Fraud Prevention – The Tip of the Iceberg

Andrew Froehlich, Network Engineer & IT Consultant | 2/29/2012 | 27 comments

Andrew Froehlich
The Department of Health and Human Services released its 2011 Health Care Fraud and Abuse Control Program report last week. In a press release, the department detailed how the federal government won or negotiated about $4.1 billion in healthcare fraud judgments and settlements.

That's a substantial amount of tax dollars, and it's great to see success stories such as this, which can help lower the overall cost of healthcare. In fact, it was far and away the most money that the HHS has ever recovered.

How did it become so good at cracking down on healthcare fraud perpetrators? There are hard-working individuals on "Medicare fraud strike force teams," but a great deal of credit must also go to the government's new Fraud Prevention System (FPS).

Just last year, the Centers for Medicare & Medicaid Services were allotted about $270 million in funding from the HHS and Congress to combat fraud and waste within the federal healthcare system. According to an annual report (PDF download), the CMS used a portion of the funds to "build on existing fraud prevention activities and implement new advanced technology to ensure that accurate payments are made to legitimate providers for appropriate and reasonable services for eligible beneficiaries of the federal health care programs." The FPS was born from this funding.

The system, which went live in June, uses the same predictive modeling technologies that credit card companies use today.

This is interesting, because it would seem that fraud prevention software has become easier to repurpose for varying types of data and predictive informaton. Previously, these systems were designed and built for a specific purpose, usually in the financial servies industry, but now they are much more flexible and can adapt to fit many different environments.

Much of the problem with implementing fraud prevention systems in other areas had to do with the fact that data was not always stored digitally. And even if it was, it was dispersed in multiple databases and in differing formats. But now that there is a push for digital medical record standards, all the data is beginning to line up, and that makes it very easy to wrap data mining and prediction analytics tools around it.

As a result, you can expect healthcare fraud to be exposed far more frequently in the future thanks to technology that was invented in the financial industry -- and reapplied for a slightly different purpose. Due to the apparent success of the FPS, I expect our government to apply similar systems to other areas where fraud is frequent. One obvious target would be the IRS, but perhaps a similar system has already been implemented, and we just haven't been told.

Just in case, you'd better make sure you have all your receipts for this year's tax season!

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batye   Fraud Prevention – The Tip of the Iceberg   4/2/2012 1:54:16 AM
Re: Predict me this
I think we never get informed about a lot of the things what happens with our info at banks or other places, this days it just life... so to say
batye   Fraud Prevention – The Tip of the Iceberg   4/2/2012 1:52:12 AM
Re: Integration of data is key
yes, but in reality things not always perfect as we citizens would like them to be....   Fraud Prevention – The Tip of the Iceberg   3/31/2012 10:25:14 PM
Re: Predict me this
@Skr2011: Yes, can imagine. I am sorry it did not work out.
User Ranking: Blogger
Skr2011   Fraud Prevention – The Tip of the Iceberg   3/31/2012 9:36:47 PM
Re: Predict me this The restaurant and lodge was a bit of a money pit but it was fun while it lasted.
Skr2011   Fraud Prevention – The Tip of the Iceberg   3/31/2012 9:19:45 PM
Re: Integration of data is key

I agree. Politics should not play a role, but what is the chance that a government commission would be apolitical;)   Fraud Prevention – The Tip of the Iceberg   3/31/2012 8:58:48 PM
Re: Predict me this
Thank you for sharing that story. And I absolutely agree with you, there is protection, and there is protection. I got an alert from a credit rating monitoring agency; and found that one of my credit cards was reported as lost or stolen. Now I still had that card on me, so concerned I call the bank. Turns out the card may have been compromised by an online merchant (who remained un-named), and the bank had decided to block the card, issue a replacement and notify the rating agencies. Noone thought me the customer, whose card was blocked, needed to be told. Till I found out the hard way. 

Btw, you owned a restaurant and lodge? Sounds lovely. Its something I would love to do at some stage.. 
User Ranking: Blogger
batye   Fraud Prevention – The Tip of the Iceberg   3/30/2012 2:35:19 PM
Re: Integration of data is key
as long as privacy commisioner would have people problems in mind

and work for a people...

as sometimes he/she like in few cases before have only gov. interest in mind and not citizens...
Skr2011   Fraud Prevention – The Tip of the Iceberg   3/30/2012 1:19:35 PM
Re: Integration of data is key

I think the US can use a commission like that. Privacy has always been a tricky issue here because the founding fathers never spelled out privacy rights in the constitution. Lawyers today will tell you that the right to privacy was implied in the consitiution but who is out there really protecting our privacy in the US?
batye   Fraud Prevention – The Tip of the Iceberg   3/28/2012 3:30:35 PM
Re: Integration of data is key


The Privacy Commissioner of Canada - legal position with a lot of the legal power to protect privacy rights

The Commissioner is an advocate for the privacy rights of Canadians and her powers include:
  • Investigating complaints, conducting audits and pursuing court action under two federal laws;
  • Publicly reporting on the personal information-handling practices of public and private sector organizations;
  • Supporting, undertaking and publishing research into privacy issues; and
  • Promoting public awareness and understanding of privacy issues.

Skr2011   Fraud Prevention – The Tip of the Iceberg   3/28/2012 12:25:55 PM
Re: Predict me this
@ I owned a restaurant and lodge out in the middle of no where. More then once I experienced a guest whos bank had shut their card off because of the location and the fact that the guest had gased up at remote gas stations before making it to my place. There is protection and then there is over protection.
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