The Centers for Medicare & Medicaid Services (CMS) has launched the Fraud Detection Operation Center (FDOC) to fight waste, fraud and abuse, the agency announced this week.
Listed on a new webpage are a list of “recent success stories.” They include taking action against improper enrollment in Affordable Care Act (ACA) plans, cracking down on false billing of wound care services and scrutinizing “problematic activities” regarding hospice claims.
The page also claims it stopped payments to a provider who died 20 years ago as well removed 18 providers convicted of a “serious crime” for not meeting adequate standards.
"CMS launched the Fraud War Room on March 24—a real-time operations center armed with modern tools and interagency coordination—to identify scams early and shut down fraud before taxpayer dollars are lost," said a CMS spokesperson. "Through this effort, CMS has to date suspended $43M in payments to 33 providers due to credible allegations of fraud. We look forward to announcing additional success stories in the future."
The FDOC leverages the Fraud Prevention System (FPS), a system developed, built and operated by federal contractor Peraton. The FPS uses artificial intelligence and machine learning models to flag potentially fraudulent behavior by providers, allowing investigators to more easily see whether a provider should be funneled to the government’s case management system.
Peraton, a national security and technology company, manages the end-to-end process—from member enrollments to processing claims—for Medicare and Medicaid fraud detection at the CMS, said Technical Director Lauren Toth in an interview with Fierce Healthcare. The company has saved the federal government $13 billion over the last decade and $1.2 billion in 2024 alone.
Workers on behalf of the Department of Government Efficiency (DOGE) are using the FPS and the FDOC to look at fraud probabilities of providers, or, theoretically, beneficiaries, in real time. Providers are susceptible to having federal payments paused or licenses revoked after a review.
“Everything that we’ve seen so far has been per our normal processes,” said Toth. “If someone from digital services that’s been working with DOGE needs to access our dashboards, they’ll submit a help desk request and get the proper access, making sure they have the right rule-based access for what they’re doing.
“I don’t know about all, but the majority of people within the FDOC are within CMS that have already been working with FPS,” she added.
The DOGE has had access to 19 sensitive systems at the Department of Health and Human Services (HHS), reported Wired, including accounting systems that pay contractor and a Medicare claims warehouse.
The DOGE has suspended healthcare grants under an initiative called “Defend the Spend,” and the HHS has been sued several times over its decision to terminate $11 billion in grants to states for infectious disease outbreak prevention. Peraton said its contracts with the CMS have not been affected yet.
Beyond individual cases of fraud addressed by the FDOC, the CMS emphasized regulatory actions taken to reduce waste and fraud. This includes a proposal to shorten the marketplace open enrollment period, end the federal match for certain state funding requests in Medicaid, close loopholes in the Medicare Advantage appeals process, terminate some CMS Innovation Center pilot models and slash funding to the ACA navigator program.
Rapid FI
Now, Peraton is unveiling a commercial license designed to be more digestible and personalized for federal agencies.
Although the product, called Rapid Fraud Intelligence (Rapid FI), is not currently used by FDOC, the CMS is perhaps the most obvious agency that could benefit from the offering, said Toth. The company says Rapid FI is 50% faster and results in an 100x return on investment.
Peraton demoed the product to Fierce Healthcare using a hypothetical dashboard for Medicare and Medicaid fraud investigators looking at suspicious provider activity.
The program layers a user interface over infrastructure developed through the FPS to improve workflows, said Allen Barger, a senior principal of software development for Peraton.
Notifications alert investigators of suspicious billing patterns or activity through a probability risk score. Providers are also judged against each other through comparative billing, allowing an investigator to see how one provider’s billing stacks up against the rest of the pack.
Rapid FI will look at cost, claim types, a behavior scored based on more than six metrics, a social networking analysis to identify the likelihood of kickbacks, how many times a National Provider Identifier was flagged or other outliers related to distance, medical codes and number of patients.
Barger then highlighted one hypothetical chiropractor from the dashboard. This provider has 32 patients, and the average distance of each patient is 95 miles, “which could raise a red flag” because there are likely chiropractors closer than 95 miles of its residents. The chiropractor also billed more than $800,000 for the same medical code.
Toth said the goal of Rapid FI is to pause payments before they are made.
“A lot of investigations today are payments that have already been made,” she explained. “So it's pay and chase. An investigator might come in and say, ‘this provider has really suspicious past billing, and we don't want them to continue this bad billing if they really are bad.’ They will click a button and it prioritizes and moves that whole record into their case management system so that they can start their management of their investigation.”
Peraton has also had discussions with other federal departments to pinpoint payment anomalies. Investigators could also use Rapid FI to evaluate billing in Medicare Advantage or Part D eligibility, or target models on specific geographic regions, even narrowing in on ZIP codes rife with suspicious activity. The company has previously contracted for the Social Security Administration and the IRS.
“It is very expensive and very time-consuming to start an investigation at CMS, so if we could use analytics to help investigators make a more well-informed decision on whether or not to start an investigation, then a lot of time and money could be saved,” said Barger.