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TRICARE Operations Manual 6010.62-M, April 2021
Program Integrity
Chapter 13
Section 2
Anti-Fraud Controls And Contractor Actions
Revision:  
1.0  ANTI-FRAUD CONTROLS FOR THE PREVENTION, DETECTION, AND DETERRENCE OF FRAUD AND ABUSE IN THE TRICARE PROGRAM
1.1  The Defense Health Agency’s (DHA) health care anti-fraud and abuse program protects beneficiaries and taxpayers by combating health care fraud. DHA’s health care anti-fraud and abuse program is at the forefront of the fight against health care fraud, waste, and abuse. DHA has been able to expand its capacity to fight fraud and abuse by using powerful, new anti-fraud tools to protect TRICARE by shifting from a “pay and chase” approach toward fraud prevention, detection, correction, and deterrence.
1.2  The contractor shall implement fraud detection, prevention, correction, and deterrence efforts to ensure that TRICARE makes accurate payments to legitimate entities for allowable services or activities on behalf of eligible beneficiaries of TRICARE programs.
1.3  Program Integrity (PI) consists of activities that focus on detection, prevention, correction, and deterrence undertaken to minimize or prevent overpayments due to fraud and abuse and to take prompt action to ensure that TRICARE claims are not inappropriately paid. It is crucial to create an environment that actively discourages fraudulent or abusive behavior in the TRICARE program.
1.4  The contractor shall establish procedures and utilize anti-fraud and abuse controls for the prevention, detection and deterrence of fraud and abuse and detection of fraudulent or abusive patterns and trends in billings by providers, pharmacies, entities, and beneficiaries on a prepayment and post-payment basis.
2.0  TOOLS AND RESOURCES FOR FRAUD DETECTION
2.1  The contractor shall utilize prepayment and post-payment fraud detection tools and resources to monitor and analyze various beneficiary, provider, and pharmacy data for potential fraud waste and abuse.
2.2  The contractor’s anti-fraud and abuse controls shall include the following and the controls:
•  Eligibility verifications for beneficiaries, providers, and pharmacies.
•  Coordination of Benefits (COB).
•  Claims processing edits.
•  Claims auditing software.
•  Duplicate claims payment prevention.
•  Prepayment edits (e.g., applied to program exclusions and limitations).
•  Prepayment Claims Review - placement of providers or beneficiaries on prepayment review.
•  Post-payment utilization review to detect fraud or abuse by either beneficiaries, pharmacies, or providers and to establish dollar loss to the Government.
•  Focused reviews of services known to have relatively high rates of fraud and abuse.
•  Recoupments of overpayments identified related to suspect claims.
•  Application of security measures to protect against embezzlement or other dishonest acts by employees.
•  Incorporate anti-fraud attestation language whenever and wherever practical (e.g., claim forms, network agreements, provider remittance, electronic claims submission agreements, Explanation of Benefits (EOBs)).
•  Utilization of Hotlines (Fraud Reporting Mechanisms).
•  Prepayment duplicate claims screening.
•  Post-payment duplicate screening - TRICARE Duplicate Claims System (DCS).
•  Provider Enrollment - Verification of provider status (e.g., credentials, licensure) to include appropriate termination action when findings are discovered, recommendations of boards, state licenses, etc. results in loss or suspension of licensure or certification.
•  PI targeted measures (e.g., prepayment anti-fraud review, use of post-payment fraud detection, predictive analytics software, data mining software, routine anti-fraud data mining, investigative anti-fraud auditing, provider and beneficiary education).
•  Controls will include cost control review of outliers, spike in dollars paid, high utilization of supplies, verification of beneficiary submitted claims for high dollar to validate appropriateness, new benefit monitoring.
•  Specific to pharmacy, controls shall include comparing reversal rates, excessive partial fill submissions, high use patients, review of outliers, codes with medication therapy for high ingredient costs, claims with high average ingredient cost, review of brand and generic fill rates, top pharmacies per generic code rate, controlled substance prescription rates, and ability to conduct on-site audits of pharmacies who meet these indicators and ability to review and perform on-site of top one percent of providers who meet these indicators.
2.3  The contractor shall ensure that all TRICARE claims are accurate, reviewed timely, analyzed, or audited to ensure payment is for only authorized medically or psychologically necessary benefits.
