Key Algorithmsfor Payment Integrity

–Helping you fight fraud, waste and abuse with innovative solutions

One of your primary goals as a government

agency is to fight fraud, waste and abuse at

each stage — from prevention to detection to

recovery. And IBM Watson Health can help.

Our robust library of hundreds of algorithms

can help strengthen your payment integrity

program while supporting valuable discoveries

along the way.

Please use this guide book as a reference

for your organization, and don’t hesitate to

contact us via email at govsta@us.ibm.com

for further assistance.

Each year IBM Watson Health™ identifies and releases a set of

key fraud-fighting algorithms that have yielded positive results for

our customers. Collated and prepared by our program integrity

analysts, Accredited Health Care Fraud investigators, and subject

matter experts, this resource is your opportunity to discover

effective ways to find and recover program dollars.

The purpose of this algorithm is to identify instances in which personal care services (PCS) are rendered outside of the dates of service listed on the prior authorization documentation, have no record of an associated prior authorization, or the services rendered exceed the approved amount in the prior authorization.

Prior Authorization AnalysisPRIO

R AUTHO

RIZATION

ANALYSIS

Category: Prior Authorization

Effort: Medium

Data required: PCS claims, prior authorization data, a policy to support algorithm

Services that require prior authorization should be routinely monitored to ensure the terms of the prior authorization are being met.

PCS are one of the areas the Center for Medicare and Medicaid Services (CMS) identifies as high risk for improper payments.

Did you know?

31

Capitation Rate Audits and Reviews

CAPITATION

RATE AUDITS AND REVIEW

S

Category: Administrative Recoveries and Adjustments

Effort: Medium

Data required: Managed care capitation payment data, member eligibility data, MCO plan descriptions and rates

The age and gender of members on an MCO plan should be verified and monitored soon after a member enrolls in a plan to ensure that the capitation rates paid to providers are appropriate.

It is not uncommon for individuals signing up for healthcare coverage to inadvertently select an incorrect age or gender. Therefore, the capitation payments made on behalf of that beneficiary are based on incorrect information.

Did you know?

Age and gender are generally taken into consideration when determining the capitation rate for an individual on a Managed Care Organization (MCO) plan. Males typically see a doctor less often than females, therefore the capitation rate for a male would be lower than for a female. Similarly, older people will typically require more services compared to younger people and therefore have higher capitation rates. If an incorrect age or gender is entered into the system, the capitation rates paid to providers will be impacted. The purpose of this algorithm is to identify managed care capitation payments paid by the health plan for the incorrect age or gender.

Home Ventilator AnalysisH

OM

E VENTILATO

R ANALYSIS

Category: Waste

Effort: Low

Data required: CMS-1500 professional claims, a policy to support algorithm

For more clear-cut results and recoveries, only include oxygen contents and accessories billed by the same provider as the rented oxygen system.

• Healthcare Common Procedure Coding System (HCPCS) codes for oxygen contents include E0441 through E0444.

• HCPCS codes for oxygen accessories (such as codes for cannulas, masks, tubing) include A4615, A4616, A4619, A4620, A7525 and A7526 (not an all-inclusive list).

• HCPCS codes for oxygen systems include E0424, E0431, E0434, E0439, E1390, E1405 and E1406.

Did you know?

The purpose of this algorithm is to identify members with home ventilators who lack the appropriate medical history and flag them as not having a medical necessity for the device. Home ventilators are an appropriate treatment for neuromuscular diseases, thoracic restrictive diseases and chronic respiratory failure due to chronic obstructive pulmonary disease.

Duplicate Inpatient ClaimsDUPLICATE IN

PATIENT CLAIM

S

Category: Improper Billing

Effort: Medium

Data required: Inpatient claims

It might be helpful to categorize your findings into various buckets. Each bucket may require a different audit approach.

• Fee-for-service (FFS) Only• Same billing provider• Different billing provider• FFS and Managed Care (MC)• Same billing provider• Different billing provider• MC Only• Same billing provider• Different billing provider

There may be several reasons for potentially duplicate claims. Some potential hypotheses include:• A provider billed the wrong dates of service on one or both claims,

which caused the claims to appear as duplicates.• A provider billed both an inpatient and an inpatient crossover claim

for the same inpatient stay, and the provider intended to void one of the claims (but never did).

• A provider billed both an inpatient FFS claim and an inpatient MC encounter for the same inpatient stay, and the provider intended to void one of the claims (but never did).

Did you know?

The purpose of this algorithm is to identify inpatient claims (and managed care encounters) with the same first date of service and/or same last date of service as another inpatient claim for the same recipient. Multiple inpatient claims for the same recipient with the same admission or discharge date is not expected. We consider these claim pairs to be “potentially duplicate”.

Supplies Billed with National Drug Codes (NDCs)

SUPPLIES BILLED WITH

NATIO

NAL DRUG

CODES (N

DCS)

Category: Abuse

Effort: High

Data required: 510(K) NDC numbers, pharmacy claims

Medical devices or products with an NDC number can be submitted on a pharmacy claim and are often paid at a high rate under the pharmacy benefit. Implementing edits or measures to limit submission of these products on pharmacy claims can be a cost-saving measure.

The FDA approves 510(K) medical devices without clinical trials or inspection typically within 90 days. These medical devices require only a paper application and are likely common products like creams, gels or scar and dermatitis products submitted on a pharmacy claim with a high average wholesale price (AWP)

Did you know?

This algorithm identifies medical devices with a 510(K) clearance from the Food and Drug Administration (FDA) that were submitted with an NDC number on a pharmacy claim.

