July 16, 2015
On July 14, 2015, CMS issued a report regarding its implementation of the Fraud Prevention System, which uses predictive analytics to manage government fraud and False Claims Act investigations. According to this report, CMS identified or prevented $820 million in inappropriate payments in the program’s first three years. Moreover, CMS identified or prevented $454 million in 2014.

This data underscores the importance for providers to monitor their Medicare and Medicaid payment and claims data. As the CMS report makes clear, the government is aggressively using deviations from other provider data to highlight outliers for investigation. In addition to raising the spectre of an investigation, the government and relators are using statistical sampling to determine FCA liability. Draconian damages may be based entirely on statistical sampling and extrapolation, which avoid the cost of an expert’s review of individual patient charts.

These compliance risks require that providers, especially high-volume producers, proactively identify and understand any outlier data. Such a review will be evidence of an effective compliance program and enable the provider to anticipate an exculpatory response to a potential subpoena. Failure to review the data may subject providers to potential liability under the False Claims Act. Because the findings of any internal data review may be sought by the government or potential whistleblower, it is critical that a provider take the necessary steps to ensure the confidentiality of its review.