2.4  The contractor shall ensure the care and services are provided by authorized providers to eligible beneficiaries.
2.5  Beneficiary And Provider Flags
The contractor shall identify and flag specific providers of care, pharmacies, and TRICARE beneficiaries for prepayment or post-payment review when fraud, overutilization or other abuses are known or suspected.
2.6  Eligibility
2.6.1  The contractor shall identify beneficiaries accessing care after their eligibility was terminated utilizing information derived on a monthly basis by the contractor from the DMDC Claims Reprocessing Report.
2.6.2  The contractor shall initiate action to recoup funds paid for services to beneficiaries who were not eligible and report those actions on the Quarterly Eligibility Status Report. For reporting requirements, see DD Form 1423, Contract Data Requirements List (CDRL), located in Section J of the applicable contract.
2.6.3  The contractor shall refer individual beneficiary cases to DHA PI that involve more than the threshold as stated in Section C of the contract.
2.7  Detection
2.7.1  The contractor shall develop and maintain an operational procedure for identifying potentially fraudulent and abusive billing patterns and taking timely action.
2.7.2  The contractor shall prioritize PI activities to ensure that the greatest program impact and urgency is given the highest priority. Priorities will include, but are not limited to, patient abuse or harm, high dollar amounts of potential overpayment or potential for other administrative actions, likelihood of an increase in the amount of fraud or enlargement of a pattern.
2.7.3  The contractor’s proactive identification measures shall include, but not limited to:
•  Prepayment edits.
•  Prepayment review.
•  Post-payment review.
•  Proactive Research (e.g., known fraud schemes, Special Investigation Resource and Intelligence System (SIRIS), National Health Care Anti-Fraud Association (NHCAA) fraud alerts).
•  Information sharing.
•  Use of prepayment predictive analytics.
•  Use of post-payment predictive analytics.
•  Data mining.
2.7.4  External identification sources include, but not limited to:
•  DHA (e.g., initiated or requested by DHA PI).
•  Beneficiary complaints and tips.
•  Provider complaints and tips.
•  Concerned individual complaints and tips.
•  Leads.
•  Referrals.
•  Law Enforcement referral.
•  Contractor hotline.
3.0  CONTRACTOR ADMINISTRATIVE ACTIONS
3.1  The contractor shall ensure that its administrative actions for providers or beneficiaries identified as exhibiting patterns of suspected fraud and abuse, when fraud and abuse allegations are supported, or inappropriate billing may include, but not be limited to:
•  Monitoring suspect provider or beneficiary billing patterns.
•  Educating the provider or beneficiary.
•  Placing the provider or beneficiary on prepayment review.
•  Placing the provider or beneficiary on post-payment review.
•  Initiating recoupment action on actual damages determined as a result of errors identified in a statistically random (or other acceptable methods) sample audit.
•  Referring a case to local or state authorities if below the threshold as stated in Section C of the contract and without identified patient harm.
•  Removal from the preferred provider network.
3.2  The contractor shall coordinate administrative actions with DHA PI (including quality interventions) if the case is under active law enforcement investigation (federal, state or local) or the case is being prosecuted criminally or civilly litigated or both.
3.3  Monitoring
3.3.1  The contractor shall conduct monitoring activities (i.e., predictive analytics, prepayment monitoring, post-payment monitoring) to identify providers and beneficiaries who billing are suspected of fraud and abuse or improper billing patterns.
3.3.2  The contractor shall determine the period of time on a case-by-case basis for monitoring.
3.3.3  The contractor’s PI staff shall communicate, coordinate and collaborate with its provider network staff for assistance (e.g., obtaining medical records, provider education) when a network provider has been identified with suspect billing patterns.
3.3.4  The contractor shall take additional actions to deter actions of the provider or beneficiary to prevent any further losses to the TRICARE Program, if provider or beneficiary exhibits additional indicators or continues to be identified as suspect.
3.4  Education
The contractor shall notify providers and beneficiaries by certified mail when inappropriate behavior is identified. The letters will include a description of the inappropriate behavior, how behavior was identified, and consequences for continuation of improper billing and filing false claims, refer to Addendum A, Figure 13.A-5 for sample and requirements of education letter.
3.5  Prepayment Review
3.5.1  The contractor may place providers or beneficiaries on prepayment review who exhibit atypical or aberrant billing patterns or with a particular problem (e.g., errors in billing of a specific type of service personal information compromised) in submitting correct claims.
