Silos Play Role in Troubled Medicare Fraud Detection

Loraine Lawson
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Ten Early Warning Signs of Fraud in Organizations

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A U.S. inspector general report took to task Medicare fraud detection contractors this week after finding they frequently use inaccurate and inconsistent data. That makes it extremely difficult to catch people who are submitting bogus bills to Medicare, the report explained.


The U.S. Department of Health and Human Services Inspector General Daniel R. Levinson also faulted federal health officials, who were supposed to monitor how well these fraud detection contractors were doing their jobs. The U.S. Government paid tens of millions of taxpayer dollars to these companies over the past decade in an effort to stop Medicare fraud, an AP article states. It's estimated Medicare fraud alone costs taxpayers $60 billion a year.


This isn't the first time an inspector general has noted the accountability problems with fraud contractors. Ten years ago, another inspector general cited the same concerns, according to the article.


Fraud contractors are supposed to detect fraud by checking for spikes related to how much is spent, the type of service and how much service is requested. But there's no standardization in the reporting requirements. One contractor only reported two cases of potential fraud over three years, while another didn't report any fraud findings.


Experts say there's no incentive for finding fraud, and that may be part of the problem.


The bigger problem, however, seems to tie back to data quality and integration issues caused by a siloed approach to managing claims. There's no integration between the payment claims and fraud detection contractors. This means fraud contractors can't obtain real-time, accurate information on claims before the claims are paid.


A better approach would be to build fraud detection into the payment system, according to Kirk Ogrosky, former head of the Justice Department's division that investigates health care fraud.


Data integration vendor DataFlux has a case study from 2004 that would seem to back up Ogrosky's recommendation. A Medicare and Medicaid contractor who processed claims from across the nation used DataFlux's Data Management Platform to perform corrective routines for bad data, do data matching and address verification on all of its claims across siloed databases. The platform flagged any questionable transactions, which allowed the company to stop the payment process and investigate.


The company said this approach stopped more than $270 million of fraud.

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