21st Century Cures Act looks to battle Medicaid fraud

Passing the 21st Century Cures Act legislation circling Capitol Hill could enhance state and federal efforts to reduce fraud in the Medicaid program.

The Cures Act—originally devised to reform the process for approving prescription drugs and medical devices and boost medical research funding—now contains provisions that would create a centralized database that must be maintained by HHS, which will include providers terminated by Medicaid in any state. It also builds centralized enrollment standards that explain what doctors must submit to enroll into Medicaid.

The rate of improper Medicaid payments has ballooned over the past few years—from $14.4 billion in fiscal 2013 to $29.1 billion in fiscal 2015, according to federal data.

An improper payment can occur when funds go to the wrong recipient, the right recipient receives the incorrect amount of funds, documentation is not available to support a payment or the provider uses funds in an improper manner. The tally also includes fraudulent claims.

Unlike Medicare, Medicaid has no national enrollment database for providers. Instead, providers enter into agreements directly with the states.

Last year, the CMS announced it was in the early stages of seeking a vendor to create a new version of its Medicare Provider Enrollment, Chain and Ownership System, or PECOS, which would be expanded to include Medicaid provider enrollments. Federal contracting records show a contractor has yet to be selected.

If the Cures Act is passed, states would have to submit information about providers terminated from their Medicaid programs by July 2018. Providers are terminated for reasons related to fraud or for committing criminal acts.

Some of the information states would submit includes biographical information like date of birth and Social Security number as well as a national provider identifier and state license or certification number. States also would outline why the provider was terminated. States would have 30 days to determine if the termination is appropriate. If it is, it would go in a national database.

The provision appears to be in response to an HHS Office of Inspector General report that noted a lack of a comprehensive, centralized data source that identifies terminated doctors.

Implementing the proposal could help states mitigate fraud in Medicaid and improve insufficient communication among government agencies, according to an analysis by the National Association of Medicaid Directors.

Certain types of providers—those who work in personal care, home care, medical equipment and transportation—are more common perpetrators of Medicaid fraud. Once blacklisted in one state, these and other types of providers sometimes switch or steal identities and credentials or falsify their entire records, said Kip Piper, a Washington-area consultant and former senior official at the CMS.

“In other cases, bad apples simply fall through the cracks in the provider enrollment and credentialing process,” Piper said. “Having a centralized database would help state Medicaid agencies and Medicaid health plans to verify that a provider has not been excluded elsewhere and match up identification numbers and credentials faster.”

“The centralized database is certainly helpful in the efforts to curb those providers who are convicted in one state of committing Medicaid fraud from moving to another state and repeating the fraudulent practices,” Capt. Brian Ley, commander of the Illinois State Police's Medicaid Fraud Control Bureau.

Others were unsure if the centralized database would help much. “Due to provider shortages in some states, excluded or censured providers may not be denied the ability to practice and bill in that state,” said Anastasia Burton, a spokeswoman for Montana's Justice Department.

It was unclear to some observers why lawmakers felt the need to require providers to give their name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number and the state license or certification number, since the suggested data are likely already collected.

“It's hard for me to imagine a state enrolling a provider without at least the basic information listed,” said Tom Dehner, a former Massachusetts Medicaid director who is now a principal at consulting firm Health Management Associates.

Others saw potential drawbacks to the standardization as it “could decrease the ability of Medicaid programs and plans to increase performance expectations and decertify providers with repeated or serious problems,” Piper said.


Virgil Dickson

Virgil Dickson was reporting from Washington on the federal regulatory agencies. His experience before joining Modern Healthcare in 2013 includes serving as the Washington-based correspondent for PRWeek and as an editor/reporter for FDA News. Dickson earned a bachelor's degree from DePaul University in 2007.

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