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Using CMS Data for Identifying Potential FWA

by Yvonne Tso, Pharm. D., MBA



On April 15, 2022, the Centers for Medicare & Medicaid Services (CMS) released potential fraud, waste and abuse (FWA) trending data collected from Medicare Advantage Prescription Drug Plans (MAPDs) for Q4 2021. The most prominent suspect was misrepresentation of services/products (48.87%). Three categories of FWA allegations accounted for more than three-quarters of all reported. Examples include upcoding, providing a power wheelchair when a manual one was provided, billing for services that were never performed or partially performed, and drug diversion. We highlight below the most common allegations and suggest ways to detect, prevent and correct.


1. Misrepresenting Services/Products – Misrepresentation can be disguised in various ways; e.g., misrepresentation of dates (each office visit being a billable event, a member’s visit 4 times a week are paid more than weekly encounters), location (payments for a procedure performed in a physician office are less than in a hospital outpatient department) or provider (procedure performed by a physician assistant instead of a physician). Dishonest durable medical equipment (DME) suppliers concoct different schemes to bill for different and/or more expensive equipment than provided. Another DME scam consists of providing unnecessary equipment or not supplying the medical equipment at all or providing it for an indication not eligible for Medicare. DME is a Medicare covered benefit when it is medically necessary and if the equipment is approved by the Food and Drug Administration[1], similar to prescription drugs.


Detection, Prevention and Correction: FWA activities tend to be recurrent, thus forming a trend or a pattern. CMS scans and dissects the collected data to identify trends based on cumulative incidents. Plan sponsors can do the same by stratifying the claims data to select high dollar or high volume procedure codes[2] and associated providers especially when there are frequent referrals by prescribers to certain providers.


2. Billing for services not rendered (or partially provided) – A plan member sitting in the waiting room or game room of a medical care facility watching television does not make it a billable encounter. This would constitute billing for services (“office visit”) not rendered, if the member was not seen by a provider. The same can be applied to some pain management procedures that are performed monthly but are billed weekly or bi-weekly. Conversely, claims for pain management procedures are submitted when the plan member is taking pain medications instead of undergoing the procedures.[3]


Detection, Prevention and Correction: Chronic low back pain is common. Since prescribers have been cautioned about using opioids for chronic pain, we have seen rising volumes of claims for pain management procedures. CMS has guidelines (Local Coverage Determination/National Coverage Determination) for the different procedures such as epidural injections and electrical stimulation. Follow the guidelines to prevent inappropriate use. Define and approve units deemed medically necessary. Scan the claims data to detect overutilization and verify the claims are for authorized quantities and place of service for the procedures.


3. Drug diversion – Drug diversion occurs at multiple levels: pharmacy, wholesale, provider and beneficiary. CMS considers drugs used for unintended purposes “diversion”. Examples include using anti-fungal/anti-bacterial drugs in footbaths to prevent infection rather than to treat infection as a result of telemarketing schemes. These schemes also promote nasal rinse and mouthwash preparations containing antibiotics, antifungals, and steroids as preventative measures and not for treatment of an active disease.[4]


Detection, Prevention and Correction: CMS’ data source is nationwide. If the data show spikes in usages of the drugs in question, plan sponsors should scan its drug claim data to detect if similar patterns prevail. Members may need to be contacted to determine what they believe to be the indications for the drugs and medical records..


Confirming FWA is time-consuming. Results can be equivocal without diving deep into the investigative process. Taking the first step – dissecting the data and identifying potential suspects – is necessary. Alerting and educating members of some basic measures can complement the plan’s surveillance. For example, members should review their Explanation of Benefits to confirm they have indeed used or received the paid services, otherwise report to the plan any suspicious claims. Informing members that unchecked FWA practices may ultimately cost them higher premiums and cost sharing provides an incentive for reporting suspicious claims.


[1] Approval requirement varies with type and classification of the device/equipment [2] Current Procedural Terminology codes and Healthcare Common Procedure Coding System [3] It is possible for a plan member to be undergoing procedures for pain and taking pain medications concurrently. [4] Drug Trend Analysis Attachment I Methodology February 2021

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