“Doing a Number” on YOUR Number Medicare Fraud Prevention SMP National Conference 8/9/11

1. Jean Stone, Director Northeastern PI Field Office, Center for Program Integrity, CMS 212-616-2541 Jean.Stone@cms.hhs.gov “Doing a Number” on YOUR Number Medicare Fraud Prevention SMP National Conference 8/9/11 1

2. Medicare Parts A, B, C & D Part A – Hospital Insurance Trust Fund: inpatient hospital, skilled nursing facility (SNF) & some home health & hospice svcs Part B – Supplementary Medical Insurance (SMI) Trust Fund: outpatient hospital; lab; IDTF & diagnostic tests; ambulance services; physician services; PT/OT/ST; Durable Medical Equipment (DME); CMHC; CORF/ORF Part C – Medicare Advantage Program (Managed Care Organizations) Part D – Medicare Prescription Drug Coverage

3. Medicare Expenditures Per 2007 Medicare Trustees Report: FY 2006 = $408 billion 43.2 million beneficiaries FY 2008 = $456.3 billion 44.6 million beneficiaries  Per CMS OFM June 2010: FY 2009 = $497.4 billion 46.1 million beneficiaries FY 2010 = $521.7 billion 47.0 million beneficiaries Every 8 seconds, someone becomes Medicare eligible (>225 will become eligible before I finish these slides)

4. Medicare Expenditures Congressional Budget Office (CBO) projects expenditures to doubleover the next 10 years. Majority (approx 75%) of Medicare spending is for Part A & B benefits (fee-for-service portion of program) Medicare spending = one of fastest growing sectors of federal budget - - Challenge is to maintain & ensure integrity of nation’s largest health insurance program.

5. Medicare Fraud Examples Kickbacks, kickbacks, kickbacks Home Health Care Fraud Scooter Scams Arthritis Kit Scams Ambulance Rides Free Tests and Screenings Diabetic Supplies

6. MDs - Physician Fraud Vast majority are straight-shooters. “Bad Apples” Pay/solicit kickbacks Bill for servicesnot rendered Up-code, fragment, unbundle care Bill for medically unnecessary services Receive/solicit/pay kickbacks Sign orders for unnecessary lab & diagnostic tests [from Independent Diagnostic and Testing Facilities (IDTFs),] physical therapy, DME, HHA &/or Hospice care, prescription drugs

7. Durable Medical Equipment (DME) Fraud Paykickbacks for referrals Violate telemarketing prohibition Bill for equipment not provided Falsify/forge/alter/misrepresent physician orders & proof of delivery medical records patient diagnosis or medical condition “Phantom” providers – bill with no inventory, bill after closing location Up-code or Swap – bill high end/substitute lesser equipment Hire nominee owners

8. Hospice Care Fraud Pay kickbacks Forge/alter medical records to obtain coverage Misrepresent patient diagnosis or condition (patient not “terminally ill” as defined in § 1879(g)(2) of SSA) Transfer in & out of hospice for non-palliative care Underutilize(Quality of Care)

9. HOSPITAL FRAUD Pay kickbacks for physician referrals Bill for services not rendered Double bill Misrepresent patient diagnosis or up- code DRG’s Submit claim for “septicemia” dx, but medical record shows “urosepsis” (blood cultures negative) with lower DRG $ Falsify/forge/alter information in costs reports; medical records (test results, orders, etc.) Bill Excessive Units Submit 1 claim for 3 colonoscopies for same beneficiary on same day (overpayment = $ value of 2nd/3rd colonoscopies)

10. AMBULANCE FRAUD Pay kickbacks for referrals (hospital, dialysis center, SNF, physician) Bill for services notrendered Doublebill(Part A & Part B) or extra mileage Billnon-emergency as emergency transport &/or emergency air transport Bill non-medical as non-emergency transport Falsify/forge/alter physician orders medical records, trip sheets Use non-certified vehicles and/or staff

