Why Medicare should adopt the credit card industry's approach to fraud detection

When your credit card company picks up on discrepancies in your shopping habits, it blocks your transaction. So why can't Medicare take the same approach with fraudulent medical claims?

That's the question posed by attorney Hank B. Walther, former chief of the Health Care Fraud Unit in the Department of Justice's (DOJ) criminal division, in a recent Wall Street Journal editorial. Walther recounts some of the egregious fraud schemes that came across his desk during his time at DOJ, including a group of bogus infusion clinics in South Florida that ran up a $1 billion Medicare bill for unnecessary treatment. The DOJ eventually convicted 50 people who were tied to the scheme, and payments for infusion services dropped from $2 billion in 2005 to $50 million in 2010.

But those convictions weren't enough.

"These aren't success stories," Walther writes. "They're failures. After paying hundreds of millions of dollars to criminals who perpetrated egregious fraud, the government is spending millions more to incarcerate them. Unlike my credit-card company, the federal government has no tools that flag suspicious claims and stop them before payment is made."

Although the Centers for Medicare & Medicaid Services has implemented the Fraud Prevention System (FPS), it still doesn't know the number of claims that are identified before payment is made. Earlier this year, the Office of Inspector General reported that the FPS led to nearly $3 in savings for every dollar spent. A month later, SafeGuard Services was awarded a $300 million contract to oversee fraud detection in the Northeast.

Rather than continue the inefficient "pay-and-chase" model, Walther suggests subjecting Medicare claims to data analytics, and allowing "outsiders" (i.e. credit card companies) to help develop new fraud detection systems.  

To learn more:
- read the WSJ editorial

Suggested Articles

The HHS OIG is asking for an additional $23.7 million to support fraud oversight that has benefited from an emphasis on data analytics.

A New York surgeon was sentenced to 13 years in prison for fraud and more physician practice news from around the web.

A federal judge has ruled that the U.S. government’s remaining fraud case against UnitedHealth can move forward.