CMS data analytics software accounts for 22% of fraud investigations, but cost savings are difficult to pin down

Special report: Homegrown fraud task forces promote collaboration
CMS' Fraud Prevention System accounted for 22% of fraud investigation leads, a figure that is poised to increase.

More than one-fifth of investigations initiated by Centers for Medicare and Medicaid Services program integrity contractors were due to leads generated by its $192 million data analytics program.

But tracking the savings associated with CMS’ Fraud Prevention System (FPS) and the impact on an investigation’s timeliness is slightly more difficult.

Launched by CMS in 2011, FPS has been a cornerstone investment designed to push the agency away from its traditional “pay-and-chase” model of investigating fraud toward a preventative approach. In 2016, the system was the primary source of 22% of investigations initiated by program integrity contractors, according to a report (PDF) released last week by the Government Accountability Office.

RELATED: How real-time data 'revolutionized' fraud prosecutions [Q&A]

Anecdotally, zone program integrity contractors (ZPIC) told GAO that FPS allows auditors to quickly identify suspicious trends and decide whether to make an investigation, and analytics have provided investigators with better quality data. Other agencies, like the Department of Justice, have begun using data analytics to enhance investigations into specific fraud concerns, like illegal opioid distribution.

But until a few months ago, FPS lacked the ability to track its impact on the speed of an investigation, and, perhaps more importantly, accurately calculate the cost savings. In a report (PDF) released by the Office of Inspector General, auditors were unable to certify $221 million of the $885 million in savings reported by CMS in the first two years of FPS implementation.

RELATED: Predictive analytics saves government $1.5B in improper payments

CMS has routinely pointed to impressive dollar figures associated with predictive analytics. Last year, officials said FPS generated $1.5 billion in savings since the program was launched. The system has also prevented improper payments from going out the door though FPS prepayment edits that saved more than $20 million in 2016, according to GAO.

In March, CMS upgraded the system to included enhanced performance metrics to track associated savings and provide administrators with real-time insight on the impact of FPS models and prepayment edicts.

FPS is also poised to take on a larger role in lead generation as CMS transitions from ZPICs to unified program integrity contractors (UPICs) that are required to generate 45% of new investigations from FPS. System upgrades will also allow CMS to track whether FPS speeds up the investigation process.

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