The Ten Things that Haven’t Been Discovered Yet, Trying to Find $42 Billion in Prevention
By Frank Cohen, Director of Analytics and Business Intelligence
Recently, CMS released a report stating that, for the period of CY 2013 and 2014, through the use of a myriad of prevention and detection tools, they prevented some $42 billion in payments to providers from being made. According to this report, between 65% and 75% of the payments, or around $29 billion was chalked up to savings rather than recoupment. Since the report was released, I have read through it several times and while I applaud any effort to reduce fraud, waste and abuse, I was a bit surprised by the $42 billion dollars over just two years. This is the first time that I have heard of such a large amount and I wish that CMS would have provided a better breakdown of where the money came from. For example, how did they prevent 70+ percent of all payments and where did the remainder of the dollars come from? And while we’re at it, just what constitutes savings? Is it just payments that weren’t made that should have been made? For example, in the 2014 report to congress, CMS bragged about preventing $820 million dollars in payments from being made as a result of the Fraud Prevention System, which accounts for the predictive analytics mentioned in the article. In fact, if you take the press release at face value and apply the 70% or so that is claimed to have been prevented, that means that, for 2013 and 2014, CMS prevented the payout of some $29 billion and I can’t say that I believe that is really possible. I imagine that a lot of these dollars had to come from penalties, such as under the false claims act, which can multiply thousands of dollars in overpayments to tens of millions of dollars in penalties. Interestingly enough, when you look at recoupment efforts published by CMS, we saw a precipitous decline in 2014 over 2013, but I may not be seeing the big picture. Even in the 2015 CERT study, while extrapolated overpayments are in the billions of dollars, they are nowhere near the tens of billions of dollars being reported.
What’s frustrating to me, as a statistician, is the inability to validate these claims at a more granular level. And I have spoken with others that share that feeling. At an ROI of 12.4 to 1, it means that CMS spent around $3.3 billion to get to the $42 billion mark. And I get the ROI of 12.4 to 1, but what I don’t get is where the numbers actually come from. I mean, it seems that there is a huge disconnect between the $820 million claimed in 2014 under the fraud prevention system and the $29 billion claims here using that plus other techniques. In fact, if this is true; if there is another $28 billion in savings that came from other programs; in essence, where the FPS program was only responsible for 1.9% of all prevented payments, then maybe it should be scrapped as there isn’t any way that it could have a positive ROI, at least not based on these other numbers. Reporting savings in and of itself is pretty nebulous. For example, yesterday, I was driving down the New York Thruway and I passed three state cops that were using radar to check for speeding. So, because I was not speeding and did not get a ticket, I saved several hundred dollars in fines. As ridiculous as that sounds is how ridiculous CMS claims sound to me.
In the end, my problem is that I just don’t believe the numbers and at least from my experience, CMS has not proven to be very reliable in the past when it came to reporting these types of metrics. So, while I still agree with preventing fraud, waste and abuse, I will reserve my judgement as to the accuracy of CMS’s numbers until they publish something that provides some degree of detail that can be validated by outside analysts. This reminds me of George Carlin’s book “the ten things that haven’t been discovered yet.”
And that’s the world according to Frank.