A State’s Guide to Program Integrity in a Pandemic

September 24, 2020

In early 2020, faced with a novel pandemic virus, government and commercial healthcare stakeholders took swift and sweeping action, implementing several regulatory and programmatic changes to prepare for an anticipated onslaught of COVID-19 patients. For some states, that onslaught came precipitously as expected. For others, the peak came later. And for others still, case numbers continue to fluctuate as it becomes clear the pandemic — and its far-reaching economic impact — will likely be ongoing for the foreseeable future.

Program integrity — broadly, the function that ensures healthcare services were billed and paid as rendered — was largely placed on hold during the virus’ initial outbreak in order to maximize healthcare resources and capacity. Now, with the benefit of time and hindsight, and the urgency of containing healthcare costs amid budget crises, it is clear that a more balanced approach is needed. To help, we are outlining a few areas of priority for states to maintain vital program integrity activities while supporting providers on the frontlines of the crisis.

Reevaluate / Refocus Your Audit Strategy

Maintaining program integrity has grown equally more crucial and complex in today’s healthcare environment. Pre-pandemic strategies must therefore evolve and adapt in order to account for new vulnerabilities stemming from the COVID-19 crisis. These may include:

  • Telehealth expansion and relaxed regulations

Telehealth has long been ripe for fraud, waste and abuse, with some of the nation’s largest healthcare fraud schemes involving telemedicine providers. Since the Centers for Medicare and Medicaid Services (CMS) expanded telehealth coverage during the pandemic, adoption has soared, creating an unprecedented volume of telehealth claims. At the same time, once-strict regulations governing telehealth services have been relaxed during the COVID-19 emergency period and will likely continue to be in its aftermath. This may heighten the risk of both intentional and unintentional payment inaccuracies, especially as hospitals navigate major resource and financial challenges.

Given the high volume of telehealth claims, and because these services are often reimbursed at lower rates than comparable in-person visits, traditional program integrity audits may prove unnecessarily burdensome and inefficient. Automated solutions are proving to be most effective in capturing telehealth-related fraud, waste and abuse amid today’s crisis.

  • The nursing home dilemma

Nursing homes have been severely impacted by the COVID-19 pandemic, with CMS reporting 216,219 COVID-19 cases in nursing homes and, tragically, 53,196 COVID-19 nursing home deaths as of August 30, 2020.

As part of its initial COVID-19 response, the Trump administration relaxed a number of regulations around skilled nursing facilities (SNFs) and suspended routine nursing home inspections. As these inspections resume, so too should the audits that ensure patients are being appropriately placed in SNFs and receiving services as billed on claims. However, reinstating these audits must be done with discretion and regard for the on-the-ground reality.  

  • Improper COVID-19 coding

Amid the pandemic crisis, unscrupulous providers may be incentivized to upcode for COVID-19 diagnoses, due in large part to the markedly higher reimbursement rates these codes command. With COVID-19 testing currently standard hospital protocol, a positive test — whether or not the services rendered were at all related to that diagnosis — could instigate erroneous coding, resulting in an improper payment. Diagnosis-related group (DRG) validation reviews are helping states and healthcare organizations capture COVID-19 coding errors pre and post-payment, ensuring healthcare dollars are being allocated appropriately.

  • Overutilization of inpatient services

Another possible consequence of higher COVID-19 reimbursement rates is that a patient may be admitted for an inpatient stay, when a lower-cost observation level of care would have been appropriate. Place of service claim reviews can help reduce waste by determining whether the inpatient place of service billed aligns with the service rendered — and, specifically, whether the service could have been safely provided in a less intensive, observation-level setting.

Listen, Learn & Adapt

Pausing program integrity activities nationwide was a prudent step to take early in the pandemic, but in carving the path forward, a more strategic approach is necessary. Rather than implementing blanket measures, states and healthcare organizations can instead work to identify real issues and establish solutions to remedy them.

Navigating the new healthcare normal requires a high degree of flexibility, which in itself requires a data-driven approach. Making decisions based on data and leveraging programmatic flexibilities to improve efficiencies and contain healthcare costs can help to create a more sustainable environment for all stakeholders.


For more strategies on containing healthcare costs in the age of COVID-19, visit hms.com/health-ideas.

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