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CMS Analytics System Identified $820M in Fraudulent Payments

July 15, 2015
by Rajiv Leventhal
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The Centers for Medicare & Medicaid Services (CMS) has reported that the agency’s advanced analytics system, the Fraud Prevention System, identified or prevented $820 million in inappropriate payments in the program’s first three years.

The Fraud Prevention System uses predictive analytics to identify troublesome billing patterns and outlier claims for action, similar to systems used by credit card companies.  The system identified or prevented $454 million in calendar year 2014 alone, a 10 to 1 return on investment, CMS reported.

The Fraud Prevention System was created in 2010 by the Small Business Jobs Act, and CMS has extensively used its tools, along with other new authorities made possible by the Affordable Care Act, to help protect Medicare trust funds and prevent fraudulent payments. The system helps to identify questionable billing patterns in real time and can review past patterns that may indicate fraud, CMS said.

In one case, one of the system’s predictive models identified a questionable billing pattern at a provider for podiatry services that resulted in Medicare revoking the provider’s payments and referring the findings to law enforcement. The Fraud Prevention System also identified an ambulance provider for questionable trips allegedly made to a hospital. During the three years prior to the system alerting officials, the provider was paid more than $1.5 million for transporting more than 4,500 beneficiaries.  A review of medical records found significant instances of insufficient or lack of documentation. CMS also revoked the provider’s Medicare enrollment and referred the results to law enforcement. 

"We are proving that in a modern healthcare system you can both fight fraud and avoid creating hassles for the vast majority of physicians who simply want to get paid for services rendered. The key is data," CMS Acting Administrator Andy Slavitt said in a statement. "Very few investments have a 10:1 return on taxpayer money."

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