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CMS reports on first year of Medicare Fraud Prevention System

December 18, 2012

The Centers for Medicare & Medicaid Services Friday issued its first annual report to Congress on the Fraud Prevention System, which uses predictive algorithms to analyze Medicare fee-for-service claims prior to payment to identify potential errors or fraud. The Small Business Jobs Act of 2010 called for phasing in the technology in the 10 highest fraud states by July 1, 2011, and nationwide by 2014. Instead, CMS implemented the system in one step and began running the analytics against all Medicare fee-for-service claims by July 2011. CMS said it plans to better integrate the FPS and Medicare claims processing systems in the second year of the program; improve and expand the FPS models and data; and identify and share FPS algorithms relevant to Medicaid. In September, the Department of Health and Human Services' Office of Inspector General recommended that CMS revise the methodology used to calculate actual and projected savings from the FPS. Among other changes, CMS said it is evaluating the application of a corrective factor that would systematically account for legitimate services and claims overturned on appeal.