Intensity-Modulated Radiation Therapy (IMRT) Planning Unbundling

INTEN

SITY-MO

DULATED RADIATION

THERAPY (IM

RT) PLANN

ING

UNBUN

DLING

Category: Waste

Effort: Medium

Data required: Outpatient claims

This is a new approach, so the following steps are recommended:

• Conduct a historical review of these claims and request reimbursement for any component codes billed within 14 days prior to a bundled code.

• Consider implementing a new policy around IMRT planning bundled services.

• Create an edit to deny the bundled payment until the claim with the component code is adjusted.

Procedure-to-Procedure (PTP) edits are designed to reject component IMRT planning service codes when billed on the same day as a bundled code. In August 2018, the Office of Inspector General (OIG) proposed a recommendation to CMS and CMS agreed to implement an edit to prevent improper payments for component IMRT planning service codes billed up to 14 days before an IMRT planning bundled code.

Did you know?

The CMS MLN Matters article released on September 11, 2018 states “IMRT is a procedure that delivers radiation with adjusted intensity to preserve adjoining normal tissue. IMRT is provided in two treatment phases: planning and delivery. Medicare pays hospitals under the outpatient prospective payment system (OPPS) a bundled payment for the planning phase. The bundled payment covers a range of services that may be performed as part of developing an IMRT treatment plan. The bundled payment covers these services regardless of when they are billed.” The purpose of this algorithm is to identify instances in which providers bill for component IMRT planning services within 14 days prior to billing an IMRT planning bundled code. The component codes are included in the IMRT-bundled code and should not be billed separately.

Emergency Oral ExamsEM

ERGEN

CY ORAL EXAM

S

Category: Overutilization, abuse (if billing D0140 when another type of dental exam was provided)

Effort: Medium

Data required: Dental claims

• Dental/Medical record documentation will be required to determine the type of oral exam rendered and to determine if the provider billed the appropriate CDT code on the dental claim.

• Consider calculating each provider’s percentage of claims billed with CDT D0140 to prioritize potential audit candidates.

• Consider running this analysis at both the billing provider and servicing provider level to identify both types of providers who are potentially overusing this CDT code.

The 2019 CDT code book published by the American Dental Association provides the following description for CDT code D0140:D0140 Limited oral evaluation – problem focused

An evaluation limited to a specific oral health problem or complaint. This may require interpretation of information acquired through additional diagnostic procedures. Report additional diagnostic procedures separately. Definitive procedures may be required on the same date as the evaluation.

Typically, patients receiving this type of evaluation present with a specific problem and/or dental emergencies, trauma, acute infections, etc.

Did you know?

Policy may allow providers to bill Current Dental Terminology (CDT) code D0140 (Limited oral evaluation – Problem focused) for dental emergencies and conditions requiring immediate medical attention. The focus of this algorithm is to identify providers billing this procedure code more frequently than their peers. It is possible that high utilizers of D0140 may be billing emergency oral exams when a different oral evaluation code would be more appropriate. Other oral exams may be limited to a certain number of exams per calendar year (for example) and a provider might bill for an emergency oral exam to bypass claims adjudication system edits that limit other types of oral exams.

Drug ScreensDRUG

SCREENS

Category: Fraud

Effort: Medium

Data required: Professional, outpatient, and inpatient claims and a policy to support the algorithm

Drug screen claims are typically submitted by a laboratory provider but may be submitted by a physician’s office depending on the drug screen code that is used (for example, 80305 – Optical observation or the dipstick/cartridge urine test) but they must have appropriate Clinical Laboratory Improvement Amendments (CLIA) certification for the test that was performed.

Typically, a presumptive drug screen is performed first and if it comes back positive, a definitive test is ordered to find the exact drug and concentration. However, a provider can also use definitive screens if a certain drug does not routinely show up in a presumptive drug test. Definitive drug testing for more than seven drug classes should only be done for rare circumstances.

Did you know?

This algorithm identifies drug screen claims that overlap with the admission and discharge dates of a recipient’s inpatient hospital stay.

BRCA UnbundlingBRCA UN

BUNDLIN

G

Category: Unbundling

Effort: Low

Data required: Professional lab claims

Billing for new codes should be monitored closely for these high dollar tests, which should only be conducted rarely, if ever, for most patients.

CMS reports ongoing problems with genetic laboratory tests. Many instances have been reported of testing that is not related to actual or potential medical diagnoses, overuse of genetic testing when the tests have no clinical value and are not related to treatment decisions, and repeated genetic testing of the same person for the same genetic pattern by the same provider or facility.

Did you know?

This algorithm identifies claims for a BRCA component service on the same or subsequent date of service as a BRCA global service for the same recipient. Procedure codes for BRCA genetic tests were updated as of January 1, 2019. New codes were added to better capture the testing being conducted.

How can we help you?Watson Health has more than 40 years of experience serving payers across the healthcare spectrum with:

– Independent, objective analysis– Decision support and data warehousing– Robust program integrity solutions– Clinical data solutions

Algorithms are just one element of our payment integrity programs. We also provide a comprehensive, versatile suite of analytics, tools and services to help you fight fraud, waste and abuse at each stage.

With 7,000+ global employees and access to 210 million clinical and data claims records, we serve 10,000+ clients in 94 countries across value-based care, government, consumer, imaging, life sciences, oncology and genomics.

Our clients include:– Over half of state Medicaid agencies– Federal healthcare agencies, including the Centers

for Medicare & Medicaid Services (CMS), National Institutes of Health (NIH), Agency for Healthcare Research and Quality (AHRQ), US Food & Drug Administration (FDA), Centers for Disease Control and Prevention (CDC) and Substance Abuse and Mental Health Services Administration (SAMHSA)

– Over 100 US health plans, including the nation’s largestContact Us

govsta@us.ibm.com

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