Healthcare Business News

High-tech anti-fraud system won't be ready this year: GAO

By Rich Daly
Posted: November 15, 2012 - 6:45 pm ET

The centerpiece of CMS efforts to move from a pay-and-chase anti-fraud system to an advanced $90 million predictive-modeling system will be delayed for at least six months, according to congressional auditors.

The nonpartisan Government Accountability Office investigated the status of the CMS Fraud Prevention System after Republican senators said their questions on its implementation were ignored and found the program missed a July start date and will not begin fully operating until at least January.

The report “clearly shows that the Centers for Medicare and Medicaid has fallen short of the congressional requirement to prevent fraudulent Medicare payments before they are made, as opposed to having to chase down crooks after the money has gone out the door,” Sen. Scott Brown (R-Mass.), said in a press release. “The key question is when will Medicare officials finally have a fully operational and effective anti-fraud system so we can turn off the spigot of fraudulent Medicare payments?”

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Authorized by the Small Business Jobs Act, the system was intended to filter Medicare fee-for-service claims data through predictive analytic models, which use historic Medicare claims and other data to identify high-risk claims and providers. The approach was modeled on advanced financial industry anti-fraud practices and aimed to continuously review claims in real time and immediately stop payments on suspicious claims before they were sent. Obama administration officials said the technology promised to allow Medicare to move away from the time-consuming prosecution of each Medicare fraudster long after they had bilked funds out of Medicare.

The potential impact of the system is enormous since Medicare loses about $60 billion annually to waste, fraud and abuse.

The agency awarded two contracts in 2011 for a total of $90 million for companies to build the system. The system began reviewing Medicare claims but was never connected to a payment denial system “due to the time required to develop system requirements,” according to the GAO report.

The CMS “estimated that it will be implemented by January 2013 but had not yet developed reliable schedules for completing this activity,” the GAO report said.

CMS officials noted that information from the partially implemented system has been provided to zone program integrity contractors for their traditional after-the-fact audits.

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