Impressive Preliminary Results

$60 billion is estimated to be lost each year to Medicare fraud. There is enormous potential in this to help reduce the Federal deficit.  According to Kelli Kennedy of the Associated Press, a new technology system has been designed to stop fraudulent Medicare payments before they are paid out. So far, since it was launched in the summer of 2011, the results are impressive:

  • It has saved about $115 million.
  • It spurred more than 500 investigations.

Federal health officials say that the projected savings are much greater.

How Does It Work?

This $77 million technology system, which was mandated by Congress, is housed in the Baltimore area in a $3.6 million command center. It conducts the same kind of screening that credit card companies now do to scan charges and freeze bad accounts. As a result:

  • $32 million of the savings were accomplished by denying suspicious claims and ejecting fraudulent providers from the program.
  • The remaining $84 million are projected savings flowing from those actions. For example, by ejecting a fraudulent provider who has been billing Medicare for $100 million a year for wheelchairs that patients never receive, savings of $100 million could be achieved in the next year.

Data from the new system launched 536 investigations and provided information for 511 others already in progress. The bulk of the projected savings came in referrals to law enforcement that remain under investigation but will likely result in payment suspensions or kicking providers out of the program. While the system’s projected savings are only for one year,  anti-fraud administrator Peter Budetti noted the actual savings could be much more because a provider that has been banished from the program could have stayed in the system for years, racking up hundreds of millions of dollars in bad claims. Budetti said:

We have shown this technology can work in fighting health care fraud, and we have seen encouraging results. The system is designed to grow in sophistication and complexity, helping the government stay one step ahead of fraudsters.

Getting A Handle On Fraud

In the past, fraud prevention was measured by how much money law enforcement officials recovered. Now it’s based on how much money is saved before it’s paid. While investigators used to individually screen each claim as it came in, making individual determinations, u nder the new system, claims are run through a series of sophisticated computer models that can spot suspicious billing patterns in the context of all of that provider’s claims and claims from other providers in a particular industry.