used and obtained through improper payments. More importantly, fraud and abuse are two main sources that cause increase in the improper payments. And in order to detect, monitor and control such activities, programs such as ZPICS and RACS have been launched. Zone Program Integrity Contractors (ZPICs) are contractors who are authorized and responsible for identifying fraud in Medicare in seven zones (Pierce, 2012). Figure 01: Different operational zones for ZPICs Source: (Pierce, 2012). ZPICS, formerly known as Program Safeguard Contractor (PSCs), are authorized to work on four Medicare parts A, B, C, and D as well; each part covers different aspects of medical and health care programs and the ZPICs are required to ensure integrity of each assigned program (Pierce, 2012). Moreover, ZPICs comprise of statisticians, investigators, data analysts and medical review nurses as they are divided into different zones as reflected by the figure 01; they are authorized to verify and check billing amount, billing patterns across all Medicare fee-for-service (FFS) claims; also, ZIPCs are only responsible to report and accountable to the CMS as they are given authority to provide the relevant statistics and carry out investigations on different cases ; subsequently, CMS also investigates the findings submitted by the ZPICs (Pierce, 2012). For ZPICs, the jurisdiction and investigation scope have been highlighted as they have been mandated to detect fraud, abuse and waste for Medicare Part A, B, C, and D (Blumen and Lenderman, 2010; Gingerich, 2009). Additionally, ZPICs prime responsibilities include investigating leads provided by the new Fraud Prevention System (FPS); carrying out data analysis for searching out cases related to possible fraud, abuse and waste; generating and providing feedback along with support to the CMS for enhancing and improving the work and functioning of FPS; extending support for current and potential investigations relating to the mandated or assigned tasks coming under the ambit of their mandate; highlighting inappropriate payments besides recovering them; providing referrals to justice department and other law enforcement agencies for prosecution; making suggestions to CMS for practical and reasonable administrative decisions and actions for preserving and protecting Medicare Trust Fund dollars (Centers for Medicare and Medicaid Services, 2014). Based on this information, it can be deduced that ZPICs have been enshrined with substantial auditing and inquiry mandate in which they are fully authorized to work on behalf of CMS for identifying, investigating and preventing fraud, abuse and waste of resources. In this regard, it is important to mention that despite this mandate, the chances of fraud, abuse and waste cannot be ruled out. For example, it is possible that some staff members of ZPIC or whole ZPIC may collude with the health providers and this collusion is not a remote possibility but is considerable and probable as any secretive agreement may attract the officials of ZPIC to take their share and conduct a weak investigation into a matter. In other words, this collusive agreement and understanding between ZPIC and health providers will be difficult to detect because the findings only reveal that the matter has been resolved. At the same time, CMS has not been able to provide any independent investigative mechanism which can be used to deter and highlight any such agreement between ZPIC and health providers. Besides, relying heavily on the ZPICs and its services will not be always helpful for attaining the determined objectives of medical and health care programs. Furthermore, CMS has not developed and provided integrity framework for assessing ZPICs and their moral integrity with regard to the assigned mandate. In the absence of this counter or strategic mechanism for evaluating the possible and actual role and performance of ZPICs, the chances for collusion, deliberate omission and poor investigation performance cannot be underestimated. Consequently, this brings serious ramifications for the success of programs and chances of detection and prevention of fraud and abuse. Moreover, in any possible fraud, the potential involved amount would be in millions if not in thousands. Given the magnitude of money involved in such frauds, the chances of collusion become higher than the expected level. RACs Recovery Audit Contractors (RACs) are mandated to cover the aspects under the Medicare Part A and B (Blumen and Lenderman, 2010). RACs are authorized to carry out two different audit related activities: detection and correction; they are mandated to detect inappropriate payment both underpayment and overpayment including unnecessary services or inaccurate coded services, fake services and inadequate documentation (Blumen and Lenderman, 2010). Additionally, the Tax Relief and Health Care Act of 2006 statute mandated RACs for Medicare Part A and B; their fee payment is determined through the recovered or reimbursed amount (Pierce, 2012). Figure 02: Medicare RAC Recovered Amount Source: (Pierce, 2012). The figure 02 highlights some startling results. In 2010, collected overpayments were $75.4 million and this reached $797.4 million in 2011 