CMS Cutting-Edge Technology Identifies $820 Million in Improper Medicare Payments

BALTIMORE, Md. (July 15, 2015)—After three years of operations, the Centers for Medicare & Medicaid Services (CMS) reported that the agency’s advanced analytics system, called 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 Fraud Prevention System identified or prevented $454 million in Calendar Year 2014 alone, a 10 to 1 return on investment.

“We are proving that in a modern health care 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,” said CMS Acting Administrator Andy Slavitt. “Very few investments have a 10:1 return on taxpayer money.”

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. For instance, last month Health & Human Services (HHS) and the Department of Justice announced the largest coordinated fraud takedown in history, resulting in charges against 243 individuals, including 46 doctors, nurses, and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings. Over the last five years, the administration’s efforts have resulted in more than $25 billion returned to the Medicare Trust Fund.

The Fraud Prevention System helps to identify questionable billing patterns in real time and can review past patterns that may indicate fraud. 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.

“The third year results of the Fraud Prevention System demonstrate our commitment to high-yield prevention activities, and our progress in moving beyond the ‘pay and chase’ model,” said Dr. Shantanu Agrawal, CMS deputy administrator and director of the Center for Program Integrity. “We have learned a lot in the three years since the Fraud Prevention System began, and as we learn, we continue to become more sophisticated in detecting aberrant billing patterns and developing leads for investigations and action.”

In future years, CMS plans to expand the Fraud Prevention System and its algorithms to identify lower levels of non-compliant health care providers who would be better served by education or data transparency interventions.

For more information, visit cms.gov.