New tools focus on prevention of Medicare fraud, abuse

Washington -- Capping off what they described as a "remarkable year" for cracking down on health care fraud, officials with the Depts. of Health and Human Services and Justice unveiled new tools to protect the system.

During a Dec. 16, 2010, summit in Boston, department officials highlighted their new focus on predictive modeling tools, which are systems that use algorithms and other calculative methods to predict certain outcomes. Such tools are used by banks, credit card companies, insurers and other entities to identify potential fraud before it exists.

Summit participants from the Centers for Medicare & Medicaid Services said that with the help of predictive modeling and other similar methods, "bad actors" could be prevented from enrolling as physicians or suppliers in Medicare with the intent to defraud the program. Other new tools will track billing patterns and other information to identify real-time aberrations indicative of fraudulent activity.

Such resources are necessary as CMS attempts to move away from an outdated prevention model, officials said. "Preventing fraud is more effective than the old 'pay and chase' model of fighting fraud after a sham provider has been paid and disappeared," said CMS Administrator Donald M. Berwick, MD. "By using new predictive modeling analytic tools, we are better able to expand our efforts to save the millions -- and possibly billions -- of dollars wasted on waste, fraud and abuse."

The new focus already has scored the agency some wins. By using predictive modeling techniques, CMS officials said they were able to stop fraudulent payments to "false fronts" in Texas, which were storefronts acting as providers of ambulance services that did not exist.

The agency also is implementing new administrative authorities to help combat fraud, such as suspending payments when investigating a credible allegation of fraud.

"Using the most up-to-date technologies and adopting best practices across the nation's health care system, we have a better chance of finding fraudulent and abusive providers before they even start billing Medicare or other health insurance," said Peter Budetti, MD, director of the CMS Center for Program Integrity.

Officials also outlined their efforts in the private sector to combat fraud. For instance, CMS partnered with the Federal Recovery Accountability and Transparency Board to investigate a group that it labeled high-risk.

By combining public data with court records and other documents, the investigation was able to uncover a scheme that involved fraudsters registering multiple companies at the same location on the same day using the identification numbers of physicians in other states.

In Boston alone, more than $4 billion worth of civil and criminal health care fraud settlements have been recovered in the past two years, said Attorney General Eric Holder.

Attorney General Eric Holder credited the work of the Health Care Fraud Prevention and Enforcement Action Team with helping produce results against Medicare fraud.

HEAT is a joint initiative of HHS and Justice and has operations in seven U.S. cities.

Baton Rouge, La.; Brooklyn, N.Y.; Detroit; Houston; Los Angeles; Miami; and Tampa, Fla.

"Simply put, we have taken our fight against health care to the next level, and I am committed to continued collaboration, vigilance and progress," Holder said.

The health reform law provides an additional $350 million during the next 10 years to help fight health care fraud.