but diminished to $397.8 million in 2012, reflecting that an increase in overpayments was reported in 2011. Similarly, the trend in underpayment is also showing the same situation in which $16.9 million was recovered in 2010 and $141.9 and $24.9 million in 2011 and 2012 were reported respectively. Based on this, it can be extracted that the amount of overpayments was higher than the amount of underpayments during this period. This clearly shows that there is higher tendency in the scheme of overpayment mechanism and this is also proven by the fact that the recovered amount in 2011 was the highest when compared with the other collected or returned payments during this period. iii. Uses ZPICs and RACs are used for detecting fraud, abuse, and waste of resources. For example, Centers for Medicare and Medicaid Services (2014) and Department of Health and Human Services (n.d.) has provided various examples highlighting fraud and its manifestations; Medicare or Medicaid is billed for those services which have not been given to patients, equipment that has never been provided to patients, alternation in documents for receiving or claiming higher payment, inaccurate descriptions, dates and fake identities of patients, unauthorized use of Medicare or Medicaid card by different patient, untrue information for misleading authorities. These examples clearly show that the chances of fraud are higher and complicated as well. And in order to detect and prevent such cases, it is highly essential that a detailed and extensive investigation should be carried out for determining the type and depth of fraud in a particular case. At the same time, both ZPICs and RACs are also used to prevent abuse as well. fundamentally, both ZPICs and RACs are mainly mandated to prevent the occurrence of fraud in its all types and manifestations. This is important because through controlling and preventing fraud, the chances of abuse will also be diminished as well. In other words, it will not be incorrect to say that both fraud and abuse exist simultaneously; by detecting and preventing fraud will automatically discourage any behavior heading towards the act of abuse. 5. Content i. Impact Figure 03 Improper Payment Transparency Source: (Centers for Medicare and Medicaid Services, 2014). The figure has divided the improper payment error rate into two categories: Medicare and Medicaid. The projections highlight different level of decrease throughout the reported period. For example, Medicare graph highlights five year error rate from 2009 till the end of 2014. In this part, the graph depicts a diminishing rate throughout this period. In 2009, the error rate was 10.9 per cent and that has been decreasing during this period. In 2010, 2011, 2012, 2013 and 2014, the graph exhibits 9.1%, 8.6%, 8.5%, 8.3% and 8% respectively. This shows that the error rate has been declining, reflecting the presence of strong anti-fraud and abuse mechanism in the different health care programs. On the other hand, the Medicaid error rate has been comparatively decreasing better. For example, at the beginning of the period, the graph highlights 9.6% error rate in 2009 and that reached 6% in 2014, overall recording a decrease of more than 3.6 percent during this period. When it is compared with the Medicare error rate, it can be easily deduced that Medicaid reported more decline than the decrease highlighted by the Medicare error rate. Based on this situation, it can be deduced that the Medicaid program is comparatively performing better besides attaining the program objectives throughout this period whereas the Medicare program objective has been comparatively slow as small reduction in the error rate has been reported during this period. Moreover, in terms of improper payment amount, the Medicare improper payment is considerably higher than the improper payment in the Medicaid program. Based on this situation, it can be deduced that the Medicare programs are comparatively costlier as the error rate is higher. For example, the Medicare fiscal year 2012’s error rate is 8.5 percent or $29.6 billion whereas in the same period, the Medicaid fiscal year 2012’s error rate is 7.1% or $19.2 billion. In other words, the Medicaid program is more productive for channelizing the medical funds to the intended programs as well. on the other hand, the Medicare programs waste more and in terms of amount, more than $10 billion amount was misused in the improper payments. ii. Strength Fraud and abuse detection These auditing programs are designed to attain the objective of fraud and abuse detection. Both fraud and abuse remain the major hindrance for achieving the objectives of national health care programs. In this regard, it is relevant to highlight that this hindrance cannot be fully ended as fraud and abuse are two actions attached with the deliberate behavior and action of professionals involved in the health care services. However, the effective implementation and strong audit and oversight mechanisms can be considerably helpful for such tendency. More importantly, the detection of fraud and abuse will generate numerous advantages for the program objectives and other health care professionals involved in the practice. For