Antifraud Technology Offers Significant Opportunity to Reduce Health Care Fraud

AIMD-95-77: Published: Aug 11, 1995. Publicly Released: Aug 23, 1995.

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Pursuant to a congressional request, GAO provided information on how the Medicare program detects and prevents fraud, focusing on: (1) the tools Medicare uses, as well as the other available technologies, to combat fraudulent billing; and (2) rising Medicare fraud in south Florida and the actions being taken to mitigate the problem.

GAO found that: (1) Medicare's controls against fraud have not kept pace with the rising number of claims processed; (2) while electronic claims processing is critical for efficiency, the extreme volume of Medicare claims requires more innovative controls to curtail fraud; (3) existing Medicare controls have inherent limitations in detecting attempted fraud, since they are designed primarily to identify overutilized services; (4) there are new antifraud systems available to private insurers which recognize patterns in paid claims data and identify fraudulent relationships; (5) it is believed that these systems may be cost-beneficial in combatting emerging types of fraud; and (6) south Florida has been victimized by new types of fraud, resulting in the Health Care Financing Administration's (HCFA) formation of an interagency workgroup to identify specific problems and coordinate enforcement actions.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: HHS agreed that it needed to identify fraud and program vulnerabilities that make Medicare susceptible to fraud, and to prevent fraud. HHS also agreed that it needed to use software to identify patterns of billing that may constitute fraud and abuse. While these statements were encouraging, HCFA's actions did not fully respond to the recommendations. Instead, in September 1995, HCFA entered into an interagency agreement with the DOE's Los Alamos National Laboratory to explore techniques for preventing and detecting Medicare fraud and abuse. However, after reportedly spending about $9 million, in November 1998 HCFA terminated the agreement due to the growth in the field of commercially available fraud and abuse detection technology. HCFA subsequently awarded a contract to evaluate commercially available fraud and abuse software. Therefore, despite its efforts to develop or acquire antifraud technology, HCFA has not yet reaped the benefits of such technology in the Medicare program.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator, HCFA, to develop a plan for implementing antifraud technology. One approach would be to monitor the carrier currently using antifraud technology and immediately begin a pilot or demonstration program that would enable the agency to quickly see through valuable, first-hand experience how it can best deploy antifraud technology. Such a test could be conducted where the need to reduce fraud is great, such as in south Florida. If the results of this test show that antifraud technology is cost-effective and useful in identifying potential fraud, HCFA should expeditiously expand the use of this technology nationwide.

    Agency Affected: Department of Health and Human Services


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