New technology to fight Medicare, Medicaid fraud announced in Philly

The fight against Medicare and Medicaid fraud will take a new technological twist July 1, when the federal government begins using predictive-modeling computer software to flag would-be criminals before they get a check from taxpayers.

The system is supposed to enable the government to collect and analyze information so it can spot potential fraud rather than simply evaluate one claim at a time, said Health and Human Services Secretary Kathleen Sebelius and leaders from the Center for Medicare and Medicaid Services, who made the announcement Friday in Philadelphia.

The system will use technology similar to that used by banking and telecommunications companies to spot fraud. The $77 million in funding is part of the Patient Protection and Affordable Care Act passed in 2010.

"Medical data is in lots of different pots," Sebelius said at a news conference after the announcement at a summit on health-care fraud at the University of the Sciences. "We wanted to be able to spot the doctor claiming to be in six cities billing for the same procedure on the 16th of June."

U.S. Attorney General Eric Holder joined Sebelius and others involved in fighting health-care fraud at the summit. This is the sixth such gathering, following ones held in Miami, Los Angeles, New York, Boston, and Detroit.

The Obama administration has emphasized fighting fraud as part of its much-discussed health-care plan. The two cabinet-level departments joined forces in May 2009 and tried to better deploy people and resources to fight Medicare and Medicaid fraud for its own sake, but also because the federal budget is stressed.

Holder said that by using the investigative units of the FBI, U.S. Attorneys' Offices, Medicare and Medicaid, and the Food and Drug Administration, the government has obtained in the last two years nearly $8 billion in judgments, settlements, fines, restitutions, and forfeitures.

"We were inspired by our common cause - and by common sense," Holder told the roughly 320 summit participants.

The U.S. Attorney's Office in Philadelphia has been one of the most active units, given the multinational pharmaceutical companies with a presence in the area, but individuals have also been caught and prosecuted.

The financial penalties for companies have reached into the billions of dollars, but it is still rare for executives to go to prison. That could change in coming weeks as U.S. Judge Legrome D. Davis decides whether to send four former executives of Synthes Inc. to jail after they pleaded guilty to charges stemming from an illegal clinical trial of bone cement. Three people died during operations in which the cement was used. The company, whose U.S. headquarters is near West Chester, paid $23 million in fines.

"If individuals can be held responsible for the action we've investigated, it is our intention to send them to jail," Holder said in the news conference, with Sebelius, Assistant Attorney General Tony West, and Zane Memeger, U.S. Attorney for Eastern Pennsylvania, standing nearby. "Each case has to be resolved on its facts, but we don't resolve all these matters by only holding the corporation liable. To the extent we can make the case against individuals, we will do so. That, I think, is the most effective deterrent."

The computerized tracking system is part of that initiative. Sebelius said the real-time hope for the system was akin to when a credit-card company "can alert you to 12 flat-screen televisions being billed to your card from a town you've never been to."

Donald Berwick, the chief administrator for the Centers for Medicare and Medicaid Services (CMS), said that the contract was put out for bid and that Northrop Grumman, National Government Services, and Federal Network Systems, a subsidiary of Verizon, were joining forces on the system. The contract is for one year, with options for two years of extensions, but the government will own the algorithms, so, in theory, the system could survive if any of the companies departs.

"This helps CMS," Berwick said, "to move beyond the pay-and-chase recovery operations to an approach that focuses on preventing fraud and abuse before payment is made."