FPS screens fee-for-service claims prior to payment in order to help  identify and prevent improper and potentially fraudulent payments by  performing two primary functions:
Develop leads for fraud investigations. In developing  these leads, FPS is intended to help CMS prevent potentially  fraudulent payments by furthering the agency’s ability to more quickly  identify and investigate suspect providers, and take more timely  corrective actions. Medicare Program Integrity

CMS uses contractors to support the agency’s program integrity activities,  including program integrity contractors to identify and investigate  providers engaged in potential Medicare fee-for-service fraud. FPS. Healthcare Fraud Prevention Partnership

HFPP is a voluntary public-private partnership established by HHS and  the Department of Justice to facilitate collaboration in addressing  healthcare fraud. HFPP began in 2012 with 20 members  and, as of June 2017, had grown to 79 members. As of the end of  calendar year 2016, CMS had cumulatively spent $30.3 million on HFPP. CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes and Has Contributed to Program Savings

		CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes, and CMS Is Taking Steps to Track Data on Timeliness

ZPIC officials stated that FPS helps them identify suspect providers  quickly. FPS leads provide specific information about the  type of potential fraud identified, along with claims data and other  supporting information. However, once an investigation is initiated, officials stated that FPS has  generally not sped up the process for investigating providers. CMS has not tracked data to assess FPS’s effect on the timeliness of  investigation processes. However, as of May 2017, CMS was in the process of implementing a  new IT system that could be used to assess FPS’s effect on the  timeliness of program integrity contractor investigation processes. In addition to tracking the corrective actions and savings associated with  FPS, CMS also measures the extent to which investigations initiated from  FPS leads result in actions against providers engaged in potential fraud. In fiscal year 2016, 38 percent of FPS-initiated investigations  resulted in administrative actions, which did not meet the agency’s fiscal  year goal of 45 percent. FPS Denies Payments Based on Medicare Rules or Policies and Not Fraud Risk

FPS prepayment edits screen individual claims to automatically deny  payments that violate Medicare rules or policies. For example, some FPS  edits deny claims that exceed coverage utilization limits for a service. FPS edits do not analyze individual claims to automatically deny  payments based on risk alone or the likelihood that they are fraudulent. Although the prepayment edits in FPS are functionally similar to those in  CMS’s claims processing systems, the FPS edits specifically target  payments associated with potential fraud schemes. For example, CMS implemented an  FPS edit that denies physician claims that improperly increase payments  by misidentifying the location that the service was rendered. As of May 2017, CMS had implemented 24 edits in FPS. In fiscal year 2016, the edits denied nearly 324,000  claims and saved $20.4 million. Participants Reported That HFPP Efforts Furthered Their Ability to Address Health Care Fraud

		Participants Reported That Information Sharing through HFPP Furthered Efforts to Address Fraud

HFPP participants we interviewed, including CMS officials, reported that  sharing data and information within HFPP has been useful to their efforts  to address health care fraud. The principal activity of HFPP is generating  studies that pool and analyze multiple payers’ claims data to identify  providers with patterns of suspect billing across multiple payers. As an example,  one study used pooled data to identify providers who were cumulatively  billing multiple payers for more services than could reasonably be  rendered in a single day. CMS officials  and one private payer we interviewed said that they used information  from this study to conduct site visits of reportedly non-operational  providers. Participants also reported that study results have helped them uncover  payment vulnerabilities of which they might not otherwise have been  aware. Participants reported that HFPP has also facilitated both formal and  informal information sharing among payers, and indicated that it has  helped them learn about fraud vulnerabilities and strategies for effectively  addressing them. Agency Comments

GAO provided a draft of this report to HHS. HHS provided technical  comments, which GAO incorporated as appropriate.
Why GAO Did This Study

CMS analyzes Medicare fee-for-service claims data to further its program integrity activities. In 2011, CMS implemented a data analytic system called FPS to develop leads for fraud investigations conducted by CMS program integrity contractors and to deny improper payments. In developing leads, FPS is intended to help CMS avoid improper payment costs by enabling quicker investigations and more timely corrective actions. Additionally, in 2012, CMS helped establish the HFPP to collaborate with other health care payers to address health care fraud. One of the key activities of the HFPP is to analyze claims data that are pooled from multiple payers, including private payers and Medicare.
GAO was asked to review CMS's use of FPS and the activities of the HFPP. This report examines 1) CMS's use of FPS to identify and investigate providers suspected of potential fraud, 2) the types of payments that have been denied by FPS, and 3) HFPP efforts to further CMS's and payers' ability to address health care fraud. GAO reviewed CMS documents, including reports to Congress on FPS, contractor statements of work, and information technology system user guides, and obtained fiscal year 2015 and 2016 data on FPS fraud investigations and claim denials. GAO also interviewed CMS officials and CMS program integrity contractors regarding how they use FPS, and a non-generalizable selection of HFPP participants regarding information and data sharing practices, and anti-fraud collaboration efforts.

What GAO Found

Investigations initiated or supported by the Centers for Medicare & Medicaid Services' (CMS) Fraud Prevention System (FPS)—a data analytic system—led to corrective actions against providers and generated savings. For example, in fiscal year 2016, CMS reported that 90 providers had their payments suspended because of investigations initiated or supported by FPS, which resulted in an estimated $6.7 million in savings. In fiscal year 2016, 22 percent of Medicare fraud investigations conducted by CMS program integrity contractors were based on leads generated by FPS analysis of Medicare claims data. Officials representing Medicare's program integrity contractors told GAO that FPS helps speed up certain investigation processes, such as identifying and triaging suspect providers for investigation. However, the officials said that once an investigation is initiated, FPS has generally not sped up the process for investigating and gathering evidence against suspect providers. CMS has not tracked data to assess the extent to which FPS has affected the timeliness of contractor investigation processes. However, CMS is implementing a new information technology system that tracks such data, and officials said that they plan to use the data to assess FPS's effect on timeliness.
FPS denies individual claims for payment that violate Medicare rules or policies through prepayment edits—automated controls that compare claims against Medicare requirements in order to approve or deny claims. FPS prepayment edits specifically target payments associated with potential fraud. For example, an FPS edit denies physician claims that improperly increase payments by misidentifying the place that the service was rendered, which helped address a payment vulnerability associated with millions in overpayments. FPS edits do not analyze individual claims to automatically deny them based on risk alone or the likelihood that they are fraudulent without further investigation. As of May 2017, CMS had implemented 24 edits in FPS. CMS reported that FPS edits denied nearly 324,000 claims and saved more than $20.4 million in fiscal year 2016.
The Healthcare Fraud Prevention Partnership (HFPP) is a public-private partnership that began in 2012 with the aim of facilitating collaboration among health care payers to address health care fraud. The HFPP had 79 participants as of June 2017. Participants, including CMS officials, stated that sharing data and information within HFPP has been useful to their efforts to address health care fraud. HFPP conducts studies that pool and analyze multiple payers' claims data to identify providers with patterns of suspect billing across payers. Participants reported that HFPP's studies helped them to identify and take action against potentially fraudulent providers and payment vulnerabilities of which they might not otherwise have been aware. For example, one study identified providers who were cumulatively billing multiple payers for more services than could reasonably be rendered in a single day. Participants also stated that HFPP has fostered both formal and informal information sharing among payers.
The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.