Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Ask an Expert - Fraud, Waste & Abuse 🗑

3. Sponsor Snapshot 🚀 - brought to you by Modivcare

4. Compliance Chatter 📢 - 2025 Medicare Deductibles & Copays

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Ask an Expert - Fraud, Waste & Abuse 🗑

This week’s Deep Dive is going to look at a topic that is in the news too often:  Fraud!

But since we are not experts in detecting and preventing fraud, we have enlisted the help of Janna Hart.  She is Founding Partner & Chief AI Product Officer of Previsant Insights and has extensive experience with combatting Medicare fraud and agreed to share her knowledge with you all.

The format for this edition will be a Question and Answer session. 

If you want to go deeper into any of these questions, please reach and we can get you in contact with Janna!

1. What is Fraud, Waste and Abuse in Medicare? 

Medicare has 4 parts: Part A (Fee for Service Hospital / Institutional), B (Fee for Service Medical / Professional), C (Medicare Advantage), and D (Prescription Drug Coverage).  In the context of Medicare, fraud, waste, and abuse (FWA) are terms that refer to improper practices related to the use of Medicare funds or services. These issues can arise in any of the four parts of Medicare and each of them can have significant impacts on the program’s integrity and sustainability.

Fraud: intentional wrongdoing for financial gain

Waste: unintentional mistakes, errors or inefficiencies

Abuse: improper practices not necessarily aimed at financial gain

It’s important to recognize that distinguishing between fraud, waste, and abuse can be challenging, and in some cases, it may not be appropriate to use definitive labels.

For example, calling something 'fraud' would require a formal investigation, supporting evidence, and a legal ruling—until those steps are taken, it remains an allegation.

2. What is Medicare’s Mission and Strategy for combatting FWA? 

Medicare’s mission and strategy for program integrity is to prevent, detect and combat fraud, waste and abuse. Medicare works to pay the right entity the right amount for services covered under the programs. 

Medicare supports collaboration and works with providers, states and other stakeholders to support proper practices, protect patients and minimize provider burden. Medicare procures contractors to conduct certain program integrity activities, each of which have defined responsibilities as highlighted below.

3.  How would you quantify FWA in Medicare? 

Medicare publishes figures quantifying improper payments; highlighting financial losses and uncovering the underlying causes – based off the most recent report, of the  $737.6 B paid by the programs, there was a $51.1 B loss due to improper payments.

Fee-for-Service (FFS): estimated improper payment rate was 7.38%, or $31.2B

The primary cause of improper payments was insufficient documentation, meaning that the medical records did not adequately support the services billed. 

Medicare Part C: estimated improper payment rate was 6.01%, or $16.6B

This was mostly driven by notable discrepancies in medical record submissions which didn’t align with the risk score calculations.

Although Part C has a lower improper payment rate percentage (6.01%) compared to FFS (7.38%), the absolute amount ($16.6 billion vs. $31.2 billion) reflects the higher cost of errors related to risk-adjusted payments, private plan administration, and differences in compliance and auditing processes. These complexities contribute to the discrepancies in improper payment amounts despite the similar percentages.

Medicare Part D: estimated improper payment rate was 3.72%, or $3.4B

Similar to FFS, insufficient documentation was a predominant factor in improper payments.

4. How would you describe the potential impacts of artificial intelligence as it relates to FWA?

Artificial Intelligence (AI) is poised to significantly influence the landscape of FWA in healthcare, particularly within the Medicare system. Given the vast amounts of both public and private data generated by the healthcare system, AI's scalability and analytical capabilities present opportunities to both combat and, conversely, facilitate FWA. The potential impacts can be examined in two main areas: detection and perpetuation.

Enhancing Detection of FWA

AI has demonstrated substantial promise in detecting FWA through its ability to identify patterns, anomalies, and predictive indicators that may be overlooked by traditional methods:

• Pattern Recognition: AI algorithms can analyze extensive datasets to detect unusual patterns in billing submissions, provider practices, and patient interactions, flagging potential FWA activities for further investigation.

• Feature Identification: Advanced machine learning models can isolate key features that are most indicative of FWA behavior, helping focus investigative efforts where they are most needed.

• Predictive Accuracy: AI systems, when properly trained and implemented, can predict potential FWA cases with high accuracy. However, the current best practice is to incorporate a "human-in-the-loop" approach to validate AI-generated findings. Relying solely on automated decisions without oversight would be premature and potentially irresponsible, as human judgment is crucial to ensure fairness and context-sensitive decision-making.

Risks of AI in Perpetuating FWA

While AI can be a powerful tool for FWA detection, it also introduces risks that could exacerbate FWA if misused:

• Manipulation of Records: Generative AI technologies could be employed to create falsified or manipulated medical records at scale, presenting them as legitimate and compliant.

• Revenue Optimization Algorithms: AI can be designed to identify and exploit revenue-maximizing opportunities that may border on unethical or non-compliant practices, creating avenues for financial gain that undermine proper billing standards.

• Obfuscation Techniques: AI could be leveraged to introduce variability and noise into billing data, making it more challenging to distinguish legitimate claims from those designed to bypass detection systems. 