11. Home Health Fraud • Pay kickbacks for referrals (doctors, patients, recruiters – incentives: cash & aide services) • Admit non-homebound patients • Coach diabetic patients to not self-inject &/or stop oral medication to qualify for daily/twice daily nursing visits • New: FL SHIFT from diabetes care to PT • Provide/bill unnecessary therapy visits, care without therapy order, twice daily aide visits (not reasonable & necessary) • Up-code HIPPS codes • Bill for services not rendered • Use non-licensed staff

12. Home Health ACA Sec. 6307 As amended by Sec. 10605 • Face-to-Face Encounter with patient is required before physicians may certify eligibility for HHA services or DME under Medicare • The provision also allows Secretary to apply the face-to-face encounter requirement to other items or services for which payment is provided under Medicare, based upon a finding that such a decision would reduce the risk of fraud, waste, or abuse.

13. Pharmacy (Part D) Fraud • Pay kickbacks to physicians to prescribe unnecessary medications • Up-code (bill name brand/give generic) • Dispense, buy back drug & re-sell • Bill for services not rendered (short count or fail to dispense) • Buyprescriptions • Recruit patients/paykickbacks • Divert drugs/buyblackmarket, re-label/re-package,&/or sellexpiredstock

14. Beneficiary Fraud • Solicit kickbacks to participate in fraud • receive unnecessary service (surgery/tests) • accept free transport, sign logs for services not received • “Professional” patients • Obtain physician orders for unnecessary diagnostic tests, drugs, treatments • “Rent” use of Medicare ID #(“no show” patient) • Re-sell drugs back to pharmacy after dispensing • Recruit friends for “finder’s fee”

15. Beneficiary Fraud – ACA Sec 6402(a) Administrative Remedy for Knowing Participation by Beneficiary in Health Care Fraud Scheme • Effective upon enactment, this provision requires Secretary to impose an administrative penalty on a Medicare, Medicaid, or CHIP-eligible individual, commensurate with the offense or conspiracy, for knowing participation by individual in a Federal health care fraud offense or conspiracy to commit such an offense. • This is in addition to any existing remedies available to Secretary.

16. CMS Efforts to Reduce Medicare Improper Payments • Predictive Modeling & Data analysis totarget highest risk providers/services • Provider Education • Prepaymentclaim review • New edits (automated review) • Medical record review (complex rev.) • Postpayment claim & medical record review • Overpaymentrecoupment • EnhancedProvider Enrollment & more frequent, unannouncedsite visits • Revocation or Deactivation of Medicare billing privileges • Suspensionof Medicare payments 16

17. CMS Efforts to Reduce Medicare Fraud – Stop Pay & Chase New CMS approach: Stop the “pay & chase” Take administrative actions as early as possible “Stop the bleeding” - No longer “business as usual” New approach requires closercoordination /more frequent substantive communicationbetween CMS & PSC/ZPIC and OIG and law enforcement regarding implementation of : Payment Suspension Prepay Edits Postpay Review (request & review medical records, compute overpayment and issue demand letter) 17

18. CMS Efforts to Reduce Medicare Fraud – Stop Pay & Chase New CMS predictive modeling contractor: Northrup Grumman is developing rapid predictive modeling methods to analyze “live” claims for payment before the bills are adjudicated CMS implemented final regs March 2011 based on ACA to suspend Medicare payments based on “credible allegations” of fraud On 6/16/11, CMS Administrator Dr. Donald Berwick said predictive modeling will be one factor that can lead regulators to withhold payments. (Modern Healthcare 6/17/11) 18

19. Medical Identity Theft Medical identity theft is the misuse of another individual’s personal information to obtain or bill for medical goods or services. Such theft creates both patient safety risks and financial burdens for those affected. Use of compromised numbers can lead to erroneous entries in beneficiaries’ medical histories and even the wrong medical treatment. Medical identity theft not only harms beneficiaries and providers, it causes significant financial losses for the Medicare Trust Funds and taxpayers. 19

20. How Numbers Become Compromised Sometimes, Medicare numbers are stolen or used without the provider’s or beneficiary’s knowledge. This can happen through outright theft (e.g., “dumpster diving”, purse snatching, etc.) - or theft by staff within a health care setting or insurance company with access to the numbers. Other times, the provider and/or beneficiary is complicit in the scheme, receiving payment for use of their Medicare number. 20

