Finally. Yes, finally, the government has acknowledged its limitations and turned to the private sector to help it address escalating Medicare costs. Currently $2.2 trillion is spent on healthcare, and it is estimated that $100 billion is lost in waste and fraud within the Medicare system. Ouch.
With considerable help from several very big (small) companies the federal government has invested in a predictive modeling technology system to identify potentially fraudulent Medicare claims in advance of payment. Thanks to its partnership with Northrop Grumman, National Government Services and the Federal Network System (unit of Verizon), under the Small Business Acts of 2010, the government announced last month it would begin implementing the system nationwide in July, three years ahead of schedule.
In essence, Medicare is in the same situation as the financial industry was 15 years ago; how do you detect fraud before the payment is made, thus avoiding, what is often referred to as ‘pay and chase’. For example, banks’ credit card operations put fraud detection systems in place which allowed them to contact their customers when certain ‘risk’ patterns in spending were detected. We’ve all received a call verifying purchases out of the norm, such as buying gasoline in Tijuana or a seventy-two inch plasma TV. Now Medicare is using software to flag unusual claim patterns, such as a physical therapy company billing patients 300 miles away, a female having prostrate surgery, or a clinic’s claim submissions rising significantly in a short period of time. Now, suspect claim patterns can be spotted promptly and preventive action can be taken before payment is made.
I applaud the government for looking to the private sector for solutions. Is it not in the private sector where true innovation occurs? Is it not in the private sector where the spirit of entrepreneurship thrives? Innovators in other industries have repeatedly succeeded in bringing change to our society by becoming more productive and competitive while simultaneously offering goods and services affordable to all. Think Herb Kellehr (co-founder of Southwest Airlines) and Ray Kroc (McDonalds).
Real innovation in the healthcare industry has been shackled by political drivers, big industry players, and locking the little guys out. For instance, in the partnership referenced above, see any small business names? Those are the big guys partnering under the SMALL Business Acts of 2010. Interesting… What’s more interesting is Medical Business Associates has patents pending in this arena. Uncle Sam, I can help… call me.
The good news is we are moving in the right direction by detecting fraud in ‘real-time’, not after the fact, and more importantly before the claims have been paid. While, sooner is better than later, later is better than never.
Thanks for reading!