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Medicare goes high-tech to deter fraud

Tired of paying bogus claims, then chasing the scammers, Medicare announced Friday it is deploying screening technology similar to what's widely used by credit card companies to head off fraud.

Up to now, the $500 billion-a-year government health program for senior citizens has basically paid claims first and asked questions later in a system dubbed "pay and chase."

The technology upgrade should help deter flagrant abuses such as the small clinic that suddenly starts billing more for a particular outpatient procedure -- intravenous infusions, for example -- than major hospitals in its area. But it's not likely to help crack sophisticated schemes that involve outwardly respectable companies with the expertise to cover their tracks.

Health care fraud is estimated to cost taxpayers $60 billion a year. Medicare, which covers 47 million seniors and disabled people of any age, has long been a prime fraud target. But with the program facing insolvency, combating health care fraud has become a much more urgent priority for the government.

Medicare anti-fraud czar Peter Budetti said the new system expected to go into operation July 1 is a major step forward. "It will allow us to do some things we had not been able to do before," he said. The hope is that Medicare will no longer be an easy mark.

Up to now, the program has performed rudimentary fraud checks on individual claims before payment, officials said. For example, does the Medicare number on a bill for prostate cancer treatment belong to a female patient?

The new system will allow Medicare to monitor large numbers of claims using computer analysis to spot tell-tale patterns of potential problems: Does a storefront wheelchair retailer in Los Angeles have lots of customers in San Francisco, more than 350 miles away?

Looking at such variables as the beneficiary, the provider, the type of service and other patterns, the system will assign risk scores to claims. It will then issue an alert when something looks like it might be off. Medicare investigators will be able to scrutinize the claim before payment is sent out.

That should help address one of the major frustrations for health care fraud investigators. Because Congress directs Medicare to pay claims promptly -- usually within 14 to 30 days -- fraudsters can make a quick bundle and drop off the radar at the first sign that law enforcement is on to them. By the time the chase is on, the lawbreakers have usually absconded with the loot.

In another development, a government program that exempts companies from providing the minimum health coverage mandated by last year's health care overhaul will stop accepting applicants in September, officials said Friday.

Companies that already have exemptions will be able to continue their "mini-med" health plans with annual maximum coverage of $10,000. The health care overhaul signed last year by President Obama raised the minimum coverage level to $750,000 for those who weren't granted the waivers.

The government is closing down the program because there's no need for new applications, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight.

"For the vast majority of plans that would need a waiver, those are the ones that would have applied and did apply this year," he said.

The waivers were granted over nine months to three million workers in 1,433 organizations. Companies that have the exemptions will be able to keep them until 2014, when exchanges selling government-subsidized private coverage open.

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