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ASSESSMENT OF PRE-PAYMENT CLAIMS REVIEW FOR COMBATING HEALTH CARE FRAUD SCOPE OF WORK (REMIS # HP-10-013) BACKGROUND

The Medicare program faces significant financial challenges in the years ahead. The rate of growth in Medicare spending exceeds the growth rate of both the U.S. economy and the revenues collected to finance the program. Current projections indicate that the Medicare Hospital Insurance Trust Fund will become insolvent in 2017. Fraudulent practices likely take place throughout the health care system. Estimates of the extent and distribution of fraud in the Medicare program vary considerably. The most frequently cited estimates of the amount of fraud in the Medicare program range from between 3 percent to 10 percent of total Medicare spending. Current efforts to detect fraud in the Medicare program rely extensively on post-payment claims review, where claims are examined for anomalies and possible fraud after Medicare has paid the provider for the billed service(s). Alternative methods of fraud detection are currently being employed by commercial insurance carriers. These pre-payment methods incorporate sophisticated predictive models to identify claims and providers for further investigation. The purpose of this project will be to undertake an assessment of the application of pre-payment fraud detection methods to the Medicare program. This project will focus on the following questions: • How well do predictive modeling approaches perform in detecting fraud compared to current Medicare control approaches (both pre-payment and post-payment)? • What, if any, savings would be realized by implementing a pre-payment approach? SPECIFIC TASKS Task 1. Subtask 1.a. Project Management Initial Project Meeting

An initial project kick-off meeting shall be held within two weeks after the start of the contract with the Task Order Officer (TOO) and other Federal staff at the ASPE offices in Washington, DC or by teleconference. The purpose of this meeting shall be to discuss the objectives of the contract and any related project issues. Specific topics to be discussed include, but are not limited to, purpose and goals of the project, scope of work, subject matter experts that might be contacted

during this project, the project schedule, and project management. Prior to this meeting, the contractor shall develop a draft agenda for the TOO’s review and approval. Within one week after the meeting, the contractor shall prepare a brief memorandum summarizing the issues discussed at this meeting, which shall be submitted to the TOO via e-mail. Subtask 1.b. Monthly Progress Reports

The contractor shall provide a monthly written progress report indicating key activities conducted, funds spent during that month, and cumulative funds expended. This report shall also include a brief discussion of upcoming activities for the next month. The monthly progress reports shall be submitted to the TOO via e-mail. Task 2. Develop Workplan

The contractor shall develop a workplan that will serve as a guide for the activities and products of this project. This workplan shall present a discussion of the analytic approach for developing the baseline estimate approach, the required data sources, result table specifications, key project milestones, and the identification of key project staff and roles. The draft workplan shall be delivered six weeks into the project. Allowing one week for review and comment by the TOO and one week for the contractor to incorporate comments from the TOO, this workplan shall be finalized eight weeks into the project. Task 3. Data Acquisition

The primary source of data for this study shall be Medicare enrollment and claims data. These data shall be a mix of all fee-for-service claims/enrollment records for a given geographic area and a smaller sample (e.g. 1 percent or 5 percent) of claims enrollment data across all geographic areas. Further, two or more consecutive years of data might be required to conduct the required analysis. The contractor shall be responsible for obtaining and submitting the Data Use Agreements (DUAs) with the Centers for Medicare and Medicaid Services and other steps necessary for acquiring these data. ASPE will assist in this process only when necessary. Task 4. Conduct Analysis

The primary analytic activities of the project shall be performed within this task. Specifically, the contractor shall use its proprietary software and other statistical tools required to develop claimspecific “fraud risk” scores that reflect the probability that the claims are fraudulent. These resulting risk scores shall be summarized in a set of statistical tabulations arrayed by geographic area, provider type, service type and other variables of interest as specified in the workplan. The contractor shall also produce estimates of potential Medicare savings from the detection of

fraudulent claims. These estimates shall also be arrayed by geography, provide type, service type, and other variables of interest. Task 5. Subtask 5.1. Project Briefing and Final Report End of Project Briefing

The contractor shall develop and present a final briefing on the project to the TOO, senior agency officials and staff. The presentation will delineate the approach and key findings of the project. All briefing materials shall be submitted to the TOO one week prior to the briefing for review and approval. The timing of this briefing will be subject to scheduling considerations but shall be held approximately one month prior to the delivery of the draft final design report. This will permit sufficient time for the contractor to incorporate any comments/discussion during the briefing into this final report. Subtask 5.2 Project Final Report

The final design report shall delineate the methodological approach, the information required, the sources of that information, and the costs required to develop these baseline estimates. The draft report shall be due 26 weeks after the start of the project. The report shall be considered finalized after all comments provided by the ASPE TOO have been incorporated. The final report will conform to the standards in Attachment 1. SCHEDULE OF DELIVERABLES This project shall be 6 months in duration. The key project deliverables are delineated below in Exhibit 1. Exhibit 1. Schedule of Deliverables Due Date__ ___ 3 weeks ADA* monthly beginning in week 4 3. Draft Workplan 6 weeks ADA 4. Final Workplan 8 weeks ADA 5. Project Briefing To be determined 6. Draft Final Report 23 weeks ADA 7. Final Report 25 weeks ADA ______________________________________________________________________ *= after date of award. Deliverable 1. Initial Project Meeting Summary Memo 2. Monthly Progress Reports

