Eliminating Waste, Fraud, and Abuse in Public Programs: Indiana’s Promising Practice

1. Eliminating Waste, Fraud, and Abuse in Public Programs: Indiana’s Promising Practice National Academy for State Health Policy 24th Annual State Health Policy Conference October 3-5, 2011 Kansas City, Missouri Emily F. Hancock, RPh, PharmD, MPA Office of Medicaid Policy and Planning

2. Define the Problem

3. The Problem Illustrated • The U.S. spends more than $2 trillion on healthcare annually. At least 3 percent of that spending —or $68 billion —is lost to fraud each year. (National Health Care Anti-Fraud Association, 2008) • Medicare and Medicaid made an estimated $23.7 billion in improper payments in 2007. These included $10.8 billion for Medicare and $12.9 billion for Medicaid. (U.S. Office of Management and Budget, 2008) • Medicare paid dead physicians 478,500 claims totaling up to $92 million from 2000 to 2007. These claims included 16,548 to 18,240 deceased physicians. (U.S. Senate Permanent Committee on Investigations, 2008)

4. Indiana’s Systematic Approach to Combating Improper Payments

5. Current Program Integrity EffortsRecoveries & Avoidances SFY 11

6. Prosecutions and Restitutions • Member Fraud CY2010 • Bureau Of Investigations (BOI) substantiated 138 Medicaid Fraud Cases • 24 cases were prosecuted • 11 received felony convictions • Court ordered restitution totaling $24,554 • Provider Fraud SFY11 • Medicaid Fraud Control Unit (MFCU) investigated 266 fraud referrals • Prosecuted 12 providers, 10 received Criminal Penalties • Recovered $36,098,607

7. New Program Integrity Strategy • Expand program integrity efforts in Indiana • Establish strong partnership with innovative Fraud and Abuse Detection System (FADS) contractor • Leverage expertise with State staff working alongside contractor • Combine technology, expert consulting and auditing services • Develop new data mining processes • Coordinate activities of agency stakeholders

8. Focus on Results • Implement FADS on-time • Improve financial return on investment • Recoveries and cost avoidance • Enhance provider relations • Advance program integrity effectiveness

9. Prevention: Provider Improper Payments • Provider Enrollment • New enrollment processes and risk categories • Provider Education • Educational seminars, bulletins, and newsletters • National Correct Coding Initiative • More than 1.3 million new system edits in place • Pre-payment Review • Validating claims before payment is made • New ACA Regulations • Mandatory payment suspensions

10. Prevention: Member Misrepresentation & Overutilization • Eligibility data matches • Pre-enrollment and redetermination • ACA eligibility data in 2014 • Access to federal databases to validate eligibility • Member fraud hotline • For both members and providers • Right Choices Program (RCP) • Controls members utilization

11. Detection: Improper Payments • Continual, rigorous data analysis and investigation • Primary focus on Medicaid claims data • Link data across multiple sources • Use advanced data mining techniques and algorithms • DataProbe • J-SURS • Other Software Tools

12. Reporting: Fraud and Abuse • i-Sight Case Tracking System • Provides workflow-driven solution for documentation and tracking of provider and member fraud cases • Supports information sharing to ensure collaboration on cases • Allows for timely and accurate reporting of results for all Program Integrity activities

13. Emphasis: Member Utilization • How to manage resource access, cost and quality • How to gain provider buy-in • How to operate lock-in program • One primary medical provider (PMP) • One pharmacy • One hospital (for non-emergency visits) • How to evaluate return on investment

14. Restricted Card BecomesRight Choices Program Regulatory Authority Indiana Administrative Code, 405 IAC 1-1-2(c) Program Purpose Identify members who use Medicaid services more extensively than peers Implement restrictions for members who would benefit from increased care and coordination Restricted Card Program operated from 2000 until redesigned RCP launched in 2010

15. What Changed?:

16. Current Right Choices ProgramEnrollment Methodology • Overutilization of ER, # of PMP selections, # of Prescribers, # of Pharmacies • Overutilization of Controlled Substances together with multiple prescribers and pharmacies • Automatic placement due to suspected or alleged fraud or State guidelines for mental health drugs • Five or more mental health drug claims in 45 days • Benzodiazepines from three or more prescribers in 90 days

17. RCP Program Ramp-up

18. Priority Screening and Assessment • Members with Utilization at 3rd Standard Deviation of the Mean • Primary Medical Provider (PMP) selections • Emergency Room visits • Prescribers • Pharmacies • Prioritize Screening and Assessment • Members with xs ER utilization plus 3 other parameters • Members with xs ER utilization plus 2 other parameters • Members with xs ER utilization plus 1 other parameter

23. Why is the RCP Important in Managed Care Environments? • Focuses coordinated care • Encourages medical home concept • Leverages case management impact • Reduces waste, fraud, and abuse • Total amount paid - ↓$257.56 pmpm • Amount paid - ER visits - ↓44% • Amount paid - physician office visits – ↓48% • Pharmacy claim count – ↓2%

24. Future Considerations • Automated review of Medicaid application data • Automated pre-payment review of claims • Emerging technology application • Right Choices Program expansion • Consequences for Medicaid program violation

25. Conclusion Thank you for your interest