21. “Guard Your Card”* >40% of callers to our Medicare fraud hotline (1-800-Medicare) have already given out their numberbefore they call! If it sounds too good to be true, it is! Just hang up on telemarketers pressuring you to get something you don’t want or need There is no Medicare deadline: if you don’t get it TODAY, you can still get it later when you need it OIG NY experience was exact opposite: fraud victims didn’t want to give THEM their Medicare #s! 21

22. “Guard Your Card” - Telemarketing OIG Telemarketing Fraud Alert Hotline (7/29-8/5/11): Among the new complaints we captured: 79% of unsolicited phone calls were for diabetic supplies (e.g., glucose monitors, lancets & test strips) 21%of calls were for orthotics and other supplies 53% of companies reported offered their items for free or no charge 37% of companies told beneficiaries they were calling on behalf of Medicare or SSA 47% of beneficiaries provided their Medicare numbers to the suppliers before calling 1-800-MEDICARE 22

23. How Numbers Become Compromised At the current time, CMS is aware of about 5,038 compromised Medicare provider numbers, 169 compromised Medicare Part D provider numbers and approximately 279,408compromised Medicare beneficiary numbers. 23

24. Map of Compromised Medicare Beneficiary Numbers (Parts A, B & C) June 2011 24

25. Map of Compromised Medicare Beneficiary Numbers (Part D only) June 2011 25

26. Distribution of Part B, Part C and DME Provider Addresses in the CNC Database - June 2011 26

27. Distribution of Part D Prescriber Addresses in the CNC Database - June 2011 27

28. Florida (Hialeah/Miami area) by Zip CodePart A, B & C Beneficiaries 28

29. Florida (Hialeah/Miami area) by Zip CodePart D Beneficiaries 29

30. Zip Code Distribution of Part A, B & C Beneficiaries in Puerto Rico 30

31. California ( Los Angeles Area) by Zip Code 31

32. Texas ( Houston Area) by Zip Code 32

33. New Mexico by Zip Code 33

34. New York by Zip Code 34

35. Illinois by Zip Code 35

36. National Medicare ID Theft Case Arrests October 13, 2010: OIG & FBI arrested 73 individuals in 5 states directly linked to 2,500 stolen NY Medicare HICNs DOJ indicted 73: NY (44) CA (10) OH (6) GA (6) NM (7) in the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise 36

37. National Medicare ID Theft Case Arrests CMS and its Program Safeguard Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs) partnered with law enforcement: data analysis; payment suspension; enrollment revocation; requests for information to support investigation, indictment & prosecution; Organized crime enterprise throughout US & Armenia perpetrated large-scale, nationwide Medicare scam $163 Min fraudulent Medicare billing for unnecessary medical treatment in 118false front clinics in 25 states May 20, 2011: Rafik Terdjanian pled guilty to 1 count conspiracy to commit bank fraud on NY EDNY Rafik assisted son Robert with managing bank accounts for $35 M Medicare fraud scheme (2006-2010) 37

38. Demographic Characteristics of the CNC Database (Quarterly ) 65% are Dual-Eligible 38

39. Actions We Take After a Medicare contractor verifies that a provider or beneficiary number is compromised, the number may be placed on prepayment edit. When claims are submitted using that number, they may be subject to medical review or automatically denied. When CMS contractors provide reliable evidence of fraud, overpayment or willful misrepresentation associated with a provider number, with CMS approval, the contractor can impose a suspension of payment for future claims. Medicare contractors develop cases, open investigations, and make referrals to Law Enforcement for prosecution. 39

40. CMS Efforts to Reduce Medicare Fraud Field Offices (FOs): CMS established FOs in High Risk Areas (Miami, Los Angeles & New York) Medicare Program Safeguard Contractors (PSCs), Zone Program Integrity Contractors (ZPICs) & Medicare Part D Integrity Contractors (MEDICs) perform proactive data analysis to ID vulnerabilities, investigate & refer potential fraud to OIG perform audits & evaluations assist law enforcement (respond to Requests for Information, perform data analysis) lead Medi-Medi initiative - combined Medicare-Medicaid data analysis to identify/investigate potential fraud and abuse Partnerwith federal & state law enforcement HEAT Strike Forces National & local health care fraud Task Forces 40

