SSPS Algorithms

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Establishment of the DSHS Payment Review Program 

The demand and costs for social and health care services continues to grow, while available federal and state funding continues to diminish.  In addition, public demand for economy and accountability in government spending is increasing.  DSHS established the Payment Review Program in response to these demands and to the challenge of providing services in the most effective and cost-efficient manner possible.  The Payment Review Program protects taxpayer dollars by ensuring DSHS payment integrity ultimately increasing the likelihood that DSHS will continue to be able to provide vital social and health care services to Washington's most vulnerable citizens. 

In 1997, the United States General Accounting Office (GAO) reported to Congress that fraud, abuse and waste losses may constitute up to 10% of Medicare costs, an estimated 100 billion dollars.  Publication of this issue at the federal level caused states to review the accuracy of payments in the state-sponsored Medicaid health care arena.  At that time, DSHS spent approximately 2.2 billion dollars on health care services and 857 million dollars on social services annually.  Therefore, based on the GAO estimates, DSHS could identify and recover significant taxpayer dollars. 

Also, in 1997 new technological tools became available to assist public and private insurers of health care services in detecting billing and payment errors.  These tools use mathematical techniques to find unusual billing patterns across millions of claims. 

The Payment Review Program was established to acquire and leverage the newly available technology and software to perform data analysis of DSHS data, report on the findings, recover inappropriate paid dollars, and prevent future payment errors.  When appropriate, the Payment Review Program refers cases to the Medicaid Fraud Control Unit for investigation and appropriate action. 

Objectives of the DSHS Payment Review Program 

The DSHS Payment Review Program  is an agency-wide program that reports to an Executive Steering Committee chaired by the DSHS Deputy Secretary.  The Payment Review Program has identified several opportunities that will benefit the state of Washington, DSHS, health care and social services providers and clients of Medicaid and social service programs: 

• Clarification and streamlining of DSHS policies, rules, and billing procedures; 

• Increased payment integrity in DSHS social service programs, recovery of inappropriately billed payments, and avoidance of future losses; 

• Education to providers regarding proper billing practices; and 

• Assurance that Washington will be able to continue to provide a wide range of services to those most in need. 

Post Payment Claims Review 

DSHS is required by federal regulations, Title 42 CFR Parts 456 and 477,  to perform post-payment claims reviews.  DSHS staff have performed post payment claims reviews using claims data since 1982.

Technology being used to identify billing and payment errors 

The Payment Review Program contracts with HWT Inc. of Portland, Maine to provide a state of the art system for the detection of billing and payment errors.  The system uses filters called “algorithms” to find unusual billing patterns across millions of claims that fall outside of the DSHS policy parameters. 

 The initial data analysis focused on payments made from the Medicaid Management Information System (MMIS).  In 2002, data from the DSHS Social Service Payment System (SSPS) was added to the data warehouse for analysis and monitoring. 

Notification to providers 

Originally, the Payment Review Program and HWT representatives held briefing sessions with the Washington State Medical Association, Washington State Health Care Association, Washington Association of Housing and Services, Washington State Hospital Association, and the Washington State Pharmacy Association. 

The Payment Review Program continues to work closely with experts from the varied programs to ensure providers are kept informed.  Also, each provider who is issued an overpayment has an opportunity to request informal or formal dispute resolution to address concerns they may have.