OIG casts doubt on CMS's fraud detection capabilities

WASHINGTON - A new report from the Office of Inspector General (OIG) questions the ability of some of CMS's Program Safety Contractors (PSCs) to detect and deter fraud and abuse. In a July 2007 report, the OIG advises CMS to review PSCs with low volumes of activity in investigations and case referrals for Medicare parts A and B. It also advises the agency to require PSCs to provide more detailed explanations of their investigations, case referrals and proactive data analysis activities in their monthly reports. During a 2005 investigation, the OIG found that the PSCs "differed substantially in the number of new investigations and case referrals to law enforcement produced that year." For Part B, the PSCs produced between 18 and 3,707 new investigations (a median of 196). Three of the PSCs had 80 or fewer new investigations. The PSCs referred between 2 and 39 cases to law enforcement (a median of 13). Three PSCs had two, three and four referrals, respectively. "Although PSCs might be expected to differ from one another in workload activity levels, neither the size of a PSC's budget nor its oversight responsibility was strongly correlated with the number of new investigations or the number of new case referrals to law enforcement produced in 2005," the OIG stated. The OIG also found that most of the PSCs had "minimal results from proactive data analysis." It found that 13 of the 17 PSCs (77%) reported 18% or fewer new investigations from proactive data analysis. Of these 13 PSCs, seven had 8% or less. Two of those seven produced no new investigations from proactive data analysis. Almost half of the PSCs (seven of 17) had only one case referral to law enforcement based on proactive data analysis. One PSC had none. The OIG had this to say about the monthly reports written by the PSCs: "Although CMS does not specifically require that descriptions of proactive data analysis or its results be included in monthly status reports, we found that all PSCs mentioned proactive data analysis in at least one month's report during the year. We do not know if the absence of information about proactive data analysis in the remaining months indicated that the activity did not take place. In the reports that mentioned proactive data analysis, some PSCs repeated the exact language about the same project in numerous monthly reports. Moreover, we found no consistency across the PSCs regarding the level of detail about proactive data analysis included in the monthly status reports." In response, CMS stated it is difficult to compare PSCs. However, the agency stated that it has begun implementing a new strategy for aligning the jurisdictions of PSCs with the jurisdictions of claims-processing contractors, a move it believes will make it easier to compare PSCs in the future. CMS also noted that it has begun allocating funds to PSCs based on performance, workload and Medicare program vulnerabilities.