3.5.1.1  Once on prepayment review claims are subject to manual review using medical and dental records and other supporting documentation to verify that claims are for a covered benefit, medically necessary, and appropriate.
3.5.1.2  When medical records are requested, the provider must submit supporting documentation within a specified time frame or the claim(s) will be denied.
3.5.1.3  The length of prepayment monitoring is determined on a case-by-case basis.
3.5.1.4  The contractor may remove providers or beneficiaries from prepayment review once it has been determined that the aberrant activities have ceased.
3.5.1.4.1  The contractor shall continue to monitor providers or beneficiaries after removal from prepayment review for a period of time on a case-by-case basis.
3.5.1.4.2  The contractor shall not remove a provider or beneficiary from prepayment review if it is determined the case is appropriate for DHA PI referral. The referral shall note that the provider or beneficiary has been placed on prepayment review and date administrative measures were initiated.
3.5.2  The contractor’s PI staff shall perform all prepayment and post-payment reviews when a provider or beneficiary is placed on prepayment review for suspect or aberrant billing, and other reasons identified by the contractor or DHA PI.
3.5.3  The contractor’s PI staff shall include an appropriate number of Registered Nurses (RNs), or equally qualified medically trained professionals and credentialed coding or credentialed medical billing professionals with the education and anti-fraud experience to perform anti-fraud and abuse prepayment reviews. This means RNs or qualified Physician’s Assistants (PAs) for medical claims. A qualified Licensed Practical Nurse (LPN) or Licensed Vocational Nurse (LVN), working directly under the close supervision of an RN or PA may be used, if the contractor submits the LPN’s or LVN’s full resume and a detailed scope of authority and responsibility to the Contracting Officer (CO).
3.6  Post-Payment Review
3.6.1  The contractor shall perform post-payment reviews.
3.6.2  The contractor shall:
3.6.2.1  Initiate recoupment when medical records are requested but the provider does not provide supporting documentation within specified time frame or the claim(s) will be recouped as services not rendered and provide education regarding this requirement.
3.6.2.2  Make a determination of appropriate actions following a post-payment audit to include options from this chapter.
3.6.3  The contractor’s PI staff shall include an appropriate number of Registered Nurses (RNs), or equally qualified medically trained professionals and credentialed coding or credentialed medical billing professionals with the education and anti-fraud experience to perform anti-fraud and abuse post-payment reviews. This means RNs or qualified Physician’s Assistants (PAs) for medical claims. A qualified Licensed Practical Nurse (LPN) or Licensed Vocational Nurse (LVN), working directly under the close supervision of an RN or PA, may be used, if the contractor submits the LPN’s or LVN’s full resume and a detailed scope of authority and responsibility to the Contracting.
3.6.4  When a contractor is performing a prepayment or post-payment review, the contractor may perform the review on a specific code(s) if it is and can be determined on a case-by-case basis.
3.7  Recoupment Action
3.7.1  The contractor shall recoup any erroneous payments as a result of its program integrity reviews in accordance with Chapter 10.
3.7.2  The contractor shall continue to monitor providers or beneficiaries with previous recoupment actions for a period of time on a case-by-case basis.
3.8  Claims Processing Suspension
The contractor shall not indefinitely suspend or pend provider or beneficiary claims from payment due to potential aberrant billing practices.
3.8.1   Only at the direction of the Director, DHA PI, with the concurrence of the DHA Office of General Counsel (OGC), will a provider’s, pharmacy’s, dental practice’s, or beneficiary’s claims be indefinitely suspended or pended from payment due to potential aberrant billing practices. In this case, formal notification to the provider, pharmacy, dental practice, or beneficiary by the contractor will occur (see Addendum A, Figure 13.A-6 and Figure 13.A-7).
3.8.2  The contractor shall, under the guidance of the DHA PI, send a special and specific notice to the beneficiary per Addendum A, Figure 13.A-8 for those cases where a beneficiary submits a claim, or one is submitted on his or her behalf, which includes services involving a suspended provider or network pharmacy.
3.8.3  The contractor shall confirm with the provider that DHA has placed them on a temporary claim payments suspension administrative action 15 business days after DHA PI advises the contractor the temporary claim payments suspension has been put in place.
