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 (plan sponsors) for fourth quarter 2021. The most prominent suspect was misrepresentation of services/products (48.87%). Three categories of FWA allegations accounted for 78.47 percent, 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 achieve CMS Fraud, Waste and Abuse compliance.   

  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 a 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, 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 and associated providers, especially when there are frequent referrals by prescribers to certain providers.   
  1. Billing for services not rendered (or partially provided) – If a plan member sits in the waiting room or game room of a medical care facility watching television, it does not make it a billable encounter. This would constitute billing for service (“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.

    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 or 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.  
  1. 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.

    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 reviewed.   

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; members should review their Explanation of Benefits to confirm they have, indeed, used the paid services. Otherwise, report to the plan any suspicious claims and inform them that unchecked FWA practices would ultimately cost them higher premiums and cost sharing.  

Inovaare has the technology to support plan sponsors in their surveillance efforts — programmatic analytics for data and training the plan’s staff to implement monitoring processes. We know operations vary from plan to plan, so we tailor our supportive programs to meet each plan’s needs in the continuous efforts of CMS fraud waste and abuse detection, prevention and correction.

For more details, please contact us at or 408-850-2235