North Carolina is one of many jurisdictions testing new methods to avoid overpaying for Medicare and Medicaid expenses. IBM has developed software that uses predictive analytics to unearth potentially fraudulent Medicaid payments. The fraud detection software analyzes millions of claims for Medicaid eligible patients and looks for billing patterns that have been identified as potentially fraudulent. The goal of the systems is generally to avoid approving improper payments rather than waiting to pursue civil remedies from hospitals, doctors and other health care providers for Medicare or Medicaid fraud after the money has changed hands.

The North Carolina Department of health and Human Services has conducted several investigations using the new software. The software was able to identify problems that would be much more difficult for a human to spot. In one case, a health care provider billed for more than 24 hours of services in one day. In another, a provider billed group rates and individual rates at the same time. In total, the investigations turned up more than $6 million in payments that were deemed potentially fraudulent.

The Department turned over the results of its investigation to the state attorney general’s office. It remains to be seen how Medicaid fraud investigators will use such computer-generated evidence in conducting their work. The notoriously complex Medicare and Medicaid billing systems may result in many situations where services were actually provided to eligible patients, but were simply billed incorrectly. Such technical violations are certainly not the kind that investigators normally target when attempting to end health care fraud schemes.

The use of software to discover fraud is a trend that will likely grow all across the country. Several states are trying out versions recommended by the FBI and other parties interested in combating health care fraud. The community of medical providers will watch with keen interest to see how the new technology will affect their businesses.

Source: eWeek.com, “IBM Predictive Analytics Helps North Carolina Detect Medicaid Fraud,” by Brian T. Horowitz, 24 May 2012

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