It is estimated that health care fraud carries about a $60 billion a year price tag for taxpayers, with Medicare as one of the main targets for fraudsters. The Medicare program now faces huge financial challenges, including possible insolvency. As such, it is more important than ever to battle.
Since the inception of the program, Medicare, the Government health program for retirees, has always paid claims and then later asked questions. The payment of fraudulent claims prior to pursuit of scam artists has been a losing proposition. Medicare announced on June 17 that it will be implementing screening technology to mitigate fraud. The new system is scheduled to begin operation July 1. This technology is similar to what is currently used by credit card companies.
The technology is designed to detect system abuses, such as billing for a particular procedure at a suddenly much higher rate than that of major medical institutions in the same geographical area.
Patrick Burns, of Taxpayers Against Fraud, states that Medicare "is putting in place the kind of computer program it should have had in 1980 or earlier." He goes on to say, "The bad news is that the largest Medicare and Medicaid frauds are designed at the highest levels of companies, with accountants, billing experts and salespeople smoothing over the paperwork so that it will slide past all the proctors."
The routine process that has been employed by Medicare includes basic testing for fraud on an individual claim basis prior to making payment. The new system is designed to analyze large amounts of data in order to recognize patterns and anomalies in claims, which can lead to discovery of potential fraud. The data analysis leads to the development of a predictive model that may then be applied to individual claims. Through this process of data evaluation, the system assigns risk scores to claims. An alert is issued when the risk score indicates a problem. This will allow the claim to be investigated before it is paid out. Medicare claims payers will even be able to customize the new system so that particular types of facilities, geographic areas, services or equipment may be flagged.
The Wall Street Journal article reports that, "United Health Group has said it saved about $125 million over two years using predictive modeling."
The contract for development of the new system, which is valued at $77 million, has been awarded to Northrup Grumman along with a group of companies. Peter Budetti, Medicare anti-fraud czar, said, "We will be able to translate their experience from the private sector into Medicare."
Medicare Administrator Don Berwick said, "We're getting ahead of the game here." Hopefully the new technology will deliver a good process for detecting fraud on the front end, as opposed to tracking down perpetrators after the fact.
Sources:
Medicare goes high-tech to head off fraud, Business Week, The Associated Press, June 17, 2011
Medicare Will Start Flagging Suspicious Claims - Before They're Paid, The Wall Street Journal, June 17, 2011
