CMS Pub. 100-18, ch. 9, § 50.6.9

42 C.F.R. §§ 422.503(b)(4)(vi)(F), 423.504(b)(4)(vi)(F)

Sponsors must perform effective monitoring in order to prevent and detect FWA.

Sponsors may accomplish this through the use of data analysis. Data analysis

should include the comparison of claim information against other data (e.g.,

provider, drug or medical service provided, diagnoses or beneficiaries) to identify

unusual patterns suggesting potential errors and/or potential fraud and abuse. Data

analysis should factor in the particular prescribing and dispensing practices of

providers who serve a particular population (e.g., long term care providers, assisted

living facilities, etc.). Use of data analysis may include monitoring pharmacy and

medical billing to detect unusual patterns. Sponsors may invest in data analysis

software applications that give them the ability to analyze large amounts of data to

detect FWA both internally and externally. Data analysis should:

• Establish baseline data to enable the sponsor to recognize unusual trends,

changes in drug utilization over time, physician referral or prescription

patterns, and plan formulary composition over time;

• Analyze claims data to identify potential errors, inaccurate TrOOP

accounting, and provider billing practices and services that pose the greatest

risk for potential FWA to the Medicare program;

• Identify items or services that are being over utilized;

• Identify problem areas within the plan such as enrollment, finance, or data

submission;

• Identify problem areas at the FDR (e.g., PBM, pharmacies, pharmacists,

physicians, other health care providers and suppliers); and

• Use findings to determine where there is a need for a change in policy.

Sponsors should develop indicators that will be used to identify norms,

abnormalities, and individual variables that describe statistically significant time-series trends. Examples include:

• Standard deviations from the mean;

• Percent above the mean or median; and

• Percent increase in charges, number of visits/services from one period to

another.

Sponsors should routinely generate and review reports on pharmacy billing,

medical claims, etc., based upon the data analysis performed to identify pharmacies

and other FDRs that require further review.