example, detection will lead to several legal and professional ramifications of those involved in such cases. Fraud and abuse reduction Undoubtedly, detection leads to the reduction of fraud and abuse. The detection of fraud and abuse sends a powerful signal to all professionals that any such behavior or conduct will likely to bring serious effect on their professional career as well as on their future career opportunities. Subsequently, if they found guilty of committing fraud or supporting any fraud related activities, this may bring termination of their employment as well. This will discourage all those behaviors which were heading in that direction. Legal and administrative action Both legal and administrative actions can be taken for those involved in fraud. With the support of ZIPCs and RACs, the CMS will be in a position to prosecute culprits involved in fraud and abuse. Both provide evidence and all those other materials that will be required to prove their involvement and guilt in the fraudulent activity. With this strong evidence, CMS will also be in a position to consider and take administrative action against them. And among other administrative actions, the chances of employment termination cannot be ruled out. iii. Weaknesses No collusion detection mechanism has been provided by the CMS. It is an unavoidable fact that the chances of collusion between staff members of ZIPCs and RACs with the professionals involved in fraud and abuse-related activities. This tendency is common and difficult to rule out in situations where money and other financial advantages are involved. Under this situation, the absence of any collusion detection mechanism raises a number of questions about the integrity of all those programs which are run with the support of the ZIPCs and RACs. Since there is no oversight on ZIPCs and RACs and on their investigation mechanism, tendency of ZPICs and RACs staff members for colluding with the individuals involved in the fraud and abuse, cannot be discouraged or minimized as well. iv. Summary CMS has been authorized to oversight different health care programs at the national and regional levels. For discharging its duty, CMS has delegated its power and authority to different ZIPCs and RACs for detecting, preventing and investigating fraud, abuse and other mal-practices that are used by health providers. The subsequent result highlights that these programs have largely been successful for unearthing the overpayments and underpayments in different health care programs. For example, the projected Medicare and Medicaid error rates are constantly diminishing throughout the period and this decrease highlights the efficacy of such programs for obtaining the health related objectives of programs. At the same time, both ZIPCs and RACs have strengths and weaknesses as well. Tendency towards fraud and abuse is being decreased as the subsequent ramifications in the form of legal and administrative actions discourage all those who think committing fraud. Similarly, fraud reduction is also the result of fraud detection and that leads to fraud prevention as well. However, the absence of any collusion detection mechanism increases inclination for fraud as no effective oversight on the ZPICs and RACs activities is being operational. References About CMS, (n.d.). History of CMS. Retrieved: http://www.cms.gov/About-CMS/Agency-Information/History/index.html Blumen, H., & Lenderman, T. (2010). How Hospitals Can Arm Themselves in the War on Waste. Retrieved: http://www.mcg.com/sites/default/files/article_how_hospitals_can_arm_themselves.pdf Carpenter, L.A., Edgar, Z., Christopher, D. (2011). Pharmacy waste, fraud, and abuse in health care reform. Pharmacy Today, pp. 54-67 Centers for Medicare and Medicaid, (2014). Medicare and Medicaid Fraud and Abuse Prevention. Retrieved: http://www.cms.gov/Outreach-and-Education/Training/CMSNationalTrainingProgram/Downloads/2014-Medicare-and-Medicaid-Fraud-and-Abuse-Prevention-Workbook.pdf Department of Health & Human Services and Centers for Medicare & Medicaid Services, (2014). Report to Congress: Fraud Prevention System Second Implementation Year. Retrieved: http://www.stopmedicarefraud.gov/fraud-rtc06242014.pdf Department of Health and Human Services (n.d.). A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse. Retrieved: http://oig.hhs.gov/compliance/physician-education/roadmap_web_version.pdf Gingerich, B.S. (2009). National Recovery Audit Contractor (RAC) Program Expansion. Home Health Care Management & Practice, Vol. 21, No. 3, pp. 208-210. Medicare Learning Network, (2012). Medicare Fraud & Abuse: Prevention, Detection and Reporting. Retrieved: https://www.care1st.com/media/pdf/corporate/2014FWA/Fraud_and_Abuse.pdf Olson, D. (2012). Tackling Fraud, Waste, and Abuse in the Medicare and Medicaid Programs: Response to the May 2 Open Letter to the Healthcare Community. Retrieved: http://www.hidesigns.com/assets/files/Tackling%20fraud_waste_abuse%20white%20paper.pdf Pierce, A.L. (2012). Medicare & Medicaid Program Integrity: The Essentials. Retrieved: http://www.medicaid-rac.com/wp-content/uploads/2013/07/HMS_Medicare_and_Medicaid_PI.pdf Read More
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