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Medicare Turns to Artificial Intelligence to Fight Fraud

Published Jan. 27, 2020

Artificial intelligence is making its mark on a number of industries, and Medicare may be next. 

In its never-ending fight to combat fraud and waste, the Centers for Medicare & Medicaid Services (CMS) plans to leverage technology such as artificial intelligence and machine learning to more quickly and effectively identify Medicare and Medicaid fraud, even before it occurs.   

The traditional approach to fighting Medicare fraud and waste has been “pay-and-chase.” In other words, Medicare will pay the providers what’s owed and then chase down any improper payments once they have been identified.

But CMS will now be leveraging the private sector to add technology like fraud prevention analytics tools to its arsenal. 

One of those players is the Healthcare Fraud Prevention Partnership, which will work with CMS to reduce fraud, waste and abuse by using data from private payers, employers, state and local agencies and other members to trade information and conduct studies to find potential solutions. 

Artificial intelligence could replace Medicare clinician reviewers

The job of clinician reviewers also may be replaced by emerging technologies. These reviewers sift through medical records to identify cases of fraud, waste and abuse.

Less than one percent of all medical records are ever reviewed using this manual process, but CMS anticipates that new technology will be able to review more records and do so in a more cost-effective manner. The agency may also use the technology to implement more prior authorization requirements to further mitigate risk.

Medicare fraud affects durable medical equipment

One of the biggest areas of Medicare fraud occurs with durable medical equipment (DME), prosthetics and orthotics.

In a blog post published on the CMS website, agency administrator Seema Verma wrote that advanced technology such as AI and machine learning “allows us to capture vulnerable items that were previously excluded from prior authorization, such as orthotics and prosthetics, which have been the target of recent telemarketing fraud schemes. The proposed changes also give us the flexibility to respond to future data and trends and tailor our strategies accordingly. Implementing prior authorization for these items as well as additional items in the future will help ensure that services billed are medically necessary.”1

Medicare fraud and waste prevention becomes even more critical as CMS moves toward more value-based care models and more creative partnerships between providers. 

“As our programs become more complex, program integrity risks become increasingly difficult to recognize,” Verma wrote. 

Medicare fraud and waste costs U.S. tax payers billions of dollars every year. In fiscal year 2017, improper payments were estimated to be around $52 billion.2