41. HEAT In May 2009, the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT). With creation of new HEAT team, fight against Medicare fraud became a Cabinet-level priority. Secretary Kathleen Sebelius and Attorney General Eric Holder pledged to continue fighting waste, fraud & abuse. Today, DOJ and HHS continue to make progress and succeed in the fight against Medicare fraud. 41

42. Mission of HEAT To gather resources across government to help prevent waste, fraud & abuse in Medicare & Medicaid programs and crack down on fraud perpetrators abusing the system & costing us all billions of dollars. To reduce skyrocketing health care costs & improve quality of care by ridding system of perpetrators preying on Medicare & Medicaid beneficiaries. 42

43. Mission of HEAT To highlight best practices by providers and public sector employees who are dedicated to ending waste, fraud & abuse in Medicare. To build upon existing partnerships between DOJ & HHS such as our Medicare Fraud Strike Forces to reduce fraud and recover taxpayer dollars. 43

44. Medicare Strike Forces Medicare Strike Forces supplement criminal health care enforcement activities of US Attorneys’ Offices, target chronic fraud & emerging or migrating schemes perpetrated by criminals operating as health care providers & suppliers. Each Strike Force is led by federal prosecutor from respective US Attorneys’ Offices or Criminal Division’s Fraud Section. 44

45. Medicare Strike Forces Each team has a HHS-OIG agent & an FBI Agent. Also participating are Medicaid Fraud Control Units (MFCUs), Office of the Medicaid Inspector General (OMIG) & local law enforcement (e.g., NYPD, Hialeah PD). FORMATION: In March 2007, DOJ’s Criminal Division’s Fraud Section ,working with local US Attorneys’ Offices, law enforcement partners in HHS-OIG, and state & local law enforcement agencies, launched the first Medicare Fraud Strike Force in Miami-Dade County, FL 45

46. 9 Medicare Strike Forces DOJ & HHS expanded the Strike Forces: 2nd phase in Los Angeles, CA in March 2008 3rd phase in the Detroit, MI in June 2009 4th phase in the Houston, TX in July 2009 5th phase in Brooklyn, NY in December 2009 6th phasein Baton Rouge, LA 2010 7th phase in Tampa, FL 2010 8th phase in Chicago, IL 2011 9th phase in Dallas, TX. 2011 46

47. 9 Medicare Strike Forces Since its inception in March 2007, Medicare Fraud Strike Force operations in 9 locations have charged >1,000 defendants who collectively billed Medicare program >$2.3 billion.  In addition, HHS’ CMS, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers. To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: http://www.stopmedicarefraud.gov/. 47

48. Medicare 7-State DME Stop Gap Project Short-term plan to enhance DME fraud, waste and abuse detection and prevention activities in 7 states (CA, FL, IL, MI, NC, NY and TX) with: High DMEPOS expenditures & growth rates and focus on highest billed items in each: Power Wheelchairs Oxygen Scooters Glucose Monitors/Diabetes Testing Strips 48

49. DME Stop Gap Plan – 4 Areas of Focus CMS and its contractors (PDAC, NSC, DME PSCs and ZPICs) implemented 4-pronged approach to address all 4 of DME program’s high risk components by identifying & taking action on: (1) highest paid/highest risk DMEPOS suppliers (2) highest volume ordering physicians (3) highest billed/highest risk DMEPOS equipment and supplies, & (4) highest utilizing beneficiaries 49

50. DME Stop Gap - Results 09/09-05/11 • 5,230Supplier, Ordering Physician & Beneficiary Site Visits/Interviews including 2,993NSC Supplier Enrollment Onsitesresulting in: • 469Revocations/Deactivations, • 6Suspensions, • 1,200 New Investigations Opened & • 28LE Referrals Accepted for $51,981,508,933 billed • >$34,964,353 in Prepay Edit Savings from Claims Denied based on 15,409Prepay Edits (Supplier, Beneficiary & Ordering Physician) • >$66,245,194in Overpayments Identified & Requested