State Medicaid anti-fraud units to use federal funds for data mining

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A new rule from the U.S. Department of Health & Human Services Office of the Inspector General allows states to use federal funds for data mining in their fight against Medicaid fraud.

The Medicare-Medicaid Anti-Fraud and Abuse Amendments, enacted in 1977, provided for federal participation in State Medicaid Fraud Control Units (MFCU), but those units were required to be separate entities from the state Medicaid agencies, and use of federal funds for data mining was prohibited.

The new rule notes that MFCUs have been largely dependent on state Medicaid agencies and external sources to refer cases to them--and that the anti-fraud units at times were unaware of changes in reimbursement policy that made data look questionable when it was not. The changes are expected to help the anti-fraud units use their resources more effectively.

It defines data mining as the "practice of electronically sorting Medicaid claims through statistical models and intelligent technologies to uncover patterns and relationships in Medicaid claims activity and history to identify aberrant utilization and billing practices that are potentially fraudulent."

This reversal includes additional reporting requirements by MFCUs to capture costs associated with data mining, the outcome and status of those cases, and monetary recoveries resulting from those activities, the rule states.

It sets three conditions on the practice:

  • The MFCUs and state Medicaid agencies must coordinate their use of data mining.
  • The two must work together to ensure the results are interpreted correctly according to current policy and practice.
  • Staff must be properly trained in the use of data mining.

The Los Angeles County Department of Public Social Services has used social networks and predictive analytics to map relationships between people and identify fraud patterns, according to an article at GCN. It also outlines how the state of Kentucky will use analytics software to fight fraud in Medicaid and other programs.

The U.S. Department of Health and Human Services recovered more than $4.2 billion in the 2012 fiscal year from attempts to defraud the Medicare and Medicaid programs.

Earlier this month, 89 people in eight cities were charged with healthcare fraud that involved $223 million in fraudulent claims.

The Senate Finance Committee in February signaled an aggressive campaign is in the works with new legislation to combat Medicare and Medicaid fraud, waste and abuse. Its attention was focused on appropriate care settings, redundant audits and increased funds for state anti-fraud activities.

To learn more:
- here's the new rule
- read the GCN article

Related Articles:
Feds continue to crack down on healthcare fraud
HHS clawed back $4.2B from healthcare fraud
Senate issues anti-fraud recommendations
Medicaid fraud crackdown: States recover millions

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