Responsible AI Use and Best Practices

My experience in applying AI for reducing improper payments reinforces the importance of responsible AI deployment. While AI can provide invaluable insights to complement human or rule-based decision-making processes, it should not operate in isolation. Effective implementation should prioritize:

• Augmentation, Not Replacement: AI should inform and enhance human decisions, not replace them. This ensures that complex cases are reviewed with the necessary context and ethical considerations.

• Robust Oversight and Controls: Integrating measures such as human oversight, transparent algorithms, and thorough validation processes helps mitigate the risks associated with unchecked AI use.

5. What resources are available to companies when they are implementing or fine-tuning their FWA programs? 

The fight against Medicare FWA is supported by a vast network of resources and organizations. The following entities are just the beginning—many more are actively involved, and a wealth of professionals and groups are ready and willing to assist in this important effort.

Healthcare Fraud Prevention Partnership (HFPP) The HFPP is a voluntary public-private partnership that includes federal and state agencies, law enforcement, private health insurance plans, employer organizations, and healthcare anti-fraud associations. Its primary role is to identify and prevent healthcare fraud, waste, and abuse by facilitating the sharing of data and best practices among its members. Through collaborative efforts, the HFPP improves detection and prevention strategies by leveraging collective insights and analytics to combat systemic vulnerabilities in the healthcare system.

Healthcare Fraud Prevention Partnership

National Health Care Anti-Fraud Association (NHCAA) The NHCAA is a not-for-profit organization focused on improving the detection and prevention of healthcare fraud. It brings together a wide range of stakeholders, including private insurers, government entities, and law enforcement agencies. The NHCAA provides training, resources, and advocacy to enhance the effectiveness of anti-fraud professionals. It also facilitates networking and collaboration on specific Fraud cases.

National Health Care Anti-Fraud Association

Office of Inspector General (OIG) The OIG is an independent body within the Department of Health and Human Services (HHS) that has the crucial role of safeguarding the integrity of HHS programs, including Medicare. The OIG conducts audits, investigations, and evaluations to identify FWA and recommends policy and procedural changes to prevent future violations. Additionally, it pursues civil and criminal enforcement actions against entities or individuals involved in fraudulent activities, ensuring accountability and compliance within healthcare programs.

Office of Inspector General

Government Accountability Office (GAO) The GAO is an independent, non-partisan agency that works for Congress to ensure the accountability of federal government expenditures, including those related to healthcare programs like Medicare. The GAO conducts audits, investigations, and evaluations to identify vulnerabilities and inefficiencies within federal programs and recommends corrective measures to prevent FWA. Its reports provide critical oversight, guiding legislative and administrative actions that strengthen the integrity of healthcare systems. The GAO also tracks and assesses the effectiveness of anti-fraud initiatives and collaborates with other oversight entities to promote transparency and improve policy outcomes.

Government Accountability Office

In addition to the entities mentioned, the websites of Medicare contractors serve as essential resources for understanding both past and current payment integrity initiatives. These platforms provide detailed information on compliance guidelines, audit procedures, and corrective measures. For example, Noridian, which acts as the Supplemental Medical Review Contractor (SMRC), offers extensive resources and updates on payment integrity projects and reviews.

Noridian

6.   What are some recent FWA stories in the news? 

Disclaimer: I do not necessarily endorse or agree with news stories in any associated links. I recommend locating official reports, such as OIG reports, for guaranteed factual information. Additionally, fraud remains an allegation prior to judicial decision.

Part B

• Intermittent Urinary Catheters: One of the most significant recent Part B fraud cases involved intermittent urinary catheters, resulting in several billion dollars in losses. (link subscription required)

• Arizona Wound Care Fraud: A recent case involved an Arizona wound care company charged with a $600 million fraud scheme. (link)

• Ostomy Supplies: This hasn’t made headlines yet but is expected to be the next major Part B fraud concern.

Although waste and abuse stories don't often reach mainstream news, there are specialized resources that can be monitored for more insights.

• Epidural Steroid Injection Review: Noridian is currently conducting a post-payment review of Medicare Part B claims related to epidural steroid injections, following an OIG report highlighting improper payments totaling $3.6 million. (link)

Medicare Advantage

• Risk Score Calculation Practices: Medicare Advantage has been under scrutiny for practices involving the diagnosis codes used to calculate risk scores.

  •  MA Home Visits Story

  •  MA OIG Report

 Part A

• Improper Payments for Mechanical Ventilation: A recent OIG report claimed that Medicare improperly paid hospitals an estimated $79 million for inpatient claims. The audit found that hospitals did not fully comply with Medicare requirements for MS-DRGs that required patients to have received 96 or more consecutive hours of mechanical ventilation. (link)

Part D

• OIG recently conducted an audit and found that Medicare Part D paid millions for drugs that should have been covered under Part A Skilled Nursing Home Benefit (link)

• Walgreens agreed to pay $100M to resolve allegations that the company overcharged for generic drugs (link)

That’s a wrap for this week’s extended Deep Dive on Medicare fraud. It’s a complex topic, and we are grateful for the knowledge and expertise shared by Janna this week!

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)