Senators Highlight GAO Review of New Medicare Fraud Detection System

WASHINGTON – Today, Sens. Tom Carper (D-Del.), Tom Coburn (R-Okla.) and Scott Brown (R-Mass.) highlighted a report that examines Medicare’s new fraud detection system. The report, “Medicare Fraud Prevention: CMS Has Implemented a Predictive Analytics System, but Needs to  Define Measures to Determine Its Effectiveness” (GAO-13-104), is the first Government Accountability Office (GAO) review of the Fraud Prevention System used by the Centers for Medicare and Medicaid Services (CMS) to better detect and curb Medicare waste and fraud. As part of the Small Business Act of 2011, Congress required that the CMS establish the anti-fraud system based on modern data analysis technology that could detect improper payments before they are made.

In its report, GAO found that the new anti-fraud technology “is generally consistent” with the practices of private health insurers and other private sector users of the technology.  However, the report also shows that Medicare officials have not yet fully integrated the system, and have yet to define the system’s measurable benefits or establish appropriate performance goals. The GAO recommends that CMS ensure that the new system is fully deployed by January 2013.  The GAO also recommends that Medicare officials determine ways to measure the performance of the system in order to determine its level of success in stopping waste and fraud.

Technology similar to the Fraud Prevention System is employed in the private sector, including credit card companies, which often alert the companies and card holders when there is an attempt to make fraudulent purchases.  The new Medicare anti-fraud system relies on “predictive analytics,” a method of data analysis that relies on models of fraudulent behavior in order to generate automated alerts on specific Medicare claims and providers.  The new system has been highlighted by Administration officials as a key solution for curbing Medicare improper payments.

“Clearly, the new fraud analysis system is a tool with enormous potential for fighting Medicare waste and fraud,” said Sen. Carper, Chairman of the Subcommittee of Federal Financial Management. “Medicare officials have correctly embraced this critical approach for stopping fraud before it happens. However, considering the magnitude of Medicare waste and fraud, the Centers for Medicare and Medicaid Services should do more to capitalize on this winning strategy. Congress directed Medicare officials to utilize this new anti-fraud technology as a way to prevent fraud, not just find out about fraud once it is committed. This Government Accountability Office report shows that the new system’s preventative abilities are not yet fully deployed, making proper detection and prevention more challenging than it needs to be. I am counting on Medicare officials to get the system fully up and running as promised.”

“Unfortunately, GAO has found that even after spending $77 million on the program CMS has no idea whether it is saving money or preventing fraud,” said Senator Tom Coburn, M.D. “It’s troubling CMS has no metrics, timeframes, measures or other indicators in place to assess the program’s effectiveness.” 

“The Government Accountability Office’s report clearly shows that the Centers for Medicare and Medicaid has fallen short of the Congressional requirement to prevent fraudulent Medicare payments before they are made, as opposed to having to chase down crooks after the money has gone out the door,” said Sen. Brown.  “The key question is when will Medicare officials finally have a fully operational and effective anti-fraud system so we can turn off the spigot of fraudulent Medicare payments?  I am eagerly awaiting the Centers for Medicare and Medicaid’s report to Congress on the results of the Fraud Prevention System, which is now months late.”

Medicare continues to be on the GAO’s list of government programs at “high risk” for waste, fraud and abuse, and Administration estimates of Medicare improper payments and fraud is in the tens of billions of dollars. In June 2011, Sens. Carper, Coburn and Brown introduced the Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST) Act (S.1251), which would address a set of problems that leads to tens of billions of dollars lost to waste and fraud in Medicare and Medicaid every year. 

The Subcommittee on Federal Financial Management has examined key aspects of the fraud prevention system. In January, Sen. Carper led a letter to CMS requesting a description of the Fraud Prevention System’s ability and track record for stopping waste and fraud. CMS is required by Congress to submit a report detailing the operations and successes of the new system, but missed the September deadline.