3.9  Termination of Network Agreement
3.9.1  The contractor may, at its discretion, terminate a provider or pharmacy network agreement if it is determined that the network provider or pharmacy is engaged in potential aberrant practices. DHA reserves the right to direct the contractor to terminate a provider or pharmacy network agreement.
3.9.2  The contractor shall communicate, collaborate, and coordinate with DHA PI within 10 calendar days if a provider or pharmacy network agreement has been terminated.
3.9.3  The contractor’s network agreement termination actions shall not interfere or jeopardize the Government’s investigation.
4.0  INITIAL PROCEEDINGS
4.1  The contractor shall review the provider’s or beneficiary’s background, claims history, specialty, and profile to determine if the case involves potential fraud, waste, or abuse, or may be more accurately categorized as a billing error.
4.1.1  The contractor shall correct and mitigate any billing, administrative error, or claims processing errors discovered after initial review.
4.1.2  The contractor shall close out the allegation or issue and notify the complainant, subject to information guidelines (Privacy Act, Health Insurance Portability and Accountability Act (HIPAA)), of their findings (refer to Chapter 1, Section 5and Chapter 19, Section 3) if a complaint is received from any source and the error was related to a billing, administrative, or claims processing error.
4.1.3  The contractor shall clearly document the reason for the closure.
4.1.4  The contractor shall notify DHA PI within 30 calendar days if a billing, administrative error, or claims processing error is identified and include in the notification any mitigations applied, recoupment actions if needed, notification to parties of corrective action, and verify that the discovered billing, administrative error, or claims processing errors are not systemic.
4.1.5  The contractor shall identify its mitigation strategy to DHA PI if the billing, administrative error, or claims processing error is found to be systemic among the contractor’s operating system and total exposure within 30 calendar days.
4.2  The contractor shall initiate and document initial action within 30 calendar days of identification of aberrant provider or beneficiary behavior.
4.3  The contractor shall provide documentation to DHA PI upon request.
5.0  CONTRACTOR PREVENTION STRATEGIES
5.1  The contractor shall determine and apply appropriate course(s) of action to deter suspected or actual provider or beneficiary fraud, waste, and abuse.
5.1.1  The contractor shall use, at a minimum, the tools or methods identified in this chapter.
5.1.2  The contractor shall document course(s) of action and strategies taken to deter suspected or actual provider or beneficiary fraud, waste, and abuse.
5.1.3  The contractor shall provide any documentation maintained to DHA PI with 15 calendar days of request.
5.2  Cost-Share (Copayment) Collection
5.2.1  32 CFR 199.4 sets forth the financial liability of the TRICARE beneficiary for cost-shares and deductibles. This regulatory requirement is derived from the statutory requirements of 10 United States Code (USC) 1079 and 1086.
5.2.2  The contractor shall establish procedures for detecting providers (to include network providers) who waive cost-shares. The following methods for detection of the waiver of cost-shares or copayments include:
•  Requiring itemized receipts attached to non-assigned claims which reflect an annotation that such amounts have been waived.
•  Changes in charging practices or erratic charge practices for the same procedure.
•  Complaints or notices from beneficiaries, other providers or interested third parties.
•  Advertisements of such practices by providers.
5.2.3  The contractor shall, when it identifies a provider who waived a cost-share or copayment, send written notice to the provider by certified mail that includes:
•  Such action is not allowed and explain the law governing the collection of cost-shares and copayments;
•  Payments may be reduced if reasonable efforts are not made to collect the cost-share; and
•  The provider may be suspended as an authorized TRICARE provider if corrected action is not taken.
•  See Section 4 for referral protocols if referral is warranted.
5.2.4  Refer to the TRICARE Reimbursement (TRM), Chapter 2, Section 1 for exceptions to the cost-share collection requirement or deductibles. In addition, the collection of cost-sharing amounts is optional under the TRICARE Hospice Benefit (TRM, Chapter 11, Section 4).
5.3  Violation of Participation Agreement or Reimbursement Limitation
5.3.1  Network providers must participate (accept assignment) on all claims. Non-network providers are not required to participate in TRICARE, or on a claim submitted to TRICARE by the provider or beneficiary, but will be subject to Federal law covering reimbursement limitations.
5.3.2  Non-network providers may agree to participate on a claim by claim basis; however, once a provider elects to participate (e.g., accept assignment) they may not change such election on that claim and may not collect from a beneficiary more than the CHAMPUS Maximum Allowable Charge (CMAC), including copayment, or cost-share. Attempts to collect more than the TRICARE allowable amount would be considered a violation of the participation agreement election.