ATTACHMENT 1 – SPECIAL CONTRACT REQUIREMENTS Rights In Data Advance Approval for Dissemination of Project Information Prior to Contract Completion The Contractor agrees not to release or disclose, verbally or in writing, information pertaining to the results or findings of work (including data collection, analyses, draft or final papers and reports) for the Period of Performance of this individual Task Order, under this Contract, without obtaining prior written approval of the Government Task Order Monitor. The Contractor must request approval in advance (minimum 21 days prior to release) and in writing, specifying: who or what is generating the request for advance information; when and how project results/information would be released; and what information would be released. A failure to receive a response from the Government Task Order Monitor does not constitute approval for releasing information. Specifications for the Delivery of Digital Copies of Reports The specifications listed below are required in all ASPE contracts where the product is expected to be a report or other document. They are intended to facilitate the retention of electronic copies of these reports for future use and to provide for translation or conversion of these electronic copies into the hypertext markup language (html) and other formats used on the Internet. In addition to the printed copies required under the contract, a digital copy of the report shall be delivered on media readable by Windows programs. The text, tables, and any charts or other graphics shall be organized and formatted as described in the following paragraphs. • Text may be formatted in any of the commonly available word processing programs marketed by the IBM®, Corel®, or Microsoft® corporations. Where compatibility with earlier versions of the software is in doubt, files shall be delivered in the penultimate version of the software. • Provide a single file that contains the whole document ready for printing. It should reproduce the printed report exactly. • In addition, lengthy documents (greater than roughly 500 Kb) should be divided into several parts and a separate file should be provided for each part. Lengthy files (greater than 200 Kb) should be avoided if possible. File names should contain consecutive numbers that correspond to the numerical labels used in the printed version. For example, Chapter 2 can be saved as ch2.doc, Chapter 4-Figure 2 as c4f2.gif. File extensions shall be those used by the software manufacturer or follow the usual industry conventions, e.g., doc, wpd, xls, gif, jpg, etc. • Tables and tabular material shall NOT be converted into graphical images, but be included with the word processing files or delivered as spreadsheet files (Excel® or Quattro Pro®). • Graphic figures such as bar and line charts, diagrams, and other drawings shall be delivered in the GIF (Graphics Interchange Format) or the JPEG (Joint Photographic Experts Group) format. Graphical elements may be merged with the text to form a single file for printing

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purposes or they may be delivered as separate files. Adobe's Portable Document Format (PDF®) may NOT be substituted for the above word processing formats. An unlocked, PDF version may be provided in addition to the word processing version, but it is not required. Provide presentations, such as PowerPoint®, as separate files. Datasets must have complete documentation.

Section 508 Compliance The deliverables must comply with the Department of Health and Human Services Section 508 Compliance Requirements. This language is applicable to Statements of Work (SOW) or Performance Work Statements (PWS) generated by the Department of Health and Human Services (HHS) that require a contractor or consultant to (1) produce content in any format that could be placed on a Department-owned or Department-funded Web site; or (2) write, create or produce any communications materials intended for public or internal use; to include reports, documents, charts, posters, presentations (such as Microsoft PowerPoint) or video material that could be placed on a Department-owned or Department-funded Web site. Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d) requires Federal agencies to purchase electronic and information technologies (EIT) that meet specific accessibility standards. This law helps to ensure that federal employees with disabilities have access to, and use of, the information and data they need to do their jobs. Furthermore, this law ensures that members of the public with disabilities have the ability to access government information and services. There are three regulations addressing the requirements detailed in Section 508. The Section 508 technical and functional standards are codified at 36 CFR Part 1194 and may be accessed through the Access Board’s Web site at http://www.access-board.gov. The second regulation issued to implement Section 508 is the Federal Acquisition Regulation (FAR). FAR Part 39.2 requires that agency acquisitions of Electronic and Information Technology (EIT) comply with the Access Board’s standards. The entire FAR is found at Chapter 1 of the Code of Federal Register (CFR) Title 48, located at http://www.acquisition.gov. The FAR rule implementing Section 508 can be found at http://www.section508.gov. The third applicable regulation is the HHS Acquisition Regulation (HHSAR). Regardless of format, all Web content or communications materials produced for publication on or delivery via HHS Web sites - including text, audio or video - must conform to applicable Section 508 standards to allow federal employees and members of the public with disabilities to access information that is comparable to information provided to persons without disabilities. All contractors (including subcontractors) or consultants responsible for preparing or posting content intended for use on an HHS-funded or HHS-managed Web site must comply with applicable Section 508 accessibility standards, and where applicable, those set forth in the referenced policy or standards documents below. Remediation of any materials that do not comply with the applicable provisions of 36 CFR Part 1194 as set forth in the SOW or PWS, shall be the responsibility of the

contractor or consultant retained to produce the Web-suitable content or communications material. The following Section 508 provisions apply to the content or communications material identified in this SOW or PWS: Access Board Final Rule “36 CFR 1194.22(a)-(p)”