Medicare To Adopt New Billing System Intended To Reduce Fraud Cases

The Small Business Lending Act, which President Obama signed into law on Monday, includes an anti-fraud provision that soon will require Medicare to do more to prevent fraud, the Miami Herald reports.

CMS' out-of-date billing system has facilitated more than $60 billion in Medicare fraud annually, according to the Herald.

Under the new provision, CMS will be required to stop its 45-year policy of approving claims quickly without first verifying them.

New Software

By next year, CMS must implement new billing software with "predictive modeling," a type of analytical technology that already has been adopted in the credit card industry to identify potentially fraudulent bills.

The provision requires CMS to launch a competitive bidding process by January for predictive modeling software contractors and to begin implementing the technology by July in the 10 states with the highest Medicare fraud rates.

Medicare billing contractors will be required to use the new technology for hospitalization and outpatient services, which make up the bulk of Medicare's spending, the Herald reports.

Reporting Outcomes

After the first year of implementation, HHS will be required to submit a report to Congress detailing the actual savings. If the savings are substantial, some of that money could be used to implement the technology in 10 additional states.

Peter Budetti -- CMS deputy administrator for program integrity -- said the agency already has implemented in some areas a pilot billing program with predictive modeling capabilities.

Sen. George LeMieux (R-Fla.), the provision's sponsor, said the estimated 10-year, $930 million cost of the new technology eventually would be offset by the expected savings (Weaver, Miami Herald, 9/29).