Technology to assess claims' risk of Medicare fraud

After creating a system similar to one already used by credit card companies to spot fraud, the federal government plans to crack down on phony Medicare payments before they are even paid.


The Centers for Medicare & Medicaid announced it has hired Northrop Grumman to create "predictive modeling technology" that can look at many aspects of a claim to see whether it appears legitimate, said the centers' administrator, Donald Berwick. The system would assign a risk score to claims, marking those that need closer scrutiny.

"We'll also be able to look at the entire context of the way the claim is submitted, and by whom and on whose behalf, and what services are being ordered, many other variables, all simultaneously," said Dr. Peter Budetti, the director of the agency's Center for Program Integrity.

Mindful that most providers and suppliers are legitimate, the system would not automatically kick out payments, he said.

"It will not, at first, immediately cut off payments or do anything automatically until we have a great deal of confidence that in fact what we've uncovered warrants that kind of action," Budetti said.

The program uses $100 million authorized last year by the Small Business Jobs Act and provisions from the Affordable Care Act to create tools for Medicare to combat fraud, he said. The act also allows the Health and Human Services secretary to waive strict Medicare payment schedules if fraud is suspected, Budetti said.

"If (claims) get kicked out, that provides sufficient reason not to have to stick to that timeframe," he said.

Officials could not provide an estimate of savings, but Budetti said it would be "paying for itself over time."

It lets the agency take action instead of its old "pay and chase recovery operations after the fact," Berwick said.

"For the first time, CMS will have the ability to use real-time data to spot suspect claims and providers and to take action to stop fraudulent payments before they are paid," he said. "This is a historic step in fighting fraud. We're getting ahead of the game here."