Medicare Turns to Predictive Modeling

HHS Secretary Kathleen Sebelius announced the nationwide effort June 17. HHS has entered a contract with Northrop Grumman to lead the technology effort in partnership with National Government Services and Federal Network Systems, a Verizon company.

Medicare claims will be analyzed using risk-scoring technology that applies predictive models, an approach similar to that used in the private sector to identify credit card fraud. For the first time, federal authorities "will have the ability to use real-time data to spot suspect claims and providers and take action to stop fraudulent payments before they are paid," according to a statement from the Centers for Medicare & Medicaid Services, a unit of HHS.

Northrop Grumman will deploy algorithms and an analytical process to review claims by beneficiary, provider, service origin or other patterns to identify potential problems and assign risk scores and alerts. "These problem alerts will be further reviewed to allow CMS to both prioritize claims for additional review and assess the need for investigative or other enforcement actions," according to the CMS statement.

CMS announced in February plans to speed up the implementation of the anti-fraud technology, originally slated for limited tests this year. Also, HHS published a final anti-fraud rule in February to carry out healthcare reform's mandated programs. For example, it gives federal authorities the power to temporarily stop payments to those for whom there has been a credible fraud allegation until an investigation is completed.