Fact Sheets

CMS PROGRAM INTEGRITY INITIATIVE

CMS PROGRAM INTEGRITY INITIATIVE

Today’s Action:

The Centers for Medicare & Medicaid Services (CMS) today announced efforts to protect the nation’s largest federal health programs through the use of enhanced tools that will help to better identify and reduce fraud and abuse and prevent improper payments.

CMS is building on its current program integrity efforts by increasing the use of claims data and further analyzing that information to more efficiently detect improper payments, vulnerabilities in all Medicare and Medicaid programs, and potential areas of fraud and abuse.  CMS seeks to use its analysis to more effectively educate providers and beneficiaries in an effort to prevent and minimize waste, fraud, and abuse.   CMS’ program integrity efforts are being expanded beyond fee-for-service Medicare to also encompass oversight of the discount drug card program, Part D prescription drug benefit and the new Medicare Advantage plans.  CMS will also continue to focus on program integrity efforts relating to the Medicaid program.

CMS is also taking a number of steps to enhance its program integrity efforts in response to the increased programmatic responsibilities assumed under the MMA and the demonstrated need for more coordinated efforts to identify and correct program vulnerabilities (as illustrated by the increase in power wheelchair spending and with hospital outliers).

Increased Oversight Role to Protect the Medicare Trust Funds

• The enhanced CMS Program Integrity oversight extends beyond fee-for-service Medicare and will now include the Medicare-Approved Drug Discount Card Program, the new Medicare prescription drug benefit and the Medicare Advantage plans.
• CMS has contracted with IntegriGuard, a Program Safeguard Contractor (PSC), to monitor activities associated with drug cards.  A critical task of this PSC is a weekly assessment of the sponsor’s drug pricing information to identify any “bait and switch” activities.   Additionally the PSC will be working to identify fraudulent activities surrounding the discount drug card program including counterfeit drug cards and identity theft schemes.
• CMS is also continuing to work with law enforcement agencies to aggressively pursue all cases where companies posing as drug card sponsors have compromised Medicare beneficiaries.

Increased Oversight of the Medicaid Program

CMS is expanding the Medicare-Medicaid (Medi-Medi) match program where claims data from both programs is analyzed together to detect patterns that may not be evident when billings for either program are viewed in isolation.   As a result of combining the data, CMS can identify previously undetected patterns, such as “time bandits,” providers who bill for a total of more than 24 hours in a day in both programs.  This project allows CMS to identify vulnerabilities in both programs and work with the states, where appropriate, to take action to protect the Federal share of Medicaid dollars.  CMS’ goal is to ultimately review this data in “real time.”

• The Medi-Medi program began in 2001 with the State of California.  After two years of data matching and expansion to six more states, this program has posted results of $75 million worth of cost avoidance, identification of program vulnerabilities, savings, and recoupments.  More than 90 cases have been referred to federal and state law enforcement agencies that are in various stages of development and/or ongoing investigation. Given its success in the first seven states, CMS is expanding the Medicare and Medicaid data evaluation to the states of Ohio and Washington.  Federal expenditures in these states exceed $28 billion.
• Expansion of the Medicare-Medicaid match project will also help in better oversight of prescription drug fraud since many Medicaid prescription drug beneficiaries will see their drug benefits through Medicare beginning in 2006.
• To support one of CMS’ top priorities, combating fraud, waste, and abuse in the Medicare-Medicaid provider enrollment process, a workgroup has been established that explored the feasibility of coordinating the Medicare and Medicaid provider enrollment processes in ways that increase the overall effectiveness and efficiency of those systems.   A pilot project involving three States began in FY04.  The intent of this project was to produce a “one-stop” or a combined provider enrollment form applicable to both programs.  This effort has been very successful and has resulted in identifying efficiencies that have been beneficial to both programs.

CMS has issued a proposed regulation calling on states to report improper payments in Medicaid and State Children’s Health Insurance Programs to HHS.   Under the proposed rule, which is open for public comment until September 27, CMS will require states to estimate these improper payments by reviewing a monthly sample of Medicaid and SCHIP claims.  This information will be used to determine the accuracy of the payments based on whether the individual was eligible for the program, medical review and data processing.  Once CMS receives this information from all 50 states and the District of Columbia the national error rate will be calculated. The regulation can be found at In addition to announcing its enhanced steps to analyze program data, CMS today issued a proposed regulation calling on states to report improper payments in Medicaid and State Children’s Health Insurance Programs to HHS.  Under the proposed rule, which is open for public comment until September 27, CMS will require states to estimate these improper payments by reviewing a monthly sample of Medicaid and SCHIP claims.  This information will be used to determine the accuracy of the payments based on whether the individual was eligible for the program, medical review and data processing.  Once CMS receives this information from all 50 states and the District of Columbia the national error rate will be calculated. (The proposed rule can be found at: http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/04-19603.htm )

Greater Emphasis on Identifying, Responding to and Resolving Problems

• Building on its current data collection efforts, CMS will increase the use of electronic data to more efficiently detect improper payments, program vulnerabilities, and potential areas of fraud and abuse in both the Medicare and Medicaid programs.
• CMS is tracking and trending Medicare and Medicaid claims data on a national level so it can identify problems at the health care provider and service specific levels.   This information can be used to proactively identify potential problematic utilization spikes so that their underlying cause can be determined.
• CMS is monitoring this information and work across the Agency to identify program vulnerabilities faster and more efficiently so problems can be addressed and possibly resolved through additional provider education and informational efforts.
• Through the collection and analysis of these data, CMS will be better able to effectively use provider and beneficiary education efforts to prevent and minimize waste, fraud, and abuse.   CMS will continue to work closely with the Medicare contractors, the private companies that process and pay Medicare claims, to make sure appropriate education and guidance is given to the provider community on billing problems identified.

Expansion of Existing Successful Oversight Efforts

• A new CMS satellite office is being established in Los Angeles to reduce the unusually high rates of improper payments identified in the Medicare and Medicaid programs in California.    Current CMS oversight efforts have identified many storefront operations set up to defraud the Medicare and Medicaid programs by billing for services never provided.  CMS already has a satellite office in Miami that has been very successful in identifying fraudulent activities in that area.
• In addition to continuing the Comprehensive Error Rate Testing (CERT) program, which has successfully helped to reduce the Medicare national paid claims error rate from 14 percent in 1996 to 5.8 percent in 2003, CMS is implementing an initiative to determine the payment error rate for the Medicaid program and the State Children's Health Insurance Program.   Combined, these programs will allow CMS to be able to identify and respond to improper payments quickly thereby stopping taxpayer dollars from going out the door.  Through the work of the CERT program, CMS is able to better target problem areas and take the appropriate corrective action.