Data analytics offers an 'extremely powerful' tool to investigate fraud

Closeup of a laptop

Federal agents and prosecutors emphasized the importance of data analytics coupled with traditional investigative techniques in bringing down complex and sometimes brazen fraud schemes.

During a hearing held by the House Committee on Ways and Means, Rep. Peter Roskam (R-Ill.) focused on what more can be done to prevent fraud, noting that the Centers for Medicare & Medicaid Services “continues to rely disproportionately on pay and chase.” In her testimony, Barbara McQuade, United States Attorney for the Eastern District of Michigan said that criminal fraud enforcement efforts are “at an all-time high,” pointing to the coordinated fraud take down that arrested more than 300 people earlier this year. During fiscal year 2015, the government recovered $2.4 billion tied to healthcare fraud cases.

Abhijit Dixit, a special agent with the investigations division at Office of Inspector General, called data analytics an “extremely powerful tool” in detecting and investigating fraud, but Dixit also emphasized the need for traditional investigative work by field agents in conjunction with data analytics. Many fraud schemes operate like criminal enterprises, which require boots-on-the-ground work from field agents, he said. Although data often points investigators to billing outliers that may be an indication of fraud, the OIG also receives critical information from informants and people indicted for fraud.

“Data has pointed us in the right direction," he said "Combined with agents going into the field and following up with surveillance techniques to get a better picture of what we’re seeing, [it] has helped us immensely,” he said.

McQuade also highlighted some of the particularly egregious fraud cases that have emerged over the last several years, including Dr. Farid Fata, a Detroit oncologist sentenced to 45 years for administering aggressive chemotherapy treatments to patients that didn’t have cancer. Dixit told the congressional committee that it took just five days to arrest Fata once they began investigating the case following a tip from a whistleblower.

Scott Ward, senior vice president with Health Integrity LLC, which serves as a Zone Program Integrity Contractor, emphasized the importance of using payment data to identify fraudulent providers, adding that better IRS and immigration data would improve those capabilities. But he also admitted that federal auditors are probably catching less than 50 percent of the fraud that occurs nationwide.