Transcript for the audio podcast:
Contractors' Fraud Prevention Activities in Community Mental Health Centers
From the Office of Inspector General of Department of Health and Human Services
[Jaime Durley:] I'm Jaime Durley, Deputy Regional Inspector General for the Office of Evaluation and Inspections. I'm speaking with Evan Godfrey, a program analyst in our office about a report called Vulnerabilities in CMS's and Contractors' Activities To Detect and Deter Fraud in Community Mental Health Centers. Evan, can you tell us about community mental health centers?
[Evan Godfrey:] Sure. Medicare covers partial hospitalization programs for community mental health centers. Now, these programs are designed for patients who are at risk of being hospitalized because of mental disorders, and this provides less expensive outpatient services in a community setting, giving patients more independence and saving Medicare money.
And in 2010, Medicare paid 206 of these centers approximately $218 million for providing these services to about 25,000 Medicare beneficiaries.
[Jaime Durley:] And what role does the Centers for Medicare & Medicaid Services, or CMS, play with regard to community mental health centers?
[Evan Godfrey:] Well, CMS and its contractors generally oversee centers to make sure that they operate within Medicare's guidelines. CMS works with contractors to process claims, to prevent improper payments, and to help detect and deter fraud. Some contractors investigate potentially fraudulent centers, and they may refer these centers to law enforcement for criminal charges. They also can recommend that CMS suspend or revoke billing privileges.
[Jaime Durley:] So Evan, why did you look into community mental health centers?
[Evan Godfrey:] Well, there have been several arrests and convictions of fraud among owners and operators in the past few years. For example, dozens were convicted in a $205 million fraud case against the American Therapeutic Corporation, which owned a line of centers in Miami. Also, OIG issued a report in 2012 that found that approximately half of all centers had questionable billing in 2010...
[Jaime Durley:] Half?!
[Evan Godfrey:] Yea, half. And most of these were in eight cities in Florida, Louisiana, and Texas. Additionally, OIG's past work has found problems with CMS oversight of contractor operations.
[Jaime Durley:] So you looked into CMS's and contractors' oversight of community mental health centers. How'd you go about this study?
[Evan Godfrey:] Well, we analyzed how CMS and contractors tried to mitigate fraud in centers in 2010. This includes counting things like site visits, claims they reviewed, as well as revocation recommendations or approvals. We also analyzed Medicare claims data to determine how much Medicare paid centers with suspensions or revocations.
[Jaime Durley:] And what exactly did you find?
[Evan Godfrey:] Ah, now we found that the majority of contractors performed few, if any, activities to address fraud. In one example, we reviewed 3 contractors, and only 1 of these was responsible for almost all activities to detect and deter fraud. That contractor investigated 78 percent of the centers in its jurisdiction, while the other contractors investigated only around 5 percent of their centers. It was also responsible for 8 of the 9 total centers referred to law enforcement.
[Jaime Durley:] Is there a reasonable explanation for this? Maybe the other contractors had more centers that operated properly?
[Evan Godfrey:] Well, actually, the other contractors worked with centers in fraud-prone areas too. They estimated that at least 50 percent of those center's claims were potentially fraudulent.
[Jaime Durley:] Wow! Fifty percent were estimated to be potentially fraudulent? So, why were so few contractors doing anything to detect and deter fraud?
[Evan Godfrey:] That's a good question. The contractors that did most to mitigate fraud were part of a CMS-led special project to address community mental health center fraud in Florida. Now, the other contractors didn't have any special projects to address fraud in their areas.
[Jaime Durley:] Interesting. So when CMS and the contractors performed activities to detect or deter fraud, were they done properly?
[Evan Godfrey:] Unfortunately, there were some problems here too. Medicare paid approximately $640,000 to five centers with revoked billing privileges. Also, CMS averaged 10 months to approve revocations for 9 centers, and during that time, Medicare continued to pay them approximately $2.5 million.
[Jaime Durley:] Evan, CMS is ultimately responsible for this program, so what are you recommending they do to improve?
[Evan Godfrey:] Well, CMS should implement additional fraud prevention activities, like those used in the CMS-led special project, in other fraud-prone areas. CMS also needs to improve its communication with contractors, this would better track centers with revoked billing privileges, and they need to follow up on inappropriate payments.
[Jaime Durley:] And how, exactly, did CMS respond to these recommendations?
[Evan Godfrey:] CMS agreed with all of our recommendations. It also shared information on its new Fraud Prevention System, which uses predictive analytic technology on claims. This should help identify suspicious claims, and centers, so that CMS can act quickly.
[Jaime Durley:] Evan Godfrey, a program analyst for the Office of Evaluation and Inspections. I want to thank you so much for sharing this important work on Vulnerabilities in CMS's and Contractors' Activities To Detect and Deter Fraud in Community Mental Health Centers.
[Evan Godfrey:] Thank you.
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