Report: Systems to catch Medicaid fraud inadequate

The federal government's systems for analyzing Medicare and Medicaid data for possible fraud are inadequate and underused, making it more difficult to detect the billions of dollars in fraudulen...

The federal government's systems for analyzing Medicare and Medicaid data for possible fraud are inadequate and underused, making it more difficult to detect the billions of dollars in fraudulent claims paid out each year, according to a report released Tuesday.

The Government Accountability Office report said the systems don't even include Medicaid data. Furthermore, 639 analysts were supposed to have been trained to use the system — yet only 41 have been so far, it said.

The Centers for Medicare and Medicaid Services — which administer the taxpayer-funded health care programs for the elderly, poor and disabled — lacks plans to finish the systems projected to save $21 billion. The technology is crucial to making a dent in the $60 billion to $90 billion in fraudulent claims paid out each year.

"I'm looking forward to hearing, someday, about major fraud scams discovered as a direct result of this integrated repository and the use of creative pattern recognition techniques implemented on top of it. Until we hear that story, the public is not getting value for money from these investments," said Malcolm Sparrow, a health care fraud expert at Harvard University.

The current antiquated database is a piecemeal system with data stored in disparate systems, meaning employees don't have access to all data from all programs.

Each state has its own systems with very limited access to Medicare or national Medicaid data. But CMS does not have set plans to share access with the states, despite an earlier commitment to do so starting in 2010, according to the report.

The agency plans to integrate the missing Medicaid data by 2014 and is "very aggressive schedule" to train hundreds of other analysts on the program, said Dr. Peter Budetti, CMS deputy administrator and director for program integrity. He declined to say exactly when the analysts would be trained at a hearing Tuesday to discuss the role of technology in health care fraud.

The new $150 million systems, which went live in 2009, are intended be a one-stop storage for all data, accessible by all CMS staff and its contractors, law enforcement and state agencies.

But crucial pieces are still missing — including so-called "share systems data" that would help analysts identify and prevent payment of fraudulent claims, according to the report.

The agency planned to include this by 2008, but funding for the software to implement the system was delayed. CMS is now aiming for November 2011, the report said.

"To achieve the maximum taxpayer savings, the federal government needs to do a better job of getting this new technology into the hands of oversight staff working to curb the tens of billions of taxpayer dollars lost to waste and fraud," Sen. Tom Carper, D-Del., said at hearing held at Tuesday's hearing.

Medicare is one of the largest payer systems in the world, with contractors processing about 4.5 million claims per workday. For decades, CMS has operated under a pay and chase system, paying the claims quickly so legitimate medical providers can operate and following up on suspicious claims afterward. But as Medicare fraud has morphed into sophisticated scams, access to data showing what claims are being paid in real time has become more critical. By the time officials process the scams, crooks have already fled with the money.

"CMS takes our responsibility to fight health care fraud seriously. As we work to improve these existing systems, we are implementing advanced new technologies to further enhance our efforts to identify potential fraud before payments are made," CMS spokesman Brian Cook said.

On July 1, CMS implemented a new technology program, which is not included in the report. The agency is trying to improve prevention with screening technology similar to what's widely used by credit card companies to keep fraudulent claims from being paid in the first place. Medicare has awarded an initial $77 million contract for that system.

But when pushed by Sen. Tom Coburn, R-Okla., on when the agency would use that technology to actually stop paying suspicious claims, Budetti waivered.

"We did not set this up to automatically stop payments on day one," Budetti said.

He later estimated within a year, but said it would likely be sooner.

"I'm not going to give you an exact date because we're going through this process for the first time," Budetti said. "This is the whole purpose of doing it. We want to stop those payments before they go out the door."

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