What is Medicare Compliance?

medicare compliance

The Centers for Medicare and Medicaid Services (CMS) is an agency within the federal Department of Health and Human Services (HHS). CMS is responsible for administering health programs that include Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). CMS also oversees the state and federal health insurance marketplaces.

CMS requires certain entities to comply with rules prohibiting fraud, waste, and abuse in CMS-related transactions (such as, for example, when a provider is reimbursed for a service by Medicare). Medicare compliance, including fraud waste and abuse (FWA) training is discussed below.

What is Medicare?

Medicare is a federal government health benefits program. Medicare consists of four parts: A, B, C, and D.

Part A covers the following:

The costs of hospital rooms and hospital meals

General nursing care

Prescription drugs received in the hospital

Skilled nursing facility care

Hospice (end of life) care

Home health care

Part B covers the following:

Doctor visits (both primary care and specialist visits)

Certain vaccines, such as the flu shot

Mental health services

Annual physical exams

Durable medical equipment, such as wheelchairs and walkers

Emergency ambulance transportation

Occupations, physical, and speech therapy

Certain preventive screenings, exams, and tests

Together, Parts A and B are known as “Traditional” or “Original” Medicare, because these two parts were created by the original Medicare law. Medicare Part C (referred to as Medicare + Choice, or Medicare Advantage) did not become effective until 1999, and Medicare Part D (prescription drug benefit) did not become effective until 2006.

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What is Medicare Part C?

Before Medicare Part C was established, Medicare benefits were only offered through the federal government. This meant that people who wanted to receive Medicare-compliant benefits through private insurers were mostly unable to do so. In 1997, the Balanced Budget Act was signed into law. This law, among other things, gave Medicare-eligible individuals the option to receive their original Medicare benefits through private health plans. These plans are known as “Medicare Part C” plans, or “Medicare Advantage” plans. A Medicare Advantage plan combines coverage for hospital care, doctor visits, and other medical services all into a single plan. Under Medicare law, Medicare Advantage Plans are required to provide all of the benefits offered by Medicare Parts A and B (except hospice care, which continues to be provided by Part A).

What is Medicare Part D?

Under Part D, Medicare pays part of the costs for prescription drugs, while patients pay the remainder. Medicare Part D plans must cover drugs in six categories: antidepressants, antipsychotics, anticonvulsants, antiretrovirals (AIDS treatment), immunosuppressants, and anticancer. Medicare Part D recipients must send a monthly premium payment (of about $30) to Medicare to receive Part D benefits.

Medicare compliance consists of providers’ being familiar with what parts A, B, C, and D cover and do not cover. Medicare compliance also requires providers to bill Medicare in a specific format using specific diagnostic and treatment codes. Medicare compliance also involves providers’ being familiar with, and avoiding, penalties for Medicare fraud. Medicare fraud occurs when someone knowingly deceives Medicare to receive payment when they should not, or to receive higher payment than they should.

Who Must Undergo CMS Fraud Waste and Abuse Training?

CMS requires healthcare providers participating in Medicare to participate in fraud, waste, and abuse (FWA) training. This training is a key component of Medicare compliance. 

Fraud is the intentional deception or misrepresentation that an individual knows, or should know, to be false, and makes, knowing the deception could result in some unauthorized benefit to himself or herself or someone else. An example of fraud is purposely billing for services that were never provided. Misrepresentation of who provided the services, and altering claim forms and electronic claims records, are further examples of fraud. CMS fraud, waste, and abuse training is that part of Medicare compliance that teaches providers and employees how to detect fraud, and what the penalties are for fraud.

Waste is the over utilization of medical services – more than are needed for legitimate treatment purposes. Waste also refers to practices that result in unnecessary costs. An example of waste is providing services that are not medically necessary. CMS fraud, waste, and abuse training is that part of Medicare compliance that teaches providers and employees how to recognize waste, and how to report it.

Abuse refers to provider practices that are inconsistent with sound fiscal, business, or medical practices. Abuse includes, but is not limited to, the following:  

Billing for a non-covered service;

Misusing codes on the claim (i.e., the way the service is coded on the claim does not comply with national or local coding guidelines or is not billed as rendered); or

Inappropriately allocating costs to Medicare on a cost report.

CMS Fraud, Waste, and Abuse Training is the part of Medicare compliance that teaches the distinction between abuse and fraud. Abuse is similar to fraud. However, there is no requirement to demonstrate that abusive acts were committed intentionally. Proving fraud, however, requires evidence of intent to deceive. 

What is an FWA Annual Assessment?

An FWA assessment, referred to as a fraud, waste, and abuse annual assessment, is required to satisfy a provider’s Medicare compliance obligations. As part of satisfying the FWA  compliance requirements established by CMS, healthcare employers are required to provide FWA awareness training to all employees within 90 days of hiring and annually thereafter.

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