While a predictive analytics system has increased recovery and prevention of improper Medicare payments, an audit by the Department of Health and Human Services Office of Inspector General finds updated procedures for the Fraud Prevention System (FPS) are needed to improve savings.

The Small Business Jobs Act of 2010 requires HHS to use predictive modeling and other analytics technologies to identify improper Medicare claims that providers submit for reimbursement and prevent payment of such claims. The Centers for Medicare and Medicaid Services this week announced that FPS has identified or prevented $820 million in inappropriate Medicare payments during the first three years of its operation.

Also See: Analytics System Identifies $820M in Improper Medicare Payments

Specifically, in the third year of FPS implementation, CMS boasted that its analytics system identified or prevented $454 million in calendar year 2014 payments—a 10-to-1 return on investment. However, in its audit, OIG said while it certified nearly $454 million in unadjusted savings its auditors only certified about $133 million in adjusted savings.

Adjusted savings are those that FPS identified in actual and projected savings that, according to OIG’s analyses, reasonably can be expected to be recovered or avoided. In addition, OIG certified a return on investment of $2.84 for every dollar spent on FPS.

“This represents an increase from the prior year, but updated procedures would improve reported savings,” auditors concluded in their report. “Although the Department has made significant progress to address the challenges of measuring actual and projected savings, the Department’s written directives to its contractors were not sufficient to ensure that the contractors could identify and report the most accurate estimate of FPS savings.”

As a result, OIG recommended that CMS provide its contractors with improved instructions on how to attribute the FPS savings accurately, and CMS agreed to do so.

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