New Medicare fraud detection system saves $115 mil

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A highly touted new technology system designed to stop fraudulent Medicare payments before they are paid has saved about $115 million and spurred more than 500 investigations since it was launched in the summer of 2011, according to a report released Friday.

Federal health officials said the projected savings are much higher. The savings so far, however, are minuscule compared with the estimated $60 billion lost each year to Medicare fraud. With the Obama administration and Congress desperately looking for savings to avoid a budget meltdown, denting Medicare fraud has the potential to save billions of dollars annually.

However, the Department of Health and Human Services' inspector general noted the report had some inconsistencies in its data and questioned the methodology for calculating some of the figures.

"In these cases, we could not determine the accuracy of the department's information, which impeded our ability to quantify the amount of the inaccuracies noted in this report," the inspector general's office said in a review of the report. Officials in the office said regardless of the glitches, they believe the new fraud system is a useful anti-fraud, too.

The $77 million technology system fights fraud in much the way credit card companies scan charges and can freeze accounts. It saved $32 million by kicking providers out of the program or refusing to pay suspicious claims. The report from the Centers for Medicare and Medicaid Services, obtained by The Associated Press, was unclear on how many actual providers were suspended or revoked from Medicare.

The rest of the money, about $84 million, is projected savings flowing from those actions. For example, if a fraudulent provider has been billing Medicare for roughly $100 million a year for wheelchairs that patients never receive and they are kicked out of the program, officials estimated the program would save $100 million the next year.

Medicare has been a highly sensitive political issue for the Obama administration since Democrats lost the House in 2010, partly due to a backlash from seniors over program cuts to help finance the president's health care overhaul. Since then, top officials have emphasized the administration's stewardship of Medicare, pointing to better benefits and an all-out campaign against fraud.

Lawmakers from both parties, including Sen. Tom Carper, D-Del., and Sen. Orrin Hatch, R-Utah, have pressed health officials for months to release results on the system, complaining that without data, there's no accountability for the money spent and the promises made.

"Today's report shows that Medicare officials are clearly moving in the right direction when it comes to curbing waste and fraud," said Carper.

Hatch spokeswoman Julia Lawless said the report seems promising at first glance but said Hatch will closely review it to see if "the numbers still hold up under scrutiny."

The system's projected savings are only for one year, but 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.

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. Federal health officials did not say how many cases were pending but estimated about $68 million in potential savings in that category.

Federal health officials have struggled with how to measure the success of the Fraud Prevention System. In the past, it was measured by how much money law enforcement officials recovered. Now, it's based on how much money is saved before it's paid.

Data from the new system also launched 536 investigations and provided information for 511 others already in progress, but it's unclear what actions had been taken based on those investigations.

"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," Budetti said.

The new screening technology, which was mandated by Congress, is housed in the Baltimore area in a $3.6 million command center.

In the past, investigators individually screened each claim as it came in, determining on face value whether it looked suspicious. Under the new system, claims are run through a series of sophisticated computer models that can spot suspicious billing patterns and put that claim in the context of all the claims from that provider and claims from other providers in a particular industry.

For example, does a storefront wheelchair retailer in Los Angeles, for example, have lots of customers in San Francisco, more than 350 miles away?

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