On June 17, 2011, the Centers for Medicare and Medicaid Services (CMS) announced that it will begin using predictive modeling technology to fight Medicare fraud.  This is the latest of CMS’s initiatives to shift from a “pay and chase” approach to a proactive fraud prevention model.  According to the press release, this predictive modeling initiative builds on new anti-fraud tools and resources provided by the Patient Protection and Affordable Care Act.  “President Obama is committed to hunting down and eliminating waste, fraud and abuse throughout the federal government,” said Department of Health and Human Services (HHS) Secretary, Kathleen Sebelius.

Medicare claims will be analyzed using risk scoring technology that applies effective predictive models, according to the press release.  CMS will now have access to real-time data to help identify suspicious claims.  Northrop Grumman has been selected to develop CMS’s national predictive model technology.  Northrop Grumman has partnered with National Government Services, a Medicare administrative contractor (MAC), and Federal Network Systems, LLC, in order to leverage a wealth of claims data.

Given the importance of this initiative to CMS’s overall anti-fraud efforts, Northrop will move rapidly to implement this new anti-fraud technology.  According to the press release, Northrop Grumman will deploy algorithms and an analytical process that looks at claims by beneficiary, provider, service origin or other patterns in order to identify potential problems.  In addition, based on the predictive modeling, Northrop Grumman may assign an “alert” and “risk scores” to claims.  CMS will then review these claims to determine whether further investigation or other enforcement action is warranted.

To view the press release click here.