5.3.3  A breach of a participation agreement or billing in excess of the reimbursement limitation amount as provided by Congress as part of the Department of Defense (DoD) Appropriations Act, 1993, are considered fraud and under authority of 10 USC 1079(h)(4). If a violation of network agreement warrants a referral to DHA PI, see Section 4. Also, refer to the TRM, Chapter 3, Section 1.
5.4  Balance Billing Limitations
Non-participating providers may not collect an amount which exceeds the balance billing limit of 115% the TRICARE allowed charge. Balance billing is defined as billing a beneficiary the difference between 115% of TRICARE allowed amount and the billed charges on a claim, less the copay or cost- share. Billing in excess of this reimbursement limitation amount as provided by Congress as part of the DoD Appropriations Act, 1993, is considered abuse or fraud under 10 USC 1079(h)(4). If a violation warrants a referral to DHA PI, see Chapter 13, Section 4.
5.5  Contractor Actions For Violation Of Participation Agreement Or Balance Billing Limitation
5.5.1  The contractor shall ensure that providers adhere to its participation and non-participation agreements and the associated reimbursement limitation.
5.5.2  The contractor shall initiate corrective action when a provider does not comply with its participating or non-participating agreement to accept the allowable charge as full payment for the service, as determined by the contractor, or who violates the 115% reimbursement limitation.
5.5.3  The contractor shall resolve beneficiary complaints regarding violation of the maximum allowable charge and notify the beneficiary of the resolution.
5.5.4  The contractor shall send institutional violation letters by name via certified US mail to the hospital administrator for institutional provider violations.
5.5.5  The contractor shall obtain assurance that the provider will identify and refund any money inappropriately collected and refrain from billing beneficiaries for the reductions on participating claims or in violation of the 115% reimbursement limitation in the future.
5.5.6  The contractor shall send non-institutional provider violations addressed to the name of the person who has the authority to resolve the administrative matter. This could be the Chief Executive Officer (CEO), the billing manager, or the provider of services.
5.5.7  The contractor shall advise the provider that violating the participation agreement or reimbursement limitation subjects the provider to sanction action.
5.5.8  The contractor shall obtain a copy of the zero balance statement to verify that the issue has been resolved.
5.5.9  The contractor shall advise the provider to cease billing the beneficiary for amounts in excess of the appropriate amount and calculate the overpayment for the provider to refund to the beneficiary in a violation of a participation agreement of a balance billing limitation case (see Addendum A, Figure 13.A-1, Figure 13.A-2, Figure 13.A-3, and Figure 13.A-4).
5.5.10  The contractor shall notify DHA PI within 15 business days if after two notices a provider refuses to make refunds, continues to violate participation agreements or reimbursement limitations, or brings suit against a beneficiary who refuses to pay the amount of the reduction.
5.5.11  The contractor shall submit a copy of all supporting documents to DHA PI. This includes claims, EOBs, educational letters to the provider, patient’s canceled check copy or provider’s billing statement.
5.5.12  The contractor shall follow the same procedures listed above for any providers signing special TRICARE participating provider agreements (Residential Treatment Centers (RTCs), Partial Hospitalization Programs (PHPs), Substance User Disorder Rehabilitation Facilities (SUDRFs), and Marriage and Family Counseling Centers (MFCCs)).
5.6  Waiver of CMAC
5.6.1  As outlined in 32 CFR 199.7(a), the Director, DHA, or a designee, will ensure that the benefits under TRICARE are paid to the extent described.
5.6.2  The balance billing limit may be waived by the Director, DHA or designee, on a case-by-case basis if requested by a TRICARE beneficiary in advance. Providers may not make this request.
5.6.3  Any request submitted by a beneficiary must be prior to the date of service, identify the name of the provider, date of service, the specific procedure being performed, and an itemized cost of the service(s).
5.6.4  A decision by the Director, DHA or a designee, to waive or not waive the limit in a particular case is not subject to the appeal and hearing procedures of 32 CFR 199.10.
6.0  CASE REFERRALS TO DHA PI
The contractor shall coordinate with DHA PI before case development begins if case development and referral is determined to be warranted. See Section 4 of this chapter for case development criteria if case development and referral is determined to be warranted.
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