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Fighting fraud in government: Medicare at risk

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Portfolio Marketing Manager, Fraud & Compliance, IBM

We put a lot of deserved trust into our medical professionals. Doctors, nurses and administrators work tirelessly day in and day out to keep patients healthy and safe. When seeking medical help, people are generally in a vulnerable position. They may be receiving a difficult diagnosis, experiencing anxiety from needles or simply fearing the doctor’s office. The last thing patients think about or even fear is being taken advantage of by these same people who are helping us.

Healthcare fraud, specifically Medicare fraud, is on the rise. Medicare provides health insurance coverage, mainly for the disabled and elderly. It is available for US citizens and permanent residents over the age of 65 who qualify for Social Security benefits, railroad retirement benefits and benefits from federal retirement programs. Medicare also covers spouses, widows, widowers and dependents. The program needs to ensure that citizens receive the benefits they deserve with limited to no waste or error. However, preventing waste and minimizing healthcare fraud can be challenging.

Perpetrating fraud at considerable taxpayer expense

Medicare fraud occurs when individuals receive healthcare benefits and reimbursement under false pretenses. Unfortunately, both opportunistic criminals and organized crime groups take advantage of the Medicare system. Fraudsters typically collect funds through the billing process. While there are many schemes, the most popular schemes include upcoding, information sharing in exchange for kickbacks and false billing.

The US has taken steps in the right direction by creating tough laws and harsh penalties for criminals, and federal agencies have created joint task forces that share information and investigations with federal, state and local agencies. However, Medicare fraud remains prevalent.

For example, recently a chiropractor and an accomplice operating in St. Louis County in the state of Missouri were found guilty of healthcare fraud. The perpetrators were billing Medicare, Medicaid and health insurance companies for costly orthotics that were never provided to their patients. This practice is what is known as false billing. As reported in a local newscast, court documents showed that expensive ankle-boot orthotics were marketed to nursing homes in a fall-prevention program designed to improve quality of life, but patients were instead given less-expensive devices. This healthcare scheme lasted for five years. The fraudsters concealed the number of expensive boots sold to avoid scrutiny from Medicare, and the losses to Medicare, Medicaid and insurance companies amounted to $2.2 million.

Fraudulent schemes such as this one should never take place, but, they can be difficult to identify. Advanced analytics technology can make a difference for identifying and fighting fraud in the healthcare social services system.

Applying an advanced analytics solution

Recently, IBM helped the Department of Human Services: State of North Dakota improve its services through data-driven insight. It identified situations in which opportunities for deliberate fraud, inadvertent problems and duplicative services arose. Identifying and stopping these problems were of primary concern for the agency because they produced unnecessary overhead, slowed business and caused inefficiencies. By adopting IBM Cognos and aligning it with its data systems, the agency’s caseworkers were able to receive real-time insights that allowed them to prioritize their day-to-day critical needs.

Government and social service agencies can significantly benefit from the combination of strict penalties for criminals, joint task forces, information sharing and the latest advances in capabilities to detect fraud and abuse. Although fraudsters are likely to continue their attempts to exploit system vulnerabilities to their advantage, the combination of analytics, technology and human expertise helps these agencies protect themselves and the citizens they serve.

Learn more about leveraging analytics to protect citizens from fraud in social service programs for healthcare.