Medicare Transaction Fraud Prevention Act
Medicare Transaction Fraud Prevention Act would create a two-year pilot program under the Medicare program to test a predictive risk-scoring algorithm aimed at overseeing payments for durable medical equipment (DME) and clinical diagnostic laboratory tests. Participation would be voluntary for beneficiaries who opt in to electronic Medicare Summary Notices (MSNs). The pilot would use a scoring system from 1 to 99 to flag high-risk transactions (claims for DME or laboratory tests) and would involve a process where human review can suspend transactions, prompt beneficiary input or cure of data, and issue electronic alerts and repeated notices. The bill also requires collaboration with industry participants, provides for communications with the Office of the Inspector General (OIG), and grants authority to take steps such as potential Medicare card actions to prevent fraud. The program must be tested and evaluated with attention to appropriate AI and data-use considerations before deployment.
Key Points
- 1Establishes a 2-year pilot program (start no later than Jan 1, 2026) to test predictive risk-scoring algorithms for oversight of DME and clinical diagnostic laboratory payment transactions under Medicare.
- 2Applicable beneficiaries are those who opt in to electronic MSNs and participate in the pilot on a voluntary basis; participation can be terminated at any time.
- 3The algorithm will score relevant transactions from 1 (least risky) to 99 (most risky) and must undergo testing, evaluation, and review prior to implementation, with attention to AI policy considerations.
- 4The Secretary must set methods to notify affected beneficiaries and providers about algorithm usage, including how data is collected and processed to generate risk scores, and may waive or forgo notices if appropriate.
- 5For high-risk transactions, the Secretary can suspend pending beneficiary response, allow the beneficiary to cure or confirm data, and may trigger an automatic alert via MSN. If suspended, subsequent MSNs related to the transaction must be sent electronically every two weeks for 3 months, with fraud-reporting information included where appropriate.
- 6The Secretary has the authority to determine when a Medicare card should be terminated or a new card issued to prevent fraud and abuse.
- 7The process requires a human review to support any suspension, ensuring the decision is not solely algorithm-driven.
- 8Collaboration with industry representatives, including DME suppliers, is required for development and implementation.
- 9Definitions: "Applicable item or service" means DME and clinical laboratory tests; "Relevant transaction" means a claim for payment for an applicable item or service to an applicable beneficiary